Before trying to understand how car insurance works you must first understand what car insurance is.
Car insurance or auto vehicle insurance as it is also known, is an insurance policy that provides financial coverage for an assortment of vehicles, motorcycles, vans, bakkies and trucks against damage, loss, injury or liability that may be sustained in the event of an accident.
Now that being said no matter where you live in South Africa car insurance is an absolute must. When you take into consideration the high crime rate related to car theft and hijacking where bodily harm is a definite possibility. Taking into consideration the state of our roads, high road accident statistics as well as the competency of other drivers being without car insurance is an unnecessary risk.
Car insurance works in the following way:
Depending on the certain car insurance policy that you have purchased, provided that your premiums are up to date, your insurance policy will carry the financial liability that would normally fall to you should you fall prey to crime or be involved in an accident even if it is due to your own fault.
Crime – Should your car be stolen, hijacked or if you are involved in a smash and grab, this is when a criminal breaks out your car window to grab you cell phone or handbag that is on the car seat, your car insurance will either replace or repair any damage. But you will have an excess amount that you have to pay on your part in order for the insurance company to start processing your claim. If you fail to pay your excess amount your claim will not be processed. The excess amount varies and depends on the type of claim that you make.
Accidents – In the event of an accident due to your fault or not, whether it is a bumper bashing or something more serious your insurance policy will relief you of liability but again there will be a certain excess amount payable by you. In the event that you are responsible for an accident, you will be liable for any injury and damage sustained by the third party. Third party insurance will repair and cover any injuries sustained by the other party.
Natural disasters – Your insurance company will also cover you should your car be damaged in the event of natural disaster for example floods, landslides, hailstorms.
Most insurance companies may offer a no claims bonus. A no claims bonus is a certain amount that will be paid out to you in cash in the event that you make no claims from the insurance company for a pre determined period. Some insurance companies may even allow you to make certain claims without affecting your no claims bonus. But make sure before you make a claim whether or not your bonus will be affected the operator handling your claim will be able to assist you with the matter.