Car insurance provides a financial safety net for people in the event that a vehicle is stolen, damaged or involved in an accident. Car insurance policy is an agreement between the individual or business and the insurer of the vehicle. A specified monthly premium is paid by the insured person to the insurance company to guarantee that if the vehicle is involved in an accident, stolen or damaged the insurance company will relieve him or her of the financial burden. Car insurance is compulsory when financing the purchase of a vehicle.
Latest statistic has show that most South African use 70% of their monthly salary to pay debt, therefore very few may be able to afford the cost that comes with emergency situations. In most cases vehicle accidents will easily consume all your savings. A minor accident not involving personal injury may easily run into thousands of Rands. It therefore makes sense to have motor vehicle insurance.
It is important to note that not all insurance policies are equal. Generally you have a choice between comprehensive, third party and third party and theft. Each of these has their own advantages and therefore it would make sense to look at the advantages of each policy separately.
Comprehensive car insurance
Comprehensive car insurance includes third party, damages sustained by your vehicle during an accident or theft. Advantages of comprehensive car insurance include:
- The replacement of your vehicle if stolen.
- The repairs of damages caused by an accident to a high standard.
- Repair of minor damages such as windscreen chips.
- Coverage of liabilities that may arise from injury or damages sustained by a third party.
- Premium discounts if your vehicle is fitted with anti-theft devices.
- Premium discounts if you have more than one policy in place with the same insurer with the added advantage of extended coverage to nominated drivers. This is dependent on the insurer.
- No claim bonus in the event that you have no claims during a specified period. Again this is dependent on the insurer.
- Additional benefits you may receive without extra cost
- The towing and storage of your vehicle by approved service provider.
- Medical assist that may pay your medical expensive incurred in the emergency room
- Payment of hotel bill if the accident has occurred far away from your home.
- Trauma assist will pay for a professional counsellor.
- Road assist for the road side repair of your vehicle.
Third party insurance
Third Party Insurance will only cover damage you have caused to other vehicles and property. You will not be covered for theft, damages or loss to yourself. Third party insurance is less expensive that comprehensive insurance and affords you some cover.
Third party fire & theft
Third party fire and theft covers your vehicle for accidental damage caused to a third party. The main benefit is that your vehicle is covered against theft and fire damaged caused to your vehicle by a third party. As with third party insurance, third party fire and theft is less expensive than comprehensive car insurance.