Can a Car be Over-Insured?

You can’t blame South Africans for being over-insured. The rising crime rate has them wondering what’s coming next. Technically, you can have more than one policy. In fact, a marketing actuary at Old Mutual says there are legitimate reasons to have more than one funeral policy on your life, but what about car insurance?

Can a car be over insured? Yes, it can, and while under-insuring your car can have adverse implications which include financial hardship, the answer doesn’t lie in over-insuring your vehicle.

No Benefits When Over-Insured

You will not benefit by over-insuring your car. If your vehicle is insured for R180 000 and is written off in an accident, the assessor will say the insurance company will replace your sedan for R140 000. So you will have been paying premiums on R40 000 that no one pays you.

When last did you check your car insurance to make sure it’s correct? Aren’t you perhaps over-insured just Over-Insured Carbecause you never check?  Cars are just a typical example of items that decrease in price, and rapidly too. So you should review your insurance each year to ensure you’re always paying for the right cover and the right price.

Sometimes Comprehensive Insurance is Too Much Cover

If you don’t like the insurance you pay every month, there are ways to manage your insurance costs and reduce your premiums each month. While everyone wants to have comprehensive insurance, maybe just having this kind of insurance means your car is over-insured. Your car may be 20 years old. You may only take it out onto the roads once or twice a week to go to the shops. Maybe Third Party, Fire and Theft Cover would be a better option for you, or even Third Party only cover.

Many people hate the excess they have to pay for each claim, but if you volunteer a higher excess, you can bring your premiums down by as much as 30%, if you have to, for instance, pay the first R3 000 of a claim.

An older, stolen car doesn’t represent such a massive loss. Certainly, it does regarding inconvenience, but financially you’re not going to lose that much.

If it, however, causes damage to an expensive new car, at least Third Party Only insurance will ensure you don’t have to pay for the other car’s repairs, nearly bankrupting you.

Of course, having a claim-free driving record can also mean significant savings. If you’re buying a new car, with your excellent driving record, you could save a tidy sum with this good record.

Over Insured? Who Benefits? Not You

Are you living in fear of losing what you have? Is this your reason for over-insuring your car?

People in South Africa live in paranoia that someone will hijack, steal or wreck their vehicle.

A car is a major asset, and if you want to save money, buy a car you can afford.

A good used car doesn’t require comprehensive insurance – you can get away with Third Party Only Insurance.

We would all like to cover, but you may pay for this dearly over the decades. And after 20 years of this, you could have bought yourself a brand new car.

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All info was correct at time of publishing October 11, 2018