What does my vehicle insurance cover?

Estimated reading time: 7 minute, 45 seconds.

21 January 2022 | Cristine Knight

unnamed-Jan-21-2022-07-54-40-09-AM Insurance is priceless, when you do not have any! Many South Africans have discovered this to their cost when not, or under-insuring, their cars and driving around in the hope nothing will happen to them or their vehicles.

While there are no hard and fast rules about when to trade in your car, it needs to be a considered decision – perhaps your family has grown in size and you need a bigger vehicle or you are travelling longer distances and need something a step up from an urban runabout.While there are no hard and fast rules about when to trade in your car, it needs to be a considered decision – perhaps your family has grown in size and you need a bigger vehicle or you are travelling longer distances and need something a step up from an urban runabout.

While car insurance is NOT a legal requirement in South Africa, any vehicle purchased through a financial institution will come with a requirement that insurance is taken out for the duration of the loan.

There are three main types of insurance in South Africa:

Third-Party Car Insurance: This is generally the cheapest, but offers lesser cover. Third-party car insurance only covers the damages done to another vehicle. You may be saving on monthly premiums but having to fork out thousands for damages to your car can be a massive financial strain.
Limited Car Insurance: Limited car insurance provides insurance coverage against third-party claims and for loss or damage as a result of fire, theft and hijacking. However, you are not covered for damages should you be involved in an accident.
Comprehensive Car Insurance: This is the most extensive car insurance and is insisted upon by financial institutions and banks when your vehicle is financed. Regardless of how you may have purchased your wheels, comprehensive car insurance is a necessity and not a luxury. Although more expensive, comprehensive car insurance covers you in the event of damage, theft, accidents, and more. Third-party claims are included in this cover as well. Depending on your insurer and the make and model of your vehicle, you may have to pay a higher excess in the event of hijacking, theft, or fire.

It is also important to understand that car insurance covers your vehicle and not you as a person, meaning damages to the car will be paid for by the insurance but any other financial obligations must be covered by you.

The premium quoted to you is the result of a complex calculation that factors in the cost of the vehicle, estimated replacement value, cost of replacement parts, location, age, and claims history of the nominated driver along with national statistics on theft and hijack data for that particular car.

The general exclusions on a car insurance policy include maintenance and wear and tear of your vehicle.

Almost all insurance policies come with an ‘excess’ clause – this being the amount you will have to pay upfront in the event of a claim, so it is vital you carefully examine the policy quote before signing on the dotted line.

Low insurance premiums usually translate into high insurance excess costs. This payment is an uninsured part of your loss, which is payable when you make an insurance claim. This excess will commonly be paid to the garage handling your repair.

This insurance excess must be paid, regardless of the circumstances surrounding the accident. The insurance company uses this to dissuade fraudulent or suspicious insurance claims and also to lower premium payments.

Inexperienced or younger drivers often have to pay higher compulsory excess amounts than their experienced and older counterparts. Similarly, this logic is also applied to high-value luxury cars, as owners of such vehicles also have to pay higher compulsory excess fees.

Voluntary excess – an amount you willingly choose to pay above the compulsory excess – is a smart way of reducing overall insurance fees. Simply, once you increase your excess, you take more of the risk away from the insurance provider and this translates to lower fees.

As an example, say your insurance policy has an excess of R25 000 and you happen to be in an accident resulting in a claim of R100 000. Your insurer will retain the first R25 000 and authorise the remaining balance of R75 000 for the repairs.

It is possible to have the excess refunded provided certain conditions are met:

Waiver If you can prove you were not at fault or responsible for the accident and can give your insurer all the contact details for the other party, on request they can waive the excess (and will claim that from the guilty party’s insurers). However, damages to a parked car from fire or flood will not fall within the waiver requirements.
Insuring against your excess You can get an excess insurance policy but need to consider the cost of paying more voluntary excess and the cost of the insurance policy.

What if my car is stolen or written off?

If your car is stolen and not recovered after a period of time or is uneconomical to repair, this is called a ‘total loss’.

However, if it is insured for less than the reasonable market value, your payout could be well below what you need to replace that vehicle.

Some insurers do offer a policy with a guaranteed payout of the sum insured if your vehicle is stolen or written off – the peace of mind being that you know exactly how much you will get. This type of policy is also generally more expensive.

It is also vitally important to examine the policy quote to see if things such as a courtesy or rental car are included (and for how long).

Does the policy offer:

roadside assistance, a drive-home service or emergency repairs.
free legal advice or route-assist over the phone.
replacement costs for keys.
recovery costs for found vehicles following theft or hijacking.
emergency accommodation.
emergency costs payable to public authorities.
trauma treatment.
medical expenses of passengers (your family).

It is also important to remember claims in South Africa are settled under ‘Partial Fault’ rules, which means you can be responsible for a portion of your damages even if you are not fully at fault. If the accident could be deemed a partial fault because of something you did (or did not do), you or your insurance would pay a portion of your damages to your vehicle.

Common mistakes

Not telling the truth on your insurance policy or claim can mean the claim is denied. If you leave out information or even lie about something, you may be costing yourself much more.
Do the research. The most affordable insurance cover is not always the best, nor is the first option you find. You should always do some research on different plans as well as a cost analysis, weighing the price and benefits of policies.
Do not skip the fine print. You must know what you're covered for exactly, as well as what your excess is likely to be in case you have an accident. In many cases, you're not covered for roadside support, rental cars, distress and medical, additional drivers who are involved in an accident, personal belongings that are lost from the car, and much more.
Update your details. Your policy is calculated based partially on where you live. Updating these details with your insurer could actually produce a decrease in premiums. The same might apply if you change from open parking to a locked garage.
Reporting an accident to the police. Your insurer will require a police case number in order to process the claim. Report the accident or theft to your nearest SAPS as soon as possible.
According to the AA (Automobile Association), at any time, there are more than 1-million uninsured drivers on the roads with legal vehicles and about 800 000 unregistered, illegal vehicles. That means about 70% of people on the road do not have insurance.
Next time you are in traffic, look around: Most of the vehicles you see are not covered with car insurance and if they damage your vehicle you would not be compensated.
Insurance makes good sense.