When you start researching car insurance, you find many different options and huge terms that you don’t understand. Robyn did her own research and found out everything you may need to know about car insurance.
After getting your driver’s license, the next step is to get a car. Getting your first car is amazing, whether you buy it yourself or your parents get it for you. It unlocks new modes of freedom and allows you to be more independent. Unfortunately, cars are usually pricey and need insurance. This is a whole new world of responsibility. It’s not bad responsibility, it’s just unexpected and no one warns you of how scary the adult world can be.
If your parents started a little nest egg for you by saving up for tertiary education, a car, and all of the extras, then you don’t need to worry about these things for a few more years. But there are some of you who need to take all of that responsibility into your own hands and deal with it yourself.
A car needs to be insured in case of an accident. Car repairs can be huge and you don’t want to be caught unexpected by it. Also, some people have complete disregard for your property and car insurance helps with this, especially if you need to claim. This is why I decided to interview Juriaan Erwee, a broker from Axsure, about car insurance. Axsure is an insurance brokers company that works with all the different insurers, compares the different policies from each insurer and then works with your chosen company to insure your car.
Before I get ahead of myself and use words that no one outside of the insurance business knows, I’ll explain the basic terms to you, so that when the time comes, no one can back-hand you.
A claim is when you ask your car insurer for money for an accident you were involved in. This claim can cover your damages, the third party’s or both.
A third party is the other person involved in the accident. If you hit the back of a car in traffic, the car you hit is the third party (the owner that is).
When you claim from your insurer for a specific thing, they only cover a certain amount. This amount is stated in your contract. Anything over that amount, you have to pay for and is called an excess
Example: a broken window may cost R1500 to repair and your insurer covers R2000. You’ll have no excess and won’t have to pay anything out of your pocket. If it cost R2500 and they only cover R2000, you’d have to pay R500 out of your pocket.
A premium is the amount that you have to pay every month for your car insurance and services that the insurer provides.
When you finance your car it means that you take a loan out to be able to pay it hence your car is financed and not a cash-buy.
Now that we have the basic terms covered, we can get into the nitty gritty part of car insurance. It really isn’t that bad, all you need is a bit of guidance. If you still struggle to wrap your head around this, use online forums like Hippo to compare places. Just be aware of online comparisons, they could be showing you the same company just under different names. This is why Juriaan advises to rather use an insurance company who compares all the different insurers and you get to choose the policy that best suits your needs and bank account.
The Three Insurances
You get three different types of insurances which cover different things. The amount and extent to which they cover is also different to each insurance type. Even when you pick one of the three, they each have many different variations which also affect your premium.
Take Your Pick
1. Third Party Insurance
This insurance only covers the third party when an accident occurs. Any damages your car receives, is your own financial responsibility.
2. Third Party, Fire, and Theft
It will cover the third party, the theft of your vehicle, and it will cover fire – but no accident related stuff.
3. Comprehensive Cover
This cover is more inclusive and pays out a lot more. It covers third party, fire, theft and accident related incidences.
Third party insurance would have the lowest premium while comprehensive cover would have the highest premium. Your automatic response would now likely be:
“Well that’s an easy decision. Third party it is!”
No. It’s not that simple. If you reverse into a pole (let’s face it, we’ve all done that before, whether we’d like to admit it or not), third party insurance won’t cover anything unless the owner of the pole claims. Yes, they can do that. If you have comprehensive cover, they will pay for the pole and your car to be repaired.
Which is best for you?
When I asked this question, Juriaan immediately said comprehensive. Why?
“The problem is, if you write off your car, you won’t be able to drive around and there’s lots of costs involved. Let’s say you’re involved in an accident and a company tows your vehicle and you have third party only, you have to pay them anything between R2500 and R10 000. Just for a towing.
If your vehicle has one wheel on the grass, it means that they charge it as a recovery, so that’s an additional amount over and above the towing fee. And then they start charging storage fees. So for every day your vehicle is with the panel beater or with the guy who towed it in, it’s R350.
Let’s say you are not insured comprehensively and you were knocked unconscious in an accident and someone tows your vehicle… you won’t even be able to buy back your vehicle, because those fees are just so enormous.”
I don’t know about you, but that’s just horrible, and the thought makes me cringe. And that’s just the towing fees. Never mind the cost of fixing or replacing your car. That’s all coming straight from your bank account. If you can afford it, that is.
Now that we know comprehensive cover is the recommended insurance to get, there are certain factors that influence the rate of your premium. It affects all of the different insurances’ premiums, but it’s more intense on the comprehensive option, since it’s naturally much higher from the get-go.
Some of the factors to take into consideration when buying a car and taking out insurance:
If you buy a car that’s financed , you need to take out insurance.
Age of the Driver
Your age makes a huge difference. 25 years old and younger is seen as risky, so premiums will be higher until your 26th birthday.
The ITC (input tax credit) plays a role too – the better your credit rating, the lower your premiums.
Brand, model and cost of the car
The type of car you have matters as well – the more you pay for the car, the more you’ll pay to have it insured each month. Juriaan actually laughed at the thought of insuring a GTI. You can have a premium anywhere from R 1500. Fancy, sports cars are seen as a higher risk since they can go faster, which makes you want to experience the power and speed – and speeding has caused many, many accidents.
Your no-claim years
If you’ve had your licence for 5 years and you drove your parents car for that entire time and you weren’t involved in any form of accident, you have 5 claim-free years. If your parents had put you as a nominated driver on their insurance when you got your driver’s then you can ask them to send through the proof that you hadn’t claim once in 5 years to your new insurer to prove that you are a “safer” candidate for insurance.
The colour of your car makes a difference too. Respraying a black or metallic car would cost a lot more than a white one.
The size of your engine
This goes hand in hand with the type of car you buy.
“If you drive a Tazz or something, you’re more likely to hit the pole at 40 km/h. If you drive a GTI, you’ll hit it at 100km/h.”
This may not be true for all GTI drivers, but that is the reputation associated with these cars by insurers. Cars like the GTI are automatically seen as a higher risk.
Unfortunately being under 25 immediately means that your premiums will be increased. Whether it’s third party insurance or comprehensive cover. One way to go around this is if you or your parents bought the car (cash or financed), then your parents could get the insurance in their names. If you’re on their policy and they nominate you as a driver, then the car is still insured if you’re in any form of accident. And you get the lower premium.
Just remember that you can nominate more than one driver. If your friends or partner drive your car on a regular basis, nominate them too, so that if anything happens, they’re covered too. Each insurer may have a different limit to the amount of nominated drivers, contact them to find out how many you can nominate on your policy.
There are some insurance companies that offer packages specifically for students, but seeing as you’re under 25 and seen as a risk, the premium could still be high.
As Juriaan says,
“They aren’t a charity and need to make money too.”
You’ll need to speak to a broker or do some research before you decide which insurance is best for you. If your parents are willing to put you on their policy, then go for that. You’ll pay lower premiums and you can build up a no-claim history which will help you when the day arrives on which you need to take over your own insurance.
Sealing The Deal
Getting insurance isn’t a major schlep. If you phone a company like Axsure and you know more or less what you want, it’ll take 20 minutes. You just need to provide your
- ID number
- type of car you have (year, model, colour, engine size, etc.)
They’ll set you up and you’ll be able to drive off into the sunset carefree.
There isn’t a specific insurer that is better than another. Each insurer has their own packages and deals. An insurance broker will take heed of your specifications and budget and get the best deal for you. They look through all of the different insurance deals to decide. If you have a specific company in mind and know which package you want, then go directly through them, or use your bank if you’re more comfortable with that.
I was just in an accident… Now what?
Juriaan gave me a step-by-step procedure for instances when you’ve been involved in an accident. Whether it’s a bump or you drove into a pole. If you’re at fault or not, you need to follow these steps:
- We all have cellphones. Take as many photos as possible. Take photos of
> the scene
> the damage
> the registration licence of the third party (the other person involved)
> the driver’s license of the third party
> any other property that may have been damaged, like a robot
You’ll never have too many photos. Rather too many than too few.
- Get the third party’s contact details. Name, surname and insurance number if they have one.
- If there were any witnesses, get their numbers too. Ask them if it would be okay if your insurer could phone them as the witness just to get clarity on the situation.
- Go file a report at the police station. It’s law that any accident is to be reported to the police so that they can fill in a form. No claim will be accepted by your insurer if there is no case number filed at the police station. You must file the report within 24hours after the accident.
- Even if you don’t plan on claiming from your insurer, let them know anyway so that they have it on their system in case someone tries to use it against you in the future. It won’t influence your premium or no-claim record if you simply report it without claiming.
If you were in an accident and have comprehensive cover, your insurer will cover your damages BUT you will need to pay the excess. So if they provide R5 000 for panel beating on your bumper but the panel beaters charge R7 000, you need to pay that R2 000. If you were not at fault, your insurance broker will fight the third party’s insurer to cover the excess, if they have insurance. Unfortunately many people drive around without insurance.
The Garage Remote Scam
Before I left the interview with Juriaan, he urged me to tell all of you about the garage remote scam. It’s a scam that’s been around for ages but not many people know about it unless it actually happens to them. He walked with me to the car just to demonstrate how the scam works and how scarily easy it is for someone to break into your car.
As we were approaching my car, he told me to unlock my car. I pushed the button multiple times, thinking that the battery was dying. Until I looked at him and saw the smile on his face. He had his garage remote in his hand and he was just holding one of the buttons in. I couldn’t unlock my car until he released the button. He then told me to lock it. Again, the button didn’t work until he released the garage button. He stood at various distances away from the car, and my button just wouldn’t work to unlock or lock my car.
So many of us get out of our cars and walk away and push the button. We don’t actually check to see that it’s locked. Of course, there are some of you who have to manually lock the door with your key but the majority of cars have an alarm/lock button. The guys that do the scam, stand around looking inconspicuous in parking lots or at on-street parking areas. They look like they’re working or also walking towards a specific place. You probably can’t pinpoint them. While you’re walking away without paying attention to your car, they hold the button in and then attack your car as soon as you’re out of sight. Scary right?
Juriaan says that this happens to him at least twice a week. In different areas. The people move to different areas to acquire more unsuspecting prey. He screams at them, even if he can’t see them, until they release their buttons and he can lock his car. So at least they’re semi-decent when they get caught. Alert the police if you know of a specific area where this is happening.
Don’t delay getting insurance. Make sure that you know all of the terms so that you know exactly what deal you’re getting and make use of insurance brokers like Axsure. They have the experience and knowledge to help you get the best deal.
And be cautious! Don’t drink and drive. Not just for insurance purposes, but for the safety of yourself and others on the road. Use a service like Uber if you really can’t drive.