Why must I have Car Insurance in South Africa?

    Why must I have Car Insurance in South Africa? The chances of being in an accident are high, as every day more vehicles take to the roads. Coupled with South Africa’s high rate of hijacking and car theft, car insurance has become a necessity.

    The three main types of motor insurance are Comprehensive, Third-party fire and theft and Third party only. Finding the correct form of insurance for your situation is important.

    Why must I have Car Insurance and What are the Benefits?

    The advantages of Comprehensive motor insurance are wide-ranging. It covers hijacking, theft, damage caused by natural disasters such as floods, hail, fire or accidents.

    Comprehensive cover also insures you against third party claims where you are responsible for a third party car’s damage. Due to its extent, Comprehensive cover is the most costly.

    Why must I have Car Insurance?

    The only difference between Third-party fire and theft and Comprehensive cover is it does not protect you against accidental damage to your car.

    Should your vehicle get damaged or lost because of fire, hijacking or theft, your claim is accepted, as will any third party damage caused by you. However, for self-inflicted damage, repair costs are borne by you.

    Why must I have Car Insurance? At the Very least you Should have Third Party only

    The least expensive of the three motor insurance policies is Third party only. It protects against damages caused to a third party’s vehicle, or any injuries or accidental deaths thereof. This type of car insurance does not protect against theft, fire or accident damage or loss to your vehicle.

    How do Insurance companies Work out Costs?

    Your vehicle insurance costs are worked out according to certain factors. The model and make of your car, its condition and age, and its replacement value. Cars such as sports cars and 4x4s are costlier to repair in comparison to others. Also, some cars carry a higher risk of hijacking or theft.

    Your address and where you keep your car is another factor affecting premiums. Cars that have an alarm or tracking device mean lower premiums. Human attributes such as the driver’s record, driving experience, gender, age and driver’s license are also taken into account, as are any previous claims lodged.

    Vehicles used for delivery or business purposes pay higher premiums due to daily traffic exposure. The value attributable to your car also affects its premium. Market value, trade value and retail value are the three most important forms of vehicle valuation.

    Retail value is the car’s purchase price, whether new or pre-owned. Trade value describes the cost a dealer is willing to pay for a trade in. Market value is the trade value and the retail value’s average. Retail value attracts a greater premium, but any replacement would be of similar mileage, age or model.

    All financed vehicles are insured at their retail value. A total loss settlement would enable you to buy a similar car.

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