Best Car Insurance

Many people ask whether they should insure their vehicles at market value or trade value. There is no correct answer; it all depends on the car and your personal circumstances. Let’s first define these terms, often used incorrectly. Retail value is the price you paid for the car, e.g., 100,000 currency units.

Trade value is the price you would receive (reasonably) if you traded the vehicle in for another, e.g., 20,000 currency units if you’re a rough driver and the car was actually inherited from your grandmother. Essentially this is the price a trade-in establishment would give you, taking their profit into consideration. Replacement value is what you would pay to buy a similar car today. It covers trade value but also takes into consideration private sale.

Market value is the average of retail and replacement value, i.e., 60,000 currency units. It is the amount you could reasonably have sold it for before it was stolen/ damaged/ you decided to sell it. (Reasonable means fair and average, not the price you’re ‘trying to get away with’.)

You can decide whether you want to insure your car at its market value or its replacement value. The latter will cost you a little more; more importantly, insurance companies often stipulate they will replace your car only in the first year or two. After that, as you can understand, it becomes too expensive for them. You should revalue your car each year. When you insure a vehicle, you must keep adjusting your premium in accordance with its changing value. If you start out with a new Mercedes Benz and pay an exorbitant premium for this top of the range car for a number of years, you may find down the line that the market value of second hand Mercs has dropped dramatically and it would have been worth your while rather to bank those hefty premiums over the years.

On the other hand, if you inherited a Rolls Royce from your granddad and it’s still running, it may soon be worth a lot more than the petrol it runs on (probably quite a lot) and worth insuring well. A car loses value all the time, from the time you trade your old vehicle and have to pay the middle man who takes your car, to the time you drive it out off the showroom floor and start adding mileage to the clock, to the time wear and tear starts to take effect; not to mention the changing market, including the price of new cars and fashion or demand for certain types of vehicles. In summary, trade value is a sensible way to value your car, bearing in mind that you kind of know that you’re losing a set amount for the convenience of someone else doing all the hard work. But market value, if you’ve looked after your car, could be a more realistic indication of what the car is worth to potential buyers. All you need to do is research similar makes and models in local newspapers. Replacement value is the most expensive option and unless you are adamant you want another vehicle just like this baby, you’re likely to pay more in insurance premiums than the car is ultimately worth.

But do choose one of these options. According to the South African Insurance Association (SAIA), around 65% of the cars on our roads today are not insured. It’s bad enough not being insured, imagine being involved in a prang with another motorist who is also not insured! There is another option for ensuring your car is insured at its real value. It’s called top-up-insurance and is usually taken up when a vehicle is purchased through finance. How does it work? If you buy your car on finance, the insurance policy is ceded to the company through which you receive your loan. If for some reason you need to make a claim, the insurer will first pay the finance company to settle the outstanding finance debt, which leaves you debt free (to a certain extent). Another policy you may be interested in investigating, particularly if you purchase a pre-owned vehicle, is mechanical warranty insurance. This policy would however only be of value to you if you’re running a up market car. If you’re driving a runabout, a good service every 10,000kms will be decidedly more cost-efficient.

There are people who go their whole lives with a specific ‘dream car’ in mind. Once they can afford to buy it, nothing will stand in their way! Even if they have enough money to purchase a more expensive, or ‘luxury’ vehicle, they will buy a car in the cheaper price range simply because it is the car they have always dreamed of driving.

For some, their ideal car may be a white Citi Golf. They are pleased with their purchase – its fuel efficient, small and nifty, and most importantly, it’s what they’ve always wanted. They are happy; until the day they apply for insurance for their beloved vehicle. The price they are quoted is exorbitant, an almost ridiculously high rate for a relatively inexpensive and simple vehicle.

This is because most people do not realize there are more ‘hidden’ risk factors that insurance companies take into consideration when determining the rate of your premium. There are a number of hi-jacking and car theft syndicates in South Africa. Many of their motor vehicle targets are cars that are in high demand by their cross-border contacts; cars that have parts which are easily replaceable and easy to sell. Unfortunately for some, their ‘dream car’ may fall into this category. In relation to this point, your car insurance premium can be lower than necessary, should you provide proof that you are using all the essential measures to protect your vehicle from theft or hi-jacking. These can include a car immobilizer, a vehicle tracking device, a car alarm and also providing a locked garage within to house your motor vehicle.

Another commonly recognized risk factor is age. Insurance companies don’t particularly like insuring an 18-year-old with their first car! Age equals experience and also a level of maturity that abhors recklessness, although there is an exception to every rule. Therefore the older you are the less your premium will be. This factor is amplified in the respect that there will be a longer driving history to analyze.

Logically, an insurance company will want to know your driving history before compiling a quote. If you have been involved in one or more car accidents in the past, your premium will rise as a result. If you have been involved in a car accident in the past they see you as high-risk, someone whom they are more likely to have to pay out for in the future. As a result, the premium will be higher than someone who has never been involved in a motor vehicle accident in their whole driving history.

In conclusion, there are many factors that affect the rate of your car insurance premium. Some are unavoidable – being age and previous motor vehicle accidents. After all, an accident is an accident, and an 18-year-old is going to need car insurance just as much as a 40-year-old. Some can be helped – choosing a car that is low-risk for hi-jacking and theft, and providing a locked garage and an anti-theft device for your vehicle. These preventative measures show that your car is less likely to be a target of crime. This will make you a lower risk to the insurance company and therefore lower your premium.

The second largest purchase that most people will make in their life time is their car, with the largest being their house. The main difference is that statistics show that whilst people might change their house two or three times in their lifetime, they will change their car at least ten times if not nearer twenty. For this reason, it is well in the interest of a car owner to understand the intricacies of car insurance and why you need car insurance in the first place.

The law requires that every car on the road in South Africa be insured, at least in the most basic of formats. Basic insurance or compulsory insurance as it is known only covers any other cars for damage repair or people for injury insurance as well as damages who were involved in an accident that you were held responsible for. If your car was damaged in any way, or you sustained any form of injury, then you will need to cover any costs incurred from your own pocket. This is far from being an ideal situation, and one that most people will be prepared to pay out some money to avoid.

Most people who have owned a car at one time or another will be well aware of the ins and outs of car insurance, yet for those buying a car for the first time, especially on a limited budget, might find it difficult to understand or appreciate why you need to take out comprehensive car insurance cover.

Think about the fact that you are purchasing a vehicle that is a valuable asset. If the car is involved in any form of accident, it needs to be repaired. If it is totally destroyed or stolen, it needs to be replaced. If you have no comprehensive insurance when such a calamity occurred you would find yourself with a very simple choice. Either go out and buy a new car or do without. However if you had the good sense to take out comprehensive cover, the insurance company will provide you with the financial ability to go out and buy a replacement.

Insurance premiums are not extortionate, calculated on an annual basis, and should run at around 6% of the replacement value of your car. There are many people in South Africa who would gladly pay out that type of money to get their car back, but for them it is too late.

For someone like you who is buying their first car and contemplating the fact that their comprehensive car insurance policy seems like a lot of money, then you should bear these facts very much in mind. Also you should remember that comprehensive insurance generally includes providing a replacement vehicle while your own car is in the body shop for repairs or while you are on the lookout for a replacement if your car has been stolen or deemed “total loss” by your insurance company’s evaluators.

Comprehensive cover also covers you against theft from your car, as well as damage to the car in the event of theft. Items such as radios, disc players, GPS systems, mobile computers and items of clothing being especially popular to car thieves.

Not taking out comprehensive insurance for your car, its occupants and its contents is one of the worst forms of false economy. When you are buying your first car take up this rule and stick to it for all your motoring life, in the sincere hope that you will never need it. Copyright (c) 2009 Graham McKenzie

This list of car insurance coverage will allow you to know what types of insurance are available, and what you should take in to account when shopping for car insurance. Knowing and understanding these terms will allow you choose which types of insurance are most suitable for your needs, which means that you can make a better selection from the options available.

Liability insurance is the main type of insurance which every driver should have. It is often required by law (depending on where you live), so not having it can get you in both legal and financial difficulties. Liability insurance pays for any damage to property or physical injuries to people that has been caused by your car. For example, if you were to crash in to someone’s house, the liability insurance would pay for the repairs, and you only pay your deductible. If the accident is your fault, the liability insurance covers you.

Additional medical car insurance is another option, though it will further increase your premium. This will pay the medical expenses of anyone injured by you in your car – this can be yourself, your passengers, or people outside of the car. This type of insurance should be considered if your liability insurance does not have a very high maximum.

A similar option is personal injury insurance. This works in a similar way to medical insurance, paying the medical costs if you are involved in an accident, but only covers you – not your passengers or anyone outside of the car. Having this could save you a huge amount of money in the unfortunate event of an accident.

A common type of car insurance is collision coverage. This pays for any damage to your car if you hit something or someone. This does not, however, cover other people’s cars or property. This is worth purchasing if you have an expensive car, but on an old, low value car it may not be worth the cost.

Comprehensive car insurance is similar to collision coverage, as it also pays for repair costs if your car is damaged. The main difference, though, is that this type of insurance covers all aspects of damage, including vandalism, fires, floods, and natural disasters – how the damage is caused is irrelevant, it is still paid for you. Comprehensive car insurance is more expensive than collision coverage, so again if you have a relatively cheap car, it may not be worth the cost of taking this out.

Uninsured motorist insurance protects you if your car is damaged by an uninsured driver, or by someone who does not have enough car insurance to cover the full amount of damage. Their insurance will pay what it allows, and your uninsured motorist insurance pays the remainder of the amount that it costs to repair your car.

Knowing and understanding what each of these types of insurance is about will go some way to making you better prepared when getting car insurance quotes.

Unfortunately, South Africa is a high-crime country. Our crime rate is high when compared to other countries. For this reason, many people will get motor insurance or other insurance to protect their assets. Motor insurance is available to insure against accidents, damages and theft. In addition, because theft happens often, insurance for vehicles can be expensive. Insurance companies require vehicle owners to install immobilizers to reduce the risk of theft.

Some companies will also require the installation of tracking devices as well as immobilizers. Having your vehicle as secure as possible, for example, in a garage, behind a locked, fenced property with an alarm, all these steps will help to protect your valuable asset in the unfortunate event of a theft.

Therefore, if you are going to buy an expensive asset such as a car, boat, quad bike, motorbike, truck, etc, ensure that you have the necessary security measures in place to protect and ensure recovery of your vehicle if it ever is stolen. We recommend that if you find yourself in the position where you are going to purchase a valuable asset, phone around and find out insurers requirements, beforehand. If you are aware of insurer’s specification, you may be able to have the security device installed by professionals at your chosen dealership. In addition, with most dealerships and banks, they require vehicle insurance to be arranged immediately.

Insurance policies can be complicated with various specifications and requirements, which are sometimes not obvious to the average vehicle owner. When you are looking for a vehicle insurer, go to the internet and research insurance companies to find the most suitable one for you. Make sure you are covered for your specific needs, most dealerships will use a certain insurance company, and they can assist you with finding more information and contacts to ensure you vehicle is insured when you drive off the lot.

Getting an alarm installed in your vehicle can be a costly exercise, and it is therefore a recommendation for you to compare prices on alarm installation, immobilizers and vehicle tracking devices. The internet is, once again, a useful portal for information to find these specialized companies. On the internet, you can get online quotes and find information on installation companies that install in accordance to insurers demands. Choose a security measure that most suits your individual needs and that your car or vehicle is protected against theft.