How Does Car Insurance Work? You Have Car Insurance But Do You Know How?

How does car insurance work?

Car insurance is one of the most common forms of insurance taken out by South African individuals. But do you know why?

A huge percentage of car owners don’t actually own their cars. Instead they lease vehicles or have them financed by banks and other companies that lend them money.

To cover the risk of those covering the capital costs, car insurance becomes compulsory for those borrow money to buy vehicles.

But even a large percentage of people who own their cars outright opt for car insurance because of the high costs involved in repairing and replacing cars that have been either damaged in accidents, stolen or highjacked.

How Does Car Insurance Work and What types Of Car Insurance Are There?

How Does Car Insurance WorkIn South Africa there are three different types of vehicle insurance:

  1. Comprehensive car insurance
  2. Third party fire and theft insurance
  3. Third party only insurance

Comprehensive car insurance is the “best” type of insurance you can get for your car. It is also the most expensive. If you take out a comprehensive policy you know that whatever happens to your vehicle,  you will have cover.

What Can go Wrong, and What would Comprehensive Car Insurance cover?

While theft and accident are the most common causes of loss and damage when it comes to cars and other vehicles, a comprehensive policy will also cover you if the car is hijacked or if damage is caused by natural disasters like flooding, fire or hail.

Make sure you check the car insurance policy because sometimes “Acts of God” are not covered. Damage in the event of riots or war is also normally excluded. A number of companies offer comprehensive insurance for cars.  How does car insurance work can be complex but it’s there to protect you.

Third party fire and theft insurance is less expensive than the comprehensive type, but there is more risk for the car owner. The major difference between this type of car insurance and comprehensive insurance is that accidental damage will not be covered.

How does Car Insurance Work with Third Party, fire and Theft cover?

If the car is hijacked, stolen or damaged by fire, you will be covered. If you have an accident that involves one or more other people, and it’s your fault, the other person or persons will be covered.

This means that the damage to their cars will be covered, but the damage to yours won’t.

Third party only insurance is the cheapest type of car insurance available, and it is a form of insurance that should be, and probably soon will be compulsory in South Africa as there are more uninsured drivers out there than insure. Other countries already have compulsory third party car insurance.

So What will Third Party Only insurance Cover?

In the event of an accident, the other person or persons are covered, as they are with third party fire and theft insurance.

However this is the only cover included in the policy. If you have an accident, or your car is stolen or hijacked, or something else happens to damage it, even if it is not your fault, a third party insurance policy won’t pay out anything. You are on your own.

To get a car insurance quote, please complete and then send the form on this page

All info was correct at time of publishing July 23, 2018