Car Insurance

Car insurance, also called vehicle, auto or motor insurance, offers financial protection for a road vehicle and its driver. These policies pay out in the event of a traffic collision, to meet the costs of repairing damage to your vehicle and others on the road. Often these policies also include financial protection for the insured vehicle for other misfortunes, such as theft and fire.

Car insurance is paid for with annual or monthly premiums. The cost of these premiums is determined by:

• the driver and his/her driving record;
• the vehicle itself, including its performance and monetary value;
• the location;
• and how the vehicle is used (how far it is driven, if it’s used for personal or commercial purposes).

There are several types of coverage incorporated into car insurance policies.

Property coverage is for the vehicle itself, for damage caused in collisions or fire or loss through theft.

Liability coverage meets costs associated with the legal responsibility of the driver for injuries they cause to third parties and damage they cause to others’ property.

Medical coverage meets the cost of treating those injuries and sometimes offsets lost wages and funeral expenses. Medical coverage is primarily delivered by the Road Accident Fund (RAF), which pays out to support any person (or their survivors) seriously injured or killed on South Africa’s roads. Premiums for the fund are collected through a levy on fuel.

There are three types of insurance policy in South Africa, offering a combination of the above types of coverage. They're detailed below. However, different policies offer different cover, with different exclusions, and you should read the fine print of any policy before buying it and before making a claim.

• Third party only

  The most basic form of car insurance, these policies cover your costs if you cause an accident and have to compensate another party—for either damage to their vehicle or other property or injury to them. Importantly, these policies do not pay out to cover the repair of your vehicle. If you are involved in an accident that isn’t your fault, you can claim for damage against the other party, however if they don’t have insurance, your ability to recoup these funds may be limited. Third party only policies can be more affordable than other types of car insurance. It’s best suited to those with an older or lower value vehicle and those who don’t drive frequently.

• Third party, fire & theft

  These policies are more advanced than third party only policies, topping up their coverage with additional financial protection for your vehicle against fire, theft and hijacking. You’ll pay more for them but given the prevalence of vehicle theft and hijacking in the UK, it’s a justifiable expense. It’s important to note that, as with third party only policies, damage caused to your own vehicle is excluded from these policies.

• Comprehensive

  These policies offer the most cover, compensating you for just about any form of financial loss related to your vehicle. This includes damage caused to both your vehicle and others in accidents, whether you’re at fault or not; damage caused to your vehicle by fire, crime and natural disasters; and claims made against you by third parties.

These policies usually offer uninsured driver cover, compensating you if your vehicle is damaged in a collision caused by someone without insurance. These policies can also be topped up with additional coverage, including for the cost of a courtesy car, lent to you while yours is being repaired. Meanwhile, breakdown cover provides emergency roadside assistance— a mechanic or a tow truck— in the event of a breakdown or accident. These policies are often the most expensive but not necessarily and can in fact be the cheaper option for some drivers and vehicles, while offering more coverage—and peace of mind.

Unlike in some other counties, car insurance is not legally required in South Africa. And in fact, of the 11.4 million vehicles on the roads, between 65% to 70% of them aren’t insured, according to figures from the Automobile Association of South Africa.

The exception is if you’re buying a car on finance. In those cases, the provider will require you to have insurance in place, to protect their own investment in the vehicle. In fact, you’ll usually have to show proof of the insurance policy before you complete the deal.

In other cases, you might think you can skip the expense of a car insurance policy. But while possible, it’s not wise.

The Road Accident Fund provides some level of third party cover for all drivers on South Africa’s roads, but it only covers some of the claims that might arise from an accident—usually those for injury and death. You could face substantial costs, including for the complete replacement of your vehicle, in other circumstances—even if the accident isn’t your fault.

Furthermore, these low rates of insurance mean you might not be able to recoup costs for damage to your vehicle caused by another vehicle, making car insurance, especially comprehensive policies with uninsured driver cover, more important than ever.

South Africa also has high rates of car theft and vehicle hijackings—as of 2019, one motorist is hijacked every 32 minutes—and a poor road safety record. Driving without insurance here is a lottery: you could get lucky and avoid all accidents and crime, or you could be involved in an accident with an uninsured driver, or a hijacking, and face a huge bill.

The advantages of car insurance are many:

• covers the cost of repairing or replacing a vehicle damaged in an accident
• covers the cost of damage to the vehicle caused by fires, natural disasters and crime
• covers the cost of replacing a stolen car
• covers the cost of lawsuits, legal fees and claims for compensation brought against you as the result of an accident
• can provide benefits to survivors in the event of an accident that results in death
• the yearly cost of policies is much lower than the potential costs emanating from an accident
• payouts can help you fund repairs or a new vehicle after an accident, helping you get back on the road quickly
• some policies offer courtesy cars for you to drive while your vehicle is being repaired
• some policies provide emergency roadside assistance, sending out a mechanic or tow truck, if your vehicle breaks down or is involved in an accident
• offers peace of mind

Disadvantages of car insurance include the cost of premiums—levied either monthly or annually—and the excess, or the amount you have to contribute toward any claim.

The amount you’ll pay for car insurance—your premiums—will directly reflect the risk you pose to the insurer: the chance you’ll make a claim and they’ll have to pay out compensation. Insurers use statistics—about road accidents and crime—and information they’ve gathered over years of handling claims to categorise motorists into risk classes. Some benign facts about you, including your marital status and address, can mean the difference between bargain premiums and expensive cover. Here’s what else can affect your car insurance premiums:

• Age

  With age comes experience, especially behind the wheel, and thus lower car insurance premiums. Middle-aged drivers will earn the lowest quotes for car insurance, while those over 25—statistically more prone to accidents—will pay the most.

• Gender

  Statistically, women are safer drivers than men and earn lower premiums as a result.

• Marital Status

  Car insurers have decided that married people are less likely to be involved in accidents and therefore give them lower premiums than single or divorced drivers.

• Credit History

  A poor credit rating not only increases your supposed risk of being involved in an accident, it alerts the insurers that you might not reliably pay premiums. They’ll quote you higher fees as a result.

• Your Driving Experience and Claims History

  All the demographic factors in your favour can all be negated if you have a poor driving record and/or have made a number of claims against your car insurance policy in recent years. Conversely, a spotless driving record will mean lower premiums.

• Your Address

  Vehicle theft is more common in some neighbourhoods than others and people living in those areas will pay higher premiums.

• The Vehicle Itself

  Luxury, high-value vehicles are more expensive to replace if they’re stolen—and more likely to attract the eyes of thieves and hijackers. Meanwhile, high-performance vehicles are more likely to be involved in collisions, especially at high speed. Both will earn higher premiums. Even the colour of the vehicle can drive up its premiums. The cheapest cars to insure are inexpensive, inconspicuous models.

• Mileage and How You Use the Car

  The more frequently you drive the vehicle and the more mileage you rack up on the odometer, the more likely it is be involved in an accident. Car insurers will therefore ask for an estimate of your annual mileage and those who drive their vehicles only sparingly can find the cheapest quotes.

• Security Measures on the Car

  A vehicle with an alarm and/or GPS tracking device will be cheaper to insure than one without.

Your car insurance premiums don’t have to break the bank. Here’s how to find cheaper cover.

• Drive Safely

  If you go years without making claims you can earn a cheaper your premiums in the future. Additionally, in South Africa, some insurers will also refund you a portion of the premiums you’ve paid if you go several years without making a claim.

• Drive Fewer Miles

  Cut down your daily commute and you could see savings on your insurance, not just your fuel bill.

• Increase Your Excess

  The greater the contribution you’re expected to make to a claim, the lower your premiums.

• Choose Your Car Carefully

  Flashy, high-powered sports cars are among the most expensive to insure. Consider insurance costs when shopping for a new vehicle.

• Compare Quotes

  You wouldn’t buy the first car you came across, so you shouldn’t buy the first car insurance policy. The more insurance policies you compare, the more likely you are to find the policy that delivers exactly the cover you want, at the lowest price. Money Expert can let you compare quotes from dozens of South African car insurance providers within minutes.