You are here: Mobility Beat Reviewing your car insurance? Here are your options
AA Insurance Supermarket warns against cancelling outright
The effects of the national lockdown have already begun to show with many businesses either scaling back operations, or completely shutting their doors. For personal consumers, the weakening economy also has serious consequences, with many reconsidering their monthly budgets.
“At this time many people are thinking about ways to cut costs. During and after the lockdown people are investigating ways to reduce or eliminate the cost of car and home insurance. Totally dispensing with insurance is a dangerous financial tactic, one that actually ends up costing more than saving money. Instead,” says Shaun Neuhoff, Managing Director of AA Insurance Supermarket, “look for ways to reduce costs rather than eliminate them”.
Shaun says there are several options available – each with pros and cons – should consumers consider them.
“But, cancelling your insurance policies wholly is not an option I’d advocate as this reduces the extent of your cover, and places you and your assets at great risk. Reducing costs does not have to mean cancelling policies; it’s not an all or nothing scenario,” he explains.
Shaun notes that if this is something you are thinking about you should consider that less than 35 percent of vehicles in South Africa are insured; an unbelievable 65 percent of vehicles aren’t insured. What this means is that if you are uninsured, you will have to rely on the other person’s insurance to cover you in the event of a crash, if the other person has insurance (and, given the numbers, this is unlikely).
“From a risk perspective, being uninsured means that you will have to pay out-of-pocket should the need arise. This may be a cost you cannot cover, and the repairs to your vehicle will not be done. Can you afford to take this chance,” asks Shaun.
He says rather consider some of the following options.
Firstly, AA Insurance Supermarket sources more than ten quotes on car and home insurance to match your requirements. AA Insurance Supermarket sources price competitive products that will assist you to save money without compromising the extent of the cover you have. As long as the extent of your cover remains the same, there should be no additional risk to you by changing to a cheaper insurer.
Secondly, if you need to reduce the cost of your car and home insurance beyond simply finding a cheaper insurer, you have a number of options. These are:
“These are all options to consider but it is important to stress that if your vehicle is financed, part of the condition of securing vehicle finance is that you undertook to take out – and keep in place – comprehensive car insurance. If you cancel the policy on a financed vehicle, the finance house is entitled to put a policy of their choosing in place and add the premium to your car repayment,” says Shaun.
He says it’s clear that times are tough on everyone, and that people will be reviewing their budgets to save as much as they can.
“But, insurance is not – as many believe – a luxury purchase. It is an essential financial tool which is aimed at protecting you financially should the need arise. It is, quite simply, not a luxury, but a necessity,” Shaun concludes.