Everything you need to know about car insurance in South Africa
Need to know a bit more about car insurance ? We’ve got you! All the answers to your big car-insurance questions are below.
How does car insurance work?
You may be asking yourself: ‘What’s the point of insuring my car?’ Yes, it may be an extra monthly expense, but it's definitely a lifesaver when you need it! Life happens and your car may be damaged or stolen. If it is, you want to know that you’re not out of pocket for expensive repairs – or for a whole new car.That’s where an insurance policy comes in. It’ll cover (most of) the cost of repairs, or allow you to buy a new car if necessary. Getting insured is easy with BetterCompare’s online comparison tool.
What’s the difference between retail, trade and market value?
You can choose whether to insure your car for retail, trade or market value, and your monthly premium will be based on this value.
In simple terms, retail is the highest value – think of it as the price you’d pay for your car if you bought it brand new. Market value is what you’d sell it for privately, taking into account factors such as mileage, age and condition. Trade value is the lowest, similar to what you’d be paid by a car dealer if you were trading in your car when buying a new one.
Market value is what you’d sell your car for privately, taking into account factors such as mileage, age and condition.
Is the cheapest car insurance enough?
That depends on how much you’d like to be paid out if your car is stolen or written off in an accident. If you choose the cheapest option (for example, insuring at trade value), it probably won’t pay out enough for you to buy the same kind of car you had.
An even cheaper option is to take out third-party insurance. If you are responsible for an accident, third-party insurance will pay out for repairs to the other person’s car but not to yours. It’s important to check what’s covered in your policy – after all, you get what you pay for!
Why do insurance companies look at my credit history?
Insurance companies deal with risk, but not just the risk of your car being stolen or involved in an accident. If your credit history is not so good (that is, you don’t always pay your bills on time), you may be considered a higher risk to take on as a client – something that will be reflected in your premiums. The better your credit score, the less of a risk you will appear to an insurer, and you may get a slightly cheaper premium as a result.
Your insurance company will check whether there is any existing damage to your car that they should be aware of.
What does ‘excess’ mean?
You’ve probably come across this term when researching car insurance. This is the amount you (not your insurer) must pay if you submit a claim. This payment is usually made to the company that fixes your car if it has been damaged. The amount you pay depends on what you chose when you insured your car in the first place: if you chose a low premium, your excess is probably higher than if you chose a higher premium. If you’re in an accident that’s not your fault, your insurer will try to recover your excess from the responsible person’s insurer and reimburse you.
Can I choose who fixes my car?
Unfortunately not. Your insurer will have agreements with specific service providers and will let you know where to take your car if it needs to be repaired. This is so they can be assured that the work will be completed to a high standard (and usually covered by a warranty).
Excess is the amount you (not your insurer) must pay if you submit a claim, usually to the company that fixes your car.
Will my premium decrease as my car gets older?
Yes, it does, but this is not the only factor that’s taken into account when your premium is reviewed every year. The cost of repairs and parts increases all the time, so your premium may not decrease as much as you expect it to, even though the value of your car does.
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