Posted on Friday, October 9, 2020

A guide to insuring your car in tough times

It’s natural to want to cut down on expenses in tough times. From scaling back your spend on luxuries, like eating out and getting your nails done, to trimming down what you spend on groceries, it makes sense to be frugal. 

Although not knowing what’s coming next can trigger fear and tempt us to eliminate expenses that don’t keep the lights on or our families’ stomachs full. Like car insurance. Nevertheless, it’s essential that you don’t let fear take over and compromise your long-term security – even when uncertainty looms. 

While there are many things that are constantly outside of our control, tough times create a heightened awareness of the volatility around us. This can be a source of stress, provoking panic and leading to anxiety. But focusing on what you can control – like ensuring your car and family are protected while you’re on the road – will help you to meet uncertainty with confidence and composure.

Keep reading for our guide to insuring your car in tough times.

Shop around and compare quotes

It might be easy to get a single car insurance quote and sign up immediately, but shopping around for insurance is the best way to ensure that you get a fair rate. It also puts you in a position where you can compare quotes and choose a plan that best suits your needs. While insurers offer various benefits to make them stand out in the market, some of these might not necessarily suit your lifestyle. Which means that you will end up paying for a service that doesn’t provide any real rewards for you. 

A good rule of thumb when it comes to comparing different insurers and insurance packages is to get three quotes. This will help you to establish whether the rates you’re offered are fair and in line with market standards and could even give you some room for negotiation. All of which will help you eliminate the fear of uncertainty and empower you to keep a handle on your finances.

But shopping around shouldn’t be reserved for when you’re planning on insuring a new vehicle. If you’re looking to save on monthly premiums or if your circumstances have changed, comparing quotes will help you to take control of your cover. If you have car, home and life insurance with different providers, it’s a good idea to find out how consolidating these policies could affect your insurance costs. You may even want to look into insurance specifically designed for women to help you take charge in tough times.

Get the right cover

Choosing not to cover your car – or cancelling your cover – can have serious financial consequences if you find yourself in a situation where your vehicle is damaged or stolen.  

Unfortunately, accidents happen and the possibility of a collision is never predictable. Even if you take every precaution to avoid being involved in an accident while on the road, another driver crashing into you is never beyond the realm of possibility. To exacerbate the problem, about 70% of vehicles on South African roads are uninsured. This means that it’s likely that the other driver won’t have insurance to cover any damages, which could leave you financially and legally exposed. What’s more, incidents like theft or hijacking can rob you of your vehicle and the freedom it gives you.

Whether you’re taking out insurance on a new vehicle or looking to save on your cover, understanding the different types of car insurance available will empower you to decide what best suits your needs and your budget. 

Comprehensive insurance

Comprehensive car insurance is all-inclusive insurance that covers your vehicle in the event of theft, loss, and accidental or fire damage or write off. You will usually have to take comprehensive insurance if you’ve taken out finance on a new car. This extensive protection includes cover in case of damage caused by adverse weather conditions like hail or flooding if hail cover is chosen and paid for as part of your policy. It will also payout for any third-party damages if you are responsible for the accident and need to repair the other vehicle. Although this is the ideal type of car insurance, it is the most expensive.

Third-party, fire and theft insurance

As the name suggests, third-party, fire and theft insurance covers loss or damage arising to another driver’s car where you are responsible for an accident, and where your car is damaged due to a fire or is lost due to theft. This type of cover does not include protection for accidental damage to your own vehicle. Although it provides less cover than comprehensive insurance, the advantage of third-party, fire and theft insurance – sometimes known as limited liability insurance – is the lower monthly cost.

Third-party insurance

The most limited form of car insurance, third-party insurance only covers damage you cause to another driver’s car in the event of an accident. Although third-party insurance is the cheapest insurance available and protects you from the potentially devastating financial implications of a collision, your own vehicle is not covered.

1st for Women Essentials Cover

This cover is a non-comprehensive cover, like Third Party, Fire and Theft, and Third Party Only, which means there are some limits to your vehicle cover. There are 3 types to choose from:

1st for Women Essential 1

  • Up to R1 million Third Party Cover

  • Your vehicle is covered if it is stolen

1st for Women Essential 2

  • Up to R1 million Third Party Cover

  • Your vehicle is covered if it is written off or stolen

  • Hail Cover

  • Accident Assist includes towing from the scene of the accident and storage of the vehicle

1st for Women Essential 3

  • Up to R1 million Third Party Cover

  • Your vehicle is covered if it is written off or stolen

  • Hail Cover

  • Accident Assist includes towing from the scene of the accident and storage of the vehicle

  • Limited Accident cover up to R15,000

No insurance

Vehicle insurance isn’t a legal requirement in South Africa and you do have the choice whether to cover your car or not. If you don’t take out a policy with an insurer and you’re involved in an accident, you will have to rely on the Road Accident Fund’s third-party insurance. Keep in mind that the cover is limited to protection from liability arising due to death or injury; if you damage another person’s property, they have a financial claim against you.

It is best to take out comprehensive car insurance that will cover you in any eventuality. However, you could opt for a lower level of cover when you’re in a pinch. This will ensure you have some relief when times are tough, while still providing cover and preventing the financial calamity that could arise from an accident.

Read the fine print

Although aggregation sites and online quotes make a broad comparison of different insurers and insurance packages easy, they don’t necessarily provide detailed information about exactly what is offered and expected. Understanding the activation costs, additional fees, excess structure and exclusions, as well as the responsibilities that lie with you, will prevent any unwelcome surprises when it comes time to pay your premium or submit a claim.

Manage your risk profile

Your car insurance premium is based on your risk profile, which indicates how likely you are to claim. A variety of factors are taken into consideration when drawing up your risk profile, including the value of your vehicle, and your age, and address, among others. 

While there a few factors that you can’t control, there are others that can be managed to keep your insurance costs down. Fitting your car with a security system and tracking device will reduce the risk of theft and increase its chances of recovery if it is stolen, reducing the risk for your insurer and therefore your premium. If it’s possible, keeping your car in a secure basement or locked garage will reduce your risk. Another option is to go on an advanced or defensive driving course. 

Balance your premiums and excess

Excess is the fixed amount you have to pay if you make a car insurance claim. This fee is designed to discourage low-value claims as well as fraudulent claims and is payable regardless of who is responsible for the damage, loss or theft. 

There are usually two types of excess: compulsory and voluntary. The first is decided by your insurer, while the second is set by you. If you’re a vigilant driver with a good claims history, choosing to pay a higher excess than what is required by your insurer is a great way to reduce your monthly premiums. However, it’s important to make sure that you’ll be able to afford the fee if you are involved in an accident. 

Use all the tricks in the book

Besides looking for the most cost-effective policy and reducing the potential risk of your car being damaged or stolen, there are some tried and trusted ways to reduce your premium. If you’ve bought a second-hand vehicle or are reassessing the cover on your current car, make sure that it's insured for its market value. 

If the process of insuring your car feels too difficult or time-consuming, think about the value that your car provides on a daily basis. Whether it’s getting to work, doing the school run, or driving to get groceries, your vehicle probably gives you more freedom than you realise. By planning ahead and insuring your car in tough times, you will give yourself a sense of knowing and the confidence that one of your most valued possessions is protected should something go wrong.


The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.

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