Remote jamming, colour, potholes and other things you should know about car insurance in South Africa

When deciding on insurance for your vehicle, it is important that your decisions aren’t based on insurance premiums solely, says Marius Steyn, underwriting manager at financial services firm, Santam.

Steyn said that motorists need to take into consideration the policy terms, including what the vehicle is covered for and applicable exclusions, driver restrictions as well as the first amount payable by you in the event of loss or damage.

Below he outlined some of the common myths of vehicle insurance and how your insurance premiums are actually impacted:

  • Colour choice plays a major role in premium costs – This varies from insurer to insurer. Statistics have shown that red and black vehicles are a higher risk for accident damage than white vehicles.
  • It costs more to be insured as the driver gets older – It actually works in reverse, Steyn said. Younger persons or persons with a driver’s license for shorter periods of time are a higher road risk due to their perceived inexperience, which justifies a higher premium.
  • If another person drives the insured’s car, the other person’s motor insurance will cover them in the event of an accident – The other person’s insurance would cover the third-party damage caused in the accident. The insurer of the vehicle would normally cover the damage to the vehicle.
  • Personal motor insurance covers business use of the car – A policyholder has the option to insure the vehicle for business and private use. Insurers will only allow business use to businesses that meet their criteria, said Steyn.
  • The insurance will pay out if I was a victim of remote jamming – Most insurers exclude remote jamming and require that the theft be accompanied by forcible and violent entry into and out of the vehicle, said Steyn. “At Santam, we do not exclude theft by means of car jamming, but if it can be proven that there was never an attempt to lock the vehicle, the claim may be rejected.”
  • The policy will cover damage caused by potholes – Claims of this nature are dependent on the situation, Santam said. Motorists are also able to claim from The South African National Roads Agency.
  • Males pay more than females for car insurance – For most insurers this is correct as females are perceived to have a lower risk profile.

Buying Insurance

Insurance in general may seem complex for first time buyers, noted Standard Bank, who provided some insight on the process. Before saying (or clicking) “yes”, make sure know exactly what you are looking for, what you can afford and compare quotes by considering the benefits and exclusives against each premium quoted, the lender said.

“Also make sure you are considering a reputable company, with a strong payout history; that you have considered all relevant benefits and exclusions, features of each policy and price of your monthly premium.”

Are you looking to switch insurance companies? “Make sure you have compared apples with apples, cheaper is not always better and may leave you uncovered for certain eventualities. Also, consider if you will be immediately covered when switching,” Standard Bank said.

Tip: Typically, your premium is a calculated based on your risk factors as well as the “excess” that are expected to pay in the event of a claim. If you can afford to pay a higher excess when you claim, then ask for a quote with a higher excess option, as this will reduce your monthly premium.

Insurance value ads

Insurers often have optional value added services on motor vehicle policies, such as:

  • Touch up – Dent and scratch cover for minor repairs, such as chips, dents and light scratches.
  • Top up – The insurer pays you the difference between the value paid out by an insurance policy in case of a vehicle write-off and the outstanding balance owed on a vehicle loan.
  • Warranty – Cover to repair/replace major vehicle components in the event of failure or breakdown.

“Whilst these provide additional protection, it is very important to understand the conditions and exclusions for each of these before buying them,” Standard Bank said.

Insurance and Loyalty rewards

Insurance should not be bought because of rewards offered, but because it provides you the best protection you get at the price that you can afford, the lender said.

Rewards, it warned, come at a cost. “At the end of the day, you are still paying for those rewards in some way. Another thing to consider is the probability of actually getting those rewards, as well as the conditions attached to earning the rewards.”

What are my responsibilities?

Standard Bank warned that it is your responsibility to understand your policy and it is your insurer’s responsibility to explain it to you. “Very often, once you get insurance you think you are well protected and naturally you feel a certain peace of mind. However, to your surprise at claim stage, you find that certain things are not covered or not suitably covered.

“If you don’t understand some terms or exclusions, ask your insurer.”

Another of your responsibilities as an insured is to maintain your policy up to date.

For example, as you buy more or newer items for your home, you should update the value of your contents insured. Sure this will increase your monthly premium, but you’ll not run the risk of being under-insured and then not being fully paid in the event of a claim. The opposite is also true; if you “downsize”, then the value of your insured contents should be decreased, Standard Bank said.

“Similarly, you should let your insurer know of any significant change in your risk profile as this may again impact you at claim stage.”

For example, some insurers use your place of work or the nature of your work as a risk factor. So, if this changes, let your insurer know, and who knows you might even get a decrease in your premium!

Your personal circumstances change over time and your tolerance for risk may also change as your family and assets grows.

“So, in addition to updating your insured value or updating your risk information as and when things change, it is also recommended that you regularly review your insurance needs,” Standard Bank said.

For example, you may have previously decided not to insure your home contents, but as you accumulate assets, your risk increases and you may need to reconsider, it said.

Read: 2 things South Africans are doing to lower their monthly car payments

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Remote jamming, colour, potholes and other things you should know about car insurance in South Africa