Taking out car insurance in South Africa, as in most countries of the World is largely obligatory. In other words, insuring your car to a certain extent is not something that you can choose to do, instead it is something that you are bound to do by law.
The only play that a car owner has when taking out car insurance is the extent of the insurance they will be taking out. In all instances, every car travelling on South African roads must be covered by what is known as compulsory insurance. Unlike third party insurance or comprehensive insurance, compulsory car insurance is designed to cover other cars or individuals in the event of an accident. If an accident occurs, the car that the insurance has been paid on is not covered in any way.
Compulsory insurance can be relatively expensive as it does not represent the replacement value of the car that is insured, but instead takes into account the damage that may be caused to other car or cars involved in an accident as well as any personal injury claims. Compulsory insurance is activated in cases where the driver of the car insured is found to be responsible for the accident.
When calculating insurance premiums for compulsory insurance, the insurance company will place a much larger emphasis on the age and driving experience of the owner as well as other people driving the car, and much less on the car’s replacement value. If you have an accident where someone else is at fault, then their compulsory insurance is liable to pay for the damage to your car.
If a car owner wants to insure their car against damage in the case of an accident this type of insurance is known as third party insurance. Third party insurance covers damage to your car if you have an accident where no other cars are involved. Insurance companies will pay out most claims on a third party policy after deducting a preset amount of the repair bill known as a “deductible”
The higher amount of deductibles that you agree to pay in the event of an accident, the more you reduce the cost of your annual insurance. Another important cost saving factor in third party insurance is that for every year that the car owner of driver goes without making a claim, they are eligible to receive a bonus on the cost of the following year’s insurance. Imaginatively titled a “no claims bonus” this can mean some considerable savings on third party car insurance, especially if no claims are made for several years.
The most popular form of car insurance is known as comprehensive insurance. In addition to covering damage to cars caused by accidents, it also covers against theft of the car, or any items within the car. Comprehensive insurance is calculated on the value of the car, the age of the driver (or drivers), the age and condition of the car, where it is parked, the strength of its car alarm system and various other factors.