You might think you don’t need insurance… until you do

Insurance is one of those things you might think you don’t need, until the day comes when you do need it. When you consider the state of the roads across South Africa together with the high incidence of car theft and hijackings, as well as the frequency of road accidents, motor vehicle insurance becomes an imperative factor.

Nobody wants to be a statistic of any of the above. If something happens to your vehicle however, being insured is your peace of mind during what could be a stressful or traumatic situation. Comprehensive car insurance is the recommended option to protect both you and your vehicle, and is usually mandatory if you have a vehicle finance agreement with a financial institution such as WesBank. If money is tight, the minimum insurance you should take out on your car is third-party insurance that includes fire and theft. Third-party only vehicle insurance covers only the damage that your vehicle causes to other people’s vehicles or property.

According to the AA (Automobile Association of South Africa), between 65 and 70% of the estimated 12 million vehicles on South African roads are uninsured, and this percentage is growing annually. If you are involved in a crash, you only have a three in ten chance of the other driver being insured and able to cover any damages. If the accident is your fault, it is even more important to be covered comprehensively.

 “It’s for this reason, among others, that, if you are considering canceling your car insurance to cut back on expenses, to rethink this. If something were to happen to your car, knowing you are covered is one less thing to worry about. As the country’s leading provider of innovative vehicle and asset solutions, WesBank advises all car owners to include vehicle insurance as a fixed line item on the monthly budget,” says Kutlwano Mogatusi, WesBank Motors communications specialist.

Car insurance is a way of protecting your car – and yourself – against the harm and the costs if your vehicle is involved in an unfortunate incident such as an accident or it gets stolen. By paying a monthly insurance premium, your personal return on investment is knowing that your vehicle is covered by your insurer. If your vehicle is comprehensively insured with a reputable insurer, you will be covered for a vehicle accident, a natural disaster, fire, or theft. If the unfortunate incident is your fault and damage is caused to another vehicle, driver or passengers, or a pedestrian, your insurance would cover you for that too. Having car insurance is like a safety net if something goes wrong.

“Knowing why you need car insurance is one thing, but making sure you choose the policy that will best safeguard your vehicle, is another. The right policy ensures that your vehicle is safe from natural disasters, the threat of theft or fire, third party cover, damages, or even a total write-off of the car resulting from an accident,” explains Mogatusi.

“The best car insurance policies include vehicle repairs and replacements, reimbursement for damages to the other party or parties from an accident you cause, car hire while your car is being repaired and even roadside assistance. When you report a claim to your insurance company, a representative will manage the claims process and assist you with any questions you may have. Shopping around for a policy that suits both your needs and your pocket is advisable. Be sure to read, and understand, the terms and conditions within the fine print too – you don’t want any nasty surprises if you need to make a claim.”

Understanding the factors that can affect the amount you pay on your monthly premium will also help you make an informed decision on which insurance policy to invest in. This starts with the type of vehicle you drive – a luxury car will attract a higher insurance premium, while an older vehicle or a second-hand car with a lower market value will cost less to insure. Even the colour of the vehicle can impact the insurance cost, with white or lighter-coloured cars attracting a lower premium, as will other factors such as your age, where you live and work, and the length of time you have been a licensed driver.

If you are a recent graduate or young professional, and have been driving for less than five years, you are considered to be an inexperienced driver to the insurance company, no matter how competent a driver you may be. The insurer considers an inexperienced driver to pose a greater risk, which will also affect your monthly premium amount. How you manage your personal finances, and your credit history will also be considered as the insurance provider needs to ascertain your risk profile when determining your premiums.

While the monthly premiums for insurance may seem like a grudge payment, it is important to consider the alternative: if you are involved in an incident and have no insurance cover, you will have to pay for the damages to your car and the other vehicle, if it is your fault, from your own pocket.

“There are many insurance deals for vehicles on the market, so shop around. Also consider the extra benefits on offer such as roadside assistance, discounts for good driving or lowering your premiums annually as your vehicle depreciates in value. Look for the best deal to suit your pocket. We will always recommend comprehensive insurance as first prize. If this is not affordable in your current circumstances, make sure that at the very minimum you have the basics of fire, theft and third-party covered,” concludes Mogatusi.

Click on this link to listen to the most recent WTF - WesBank Talks Finance podcast, which aims to demystify the complex topic of car insurance.