In South Africa, around
70% of vehicles are not insured – a dismal statistic by any standard. Good vehicle insurance is an essential aspect of responsible vehicle ownership for any vehicle owner. But, for first-time buyers, the process of choosing the right policy can be confusing and overwhelming. The premium pricing, terms of cover, excess or deductibles, and the coverage offered vary greatly among different insurance companies.
To ensure your vehicle and any extras are properly insured, it’s vitally important to seek independent and impartial advice from an experienced insurance broker.
Valuable Insurance Tips for First-Time Vehicle Buyers
When it comes to vehicle insurance, you shouldn’t always simply follow the recommendation of the vehicle salesperson or bank’s vehicle loan department. Remember that although these options are often presented as a convenience, they’re often designed to refer mutual business or increase dealer profit margins – and may not always have your best interests in mind.
Here are some smart pointers to take note of:
Conduct Research Before You Even Purchase a Vehicle
Before setting out to purchase your vehicle, research the various factors that affect the vehicle insurance, such as the make and model, cost of parts and availability, security measures, driver profile, age, and credit rating. Security add-ons, like a tracking device, also need to be considered. These can incur an additional cost – but that cost might be offset by a worthwhile reduction of your vehicle insurance premiums.
Depending on the financing bank or the insurance company itself, fitments like these might also be a mandatory condition of cover depending on the brand of vehicle. This is often particularly relevant when you acquire vehicle finance through the in-house finance department of a vehicle retailer.
Remember too that factors like vehicle theft or
hijacking statistics can play a significant role in the premiums you pay, the excess you’d be liable for, and escalation of costs in the event of a claim. There are some very complex factors that influence these variables, and to a first-time buyer seeking vehicle insurance, these can be confusing and overwhelming.
Having an experienced, qualified insurance broker to evaluate your needs, and help cut through the noise, is one of the very best ways to prevent unexpected costs or losses down the road.
Insure Your Vehicle for its Full List Price – but Ensure Policy Flexibility
When you take out insurance on your new vehicle, it’s advisable to insure it for the new list price for the first 12 months, after which the vehicle should be insured for its retail value.
What’s the difference?
The new list price is of course the full price you paid for your vehicle straight off the showroom floor. The retail value, on the other hand, is the price the dealer would sell your vehicle for on the second-hand market thereafter. The “market value” is the average price between the trade-in figure offered for a pre-owned vehicle, and the price a dealer would sell it for.
By structuring or updating your vehicle insurance this way, you’re making sure your vehicle isn’t under-insured upon purchase – but also that it isn’t over-insured once its actual value begins to decline.
What About Third Party Liability Insurance?
Almost all vehicle insurance policies typically include third-party liability cover. This is cover specifically intended to protect you against any third party suing you for financial loss, physical injury, or death in the event of an accident. The South African Road Accident Fund provides coverage for people injured in road accidents, but there is nothing preventing a third party from suing you in your personal capacity for compensation as the result of an accident.
Remember that this does not only apply to the driver or passengers of another vehicle, but also your own passengers. This may even include someone who can demonstrate psychological injury, trauma or emotional shock as a result of witnessing an accident.
If this happens, the associated legal fees could easily run to millions – and you would be personally liable for these expenses, in addition to the actual legal claim for damages awarded by a court of law. Now, there are certain insurance policies that offer third party cover only as an option, but it’s easy to see how important it is that this is always included.
As with most emergency provisions, it’s far better to have it and not need it, than to find yourself facing financial ruin as a consequence of an accident that may not even be your fault.
Watch Out for Those Exclusions
A standard vehicle insurance policy might not always cover certain events, like scratch and dent damage, tyre or wheel damage, and hail damage. It’s really important to purchase these covers at an additional premium to avoid financial losses in the event of an incident.
If you’ve add-on accessories fitted to your vehicle, such as alloy wheels, an after-market sound system, nudge bars, or additional lights – to name a few – you should always ensure these are included in your vehicle insurance cover, even if they increase your premium price slightly. These add to the overall value of your vehicle, and the cumulative cost of repairing or replacing items like these can be astronomical.
Also, be aware of
conditional exclusions. Examples may include clauses that nullify an insurance claim if you are driving without a valid driving licence, driving under the influence of intoxicating substances, leaving the scene of an accident, or even if certain parts of your vehicle – like tyres – are not in roadworthy condition.
Check for Mileage Benefits
How much travelling do you typically do in a year?
Discuss this with your broker, because it may qualify you for a discounted premium on your vehicle insurance. For example, if you work from home or have a flexible working arrangement, you are on the road far less than somebody who commutes for two hours every day. Therefore, your risk profile may be lower.
With some vehicle insurance companies, if you travel less than 15,000km per year, you may qualify for a premium discount on your comprehensive vehicle insurance policy.
Vehicle Insurance and More
As with all things, knowledge is power. By being aware of even the basics around good vehicle insurance, you can avoid many of the potential pitfalls. Seeking the help and guidance of an expert insurance broker is the best way to protect your interests, understand the most important aspects of your cover, and ultimately save money.
The Pogir Group offers you an easy, user-friendly consultation with any of our highly experienced insurance brokers who will provide you with the expertise and insight you need.
In addition to
short-term insurance, The Pogir Group also offers tailor-made life financial planning, personal and corporate healthcare solutions, employee benefit programs, and expert wealth management.
For more information,
contact us today to arrange a no-obligation consultation.
Pogir. Smart, with heart.