A guide to the different types of car insurance
We know how you feel. There are so many things we'd prefer to spend money on every month rather than car insurance. (Swedish massage! All the streaming services! Savings!) But driving without insurance can have some pretty devastating effects on your finances if you're involved in an accident or your car is broken into or stolen.
The best you can do is make sure you're not overspending on this grudge payment. BetterCompare can help (just head to our car insurance page for a range of quotes) but first you need to know what kind of insurance will suit your car and lifestyle best.
Do I really need car insurance?
Car insurance is not a legal requirement in South Africa but – and this is a big ‘but’ (and it cannot lie) – if something happens to your vehicle, you sure are going to be glad that you’re insured. Anything vehicle-related gets really costly really fast, whether you bumped that new Audi next to you in the parking lot or your car was washed away by a flood.
And if you’re accessing vehicle finance to buy your wheels, you won’t have a choice – financial institutions require you to take out cover on the car.
Car insurance is not a legal requirement in South Africa but if something happens to your vehicle, you sure are going to be glad that you’re insured.
What is comprehensive car insurance?
Comprehensive car insurance is just that – it’s got you covered for all eventualities, including damage, theft, accidents and natural disasters. (It’s also the kind of cover required by banks when you take out vehicle finance.) Because it’s the big daddy of insurance, it’s naturally the most expensive, too.
The comprehensive cover doesn’t apply to only your vehicle. It also covers third-party claims. What that means is that if you’re responsible for an accident with another vehicle, your insurance will cover the cost of their repairs too. Nifty.
Comprehensive cover is most suitable for new and expensive cars, as well as cars that clock up high monthly mileage (more time on the road means a higher risk of being involved in an accident).
What is third-party, fire and theft cover?
This does exactly what it says on the box. You’re covered for fire damage to your car, theft of your car and damages to other vehicles (but not to yours) as the result of an accident. It is also known as limited cover, since it doesn’t include all the bells and whistles of comprehensive insurance.
Third-party, fire and theft cover is one of the cheaper car insurance options, and more suited to older cars that are fully paid off and clock up average monthly mileage.
Third-party, fire and theft cover does what it says on the box. You’re covered for fire damage to your car, theft of your car and damage to other vehicles.
What is third-party-only cover?
Third-party cover offers the least protection, since it extends to other vehicles only. The premiums are significantly lower, but should your car be damaged in an accident or stolen, you’ll need to cover the costs from your own pocket.
Third-party cover is suited to older cars that clock up low mileage.
What is lite cover?
Certain insurers now offer ‘lite’ policies that are ideal for smaller budgets. Lite insurance is typically aimed at cars that are fully paid off and valued at less than R100 000. It offers basic cover similar to other policies, but without the option of additional features such as emergency towing or roadside assistance.
What is ‘pay as you go’ cover?
Pay-as-you-go insurance – otherwise known as usage-based insurance – charges you based on the distance you drive or the time that you’re on the road. There is also a small monthly premium for damage or theft while the car is parked in a specified location. The on-the-road portion of the policy is typically comprehensive (meaning damage to your vehicle and to a third party’s will be covered in the event of an accident that you’re responsible for).
How does it work? Your insurance company will fit your car with a small tracking device, which reports your mileage and general driving habits to them. This policy is a rolling subscription, meaning you can cancel or upgrade at any time without penalties.
Pay-as-you-go insurance is ideal if you don’t use your car particularly often, since the less you drive, the less you’ll pay. But (and here’s the kicker) if you drive more than a specified distance, you’ll pay significantly more than a normal comprehensive policy premium.
Pay-as-you-go policies are also great for younger drivers, who are typically charged higher premiums when taking out traditional insurance.
Pay-as-you-go insurance is ideal if you don’t use your car particularly often, since the less you drive, the less you’ll pay.
A quick note on insurance exclusions
Before committing to a policy, make a cup of coffee and read through its exclusions. These are the exceptions to the policy – basically a list of specific circumstances in which your vehicle will not be covered by insurance.
Some exclusions you’ll find in all policies. For example, if you’re involved in an accident while under the influence of alcohol or drugs, you will not be covered by any insurance policy.
Before committing to a policy, make a cup of coffee and read through its exclusions – specific circumstances in which your vehicle will not be covered by insurance.
Other exclusions are policy-specific. For example, you may not be covered if the car was being driven off-road, was being used for commercial purposes (as a taxi or delivery vehicle) or if you were outside of South Africa (important to note if you’re planning a road trip). Exclusions will be clearly stated in your policy and ignorance won’t be an excuse, so be sure to familiarise yourself with them – preferably before tackling that 4x4 route!
Okay, I know what car insurance policy I need. Now what?
Once you have an understanding of what each policy covers (and what it doesn’t!), we’ll take it from there. Visit the BetterCompare car insurance page to get comparative car insurance quotes.
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