Everything you Need to Know Getting Car Insurance in South Africa

Many people forego getting a car insurance because they think it’s too expensive and it won’t be used often. What they don’t see is how much of a hassle it will be if they get into an accident and they don’t have any kind of insurance to cover for their losses.

The Automobile Association of South Africa released a statement saying that based on their findings “at most 70% of the 11 million registered vehicles in SA are uninsured”.

Everything you Need to Know Getting Car Insurance in South Africa

What is Car Insurance?

A car insurance is a policy bought by vehicle owners to help them lessen the financial impact of vehicular damage due to accidents and other incidents that would result in a loss in value of the vehicle. Insurance holders pay a premium to maintain the insurance and in return, the insurer shoulders a portion of the cost needed to pay for the damages done to properties and/or individuals in the uneventful situation.

The premium paid on the car insurance depends on the age, driving experience, gender, and violation history of the insured. How you use your vehicle also plays a part on how much premium you’ll pay and what your insurance company will cover in the policy.

There are two ways a vehicle can be used. The first one is for private use. This is when you use your vehicle to drive to work and return back home. You also use it on weekend getaways, shopping, and picking up kids from school. All uses of the car related to your private life are counted under this category.

The other one is for business use. The use of your car to visit other office sites or client locations is categorized under business use.

Insurance providers will look at the purpose of vehicle use before approving your car insurance application. Cars for business use are typically charged with higher premiums because of how often they’re utilized in your everyday activities.

The degree of responsibility assumed by the insurer will also depend on the type of policy you apply for. Comprehensive insurances are more expensive compared to third party policies with limited coverage. This is why you have to thoroughly read the fine print and take note of the important points on the policy like the insurance coverage, schedule, terms and conditions, and possible exceptions.

How Car Insurance Works

When you get into an accident, you can file for an insurance claim by paying the excess fee needed to process your application. This amount will depend on how much premium you’re paying and on the value agreed when you signed the contract policy.

The insurance company will pay out an amount based on several factors that determine the car’s value before the claim was submitted. These factors are documented in the policy so make sure you take note of them. Usually, the age, make, model, and the condition of the vehicles are the main factors that determine the value of the vehicle being insured.

A car insurance can cover property damage done not only to your car but also to other vehicles. The same goes for bodily injuries (or death) caused by vehicular accidents to involved parties.

Of course, there are limitations on how much damage your car insurance can cover. If the repair cost exceeds a certain percentage of the car’s current value, insurers will typically proceed with an insurance write-off.

For example, you have a car with a retail value that’s around R100 000. While driving your car, you got into an accident and it was badly damaged. An engineer or an insurance assessor will evaluate how much the damage will cost the insurance company. If reparations will cost more than 60% of the car’s retail value, the insurance company will typically proceed with writing off a check for you that cost R100 000, minus the excess fees. In exchange, the insurance company will take possession of your damaged car.

The value will depend on the policy you’re getting. If it says ‘market value’, that means the amount will be based on the average of the retail value and the trade value. This is usually not enough to get you a brand new vehicle similar to the one you just exchanged. To be safe, make sure you’re getting a policy that insures the vehicle for its ‘retail value’.

Getting a car insurance is not an option but more of a necessity. You won’t know when you’ll be dealt with a bad hand so it’s better to have a legal and financial safeguard to back you up.

Types of Car Insurance in South Africa

Getting a car insurance may be too much for your pocket which is why there are many types of policies you can choose from.  There are two main types of car insurance in South Africa: third party and comprehensive.

Comprehensive Car Insurance

This type of car insurance in South Africa covers injury or damage caused by your vehicle to other people or property. It also covers hijack, theft, and selected force majeure like fire, explosions, flood, hurricane, earthquake, typhoon, hailstorm, and similar situations as stated in your policy. Vehicular damage caused by riots, terrorist acts, and strikes are not typically included but this depends on the policy offered by your insurer. Due to its wide coverage, comprehensive policies are the most expensive to maintain.

Many insurance providers offer variations to the comprehensive insurance type to allow flexibility and affordability.

The Pay-As-You-Drive option allows you to enjoy the full coverage of a comprehensive insurance type while you’re on the road. Charges on this are based on how much time you spend in riding your vehicle. This is an affordable choice for those who don’t use their vehicles often.

Another comprehensive but limited insurance policy variation covers the damages you caused to another vehicle in case of an accident. However, the damage on your own car isn’t covered in this kind of policy. Loss due to fire and theft are the only occurrences covered by this type of comprehensive insurance.

Third party Car Insurance

Expect limited coverage from the most affordable vehicle insurance in South Africa.

Third party car insurance covers the damage or injury you’ve cost to a third party due to an accident. Hospitalization costs, death benefits, and property reparation are often covered in this type of car insurance. However, your vehicle will not be covered in any way, no matter how big or small the damage is.

Third party car insurance policies are also flexible in a way that you can either add or remove supplementary benefits to adjust the amount you pay for your monthly premium.

There’s also a ‘total loss’ insurance policy which covers only losses due to hijacking, fire, and theft. Damage from accidents is not covered in this type of third party insurance policy.

The cost of car insurance in South Africa

Your monthly premium is calculated as a percentage of the insured value of your vehicle. There are 2 main factors that affect the computation of your premium: discounts and loadings.

    • Discounts
      • Location
        • You may get a higher discount on your premium if you live in an area with a low accident risk.
      • Security
        • This pertains to the extra security measures you’ve taken to protect your vehicle from damage or loss. Installing a tracking system on your car, for example, may reduce your premium due to the added security measure.
      • Claims
        • If you have a ‘no-claim’ history or have a low occurrence of claiming insurance, you’ll get bigger discounts on your premium.
      • Excess
        • The higher the excess fee you’re willing to pay, the lower the monthly premium you’ll pay.
    • Loadings
      • Vehicle use
        • How you use your vehicle affects your monthly premium. Cars for business use typically have higher premiums compared to those intended for private use.
      • Driver’s age
        • Younger drivers are seen as high-risk individuals which is why insurers require them to pay higher premiums.
      • Driving experience
        • The time you’ve had your licensed affects your monthly premium. The more experienced you are, the lower the premium you’ll be paying.

Value-added services like roadside assistance and vehicle hiring are optional features that you can let go in exchange for lower monthly premiums. The price and coverage of these features vary per insurer, so make sure you consult them about these features if you want to include them in your policy.

Young drivers are charged with higher monthly premiums since they pose a higher chance of filing a claim. The reason behind this is the lifestyle, driving experience, and general behavior displayed by the younger generation of drivers compared to older ones. They usually attend late night parties, drive at faster speeds, and exhibit delinquencies like drunk driving compared to older drivers.

Maintaining an insurance is an ongoing commitment that needs to be monitored at least annually. The value of a vehicle will depreciate through time which is why you need to update your insurance policy every year to factor in the necessary adjustments.

If you don’t update your policy records, you’ll be paying premiums based on the original value of the vehicle even though its current value has diminished. Even if you’re paying in excess, your insurer will only pay out insurance money based on the current discounted value of the vehicle. It’s a waste of money so make sure you update your car value every year. Make time to communicate this to your insurer to adjust the premium you’re paying.

Tips in looking for a car insurance in South Africa

  • List down the car insurance providers you want to contact. Get detailed quotes from at least three providers to give yourself a wide range of options.
  • Policies with very low premiums often fall short on covering claims of their clients. If you go for the most affordable policy, make sure you thoroughly read the fine print. Check for policy coverage, hidden charges, and ‘in excess’ payments.
  • Check the reputation of your insurer. Ask your friends, find online forums, and look for review sites that will give you details on the performance of your chosen insurer. Make sure that the insurance company is a registered Financial Services Provider in SA.
  • Ask your insurer about unclear clauses or difficult terminologies that confuse you. Before committing to any contract, make sure you understand every bit of the policy to avoid problems in the future.
  • Choose between having lower premiums or lower excess fees. Your decision will depend on your financial situation. If you have a good amount of money on hand, it may be best to keep a low premium and just pay a bigger excess fee in case of an accident. On the other hand, if you think you’ll have trouble paying a lump sum for the excess fee, it’s best to add a little extra on your monthly premium. This will make payments easier for you without exceeding the budget.
  • Be wary of insurers who charge large amounts of excess fees. This pertains to the amount you pay to get your claim approved in case of a legitimate damage to your vehicle, regardless who caused the loss in value. Oftentimes, a company that offers low premium requires a significant amount of excess fee when claiming your insurance. Many policyholders get surprised by the amount that it feels like they’re the ones paying for most of the damage and not the insurer.

Questions to consider when looking for a car insurance policy:

    • How long is the turnaround time in processing claims?
    • How much are the excess fees? Are the fees for loss and for damage different?
    • How is the excess fee calculated? Is it a flat rate or is it percentage-based?
    • Any penalties for claiming the insurance within 6 months or a year after it was initiated? How much will these penalties cost?
    • What are the rules for claiming when you’re not the one driving your car and it got into an accident covered by the policy?
    • How does age affect insurance coverage?
    • Is the car covered for its full retail value or resale?
    • Any limitations on when and where the vehicle can be taken on the road?

Car insurance companies in South Africa

There are a lot of car insurance providers in South Africa. We’ve compiled the best and most popular among them and listed the important details you need to know about their services.

Service Provider Features Contact Details
MiWay –        Process claims online or via their mobile app-        Free roadside assistance

–        Six free take-me-home ‘WeDrive’ trips

0860 64 64 64
Outsurance –        Hand-picked vehicle repair service provider for 12 months-        Free roadside assistance

–        Fast claim turnaround, with 70% chance of getting your claim processed in 2 days

061 306 081
Discovery –        Four comprehensive car insurance plans to choose from-        Flexible excess fees

–        Towing and storage services included

0860 751 751
Santam –        Free SOS service-        Get up to 6 take-me-home services every year

–        Santam app available for online processing of claims

0860 444 444

0860 505 911

iWYZE –        Trauma counselling-        Emergency medical expenses

–        Emergency accommodation expenses

0860 63 33 39
Hollard –        Possible reward for not filing a claim at the end of the contract-        Transportation, storage, and towing services included

–        Transit cost coverage included

0860 123 32 79
Budget Direct –        24/7 hotline for getting claims-        New-for-old car replacement program

–        Towing costs covered

1800 288 149
PMD (Prime Meridian Direct) –        No excess fees for claiming base benefits-        No increase in the monthly premium rate

–        No need for vehicle pre-inspection when claiming

011 745 7800
FNB –        You get a personal claims broker-        Free roadside assistance

–        Coverage for national disaster

0860 328 328 (option 2)
Momentum –        Free roadside assistance-        Cars insured at retail value

–        Process claims via mobile app

0860 006 784
First for Women –        Free roadside assistance-        Automatic medical coverage of up to R500

–        Guardian Angel Lifestyle Assistance

0861 00 33 28
Standard Bank –        24/7 hotline-        Free roadside assistance

–        Covers a range of vehicle assets

0860 123 000
Dial Direct –        Availability of off-road car insurance-        Flood and fire damage covered

–        Towing and storage costs covered

0861 007 367
Old Mutual –        Free roadside assistance-        24/7 hotline

–        Fast turnaround time

0860 468 378
Absa –        Free roadside assistance-        24/7 hotline

–        Option to cover for fire, theft, and weather

0860 100 876

Cheap car insurance for women

Women typically pay lower premiums for their car insurance than men. Statistics say that women drivers tend to get into much fewer accidents compared to men, which is why they pose lesser risks for insurers compared to male insurance holders.

Oftentimes, women also drive with their children in the car, making them extra cautious on the road. This means they obey traffic rules better and ensure all safety precautions are in place before they hit the road.

Women belonging to a certain age bracket even get better offers from specialized insurance providers. First for Women is one of them. They’re an insurance company that caters solely to female applicants and offers a wide variety of insurance types and coverage.

Conclusion

Take note that when looking for a car insurance in South Africa, a lower premium doesn’t always mean its better. Relying your decision solely on the results from online quote platforms may cause problems in the future since you may not have the full view on what the whole policy entails. What you should do instead, is consult a knowledgeable and registered broker to clarify all items on the car insurance policy you’re looking into.

Getting a car insurance helps you cover the financial cost of injuries, damages, and other expenses associated with vehicular accidents and similar circumstances. The protection it provides is worth the monthly premium you’ll be paying so make sure you get one before you hit the road.