60-70% of registered vehicles on SA's roads are uninsured!

Don’t take the insurance bait – low premiums could mean high excess!

With such a high rate of road accidents and fatalities in South Africa, it’s alarming to learn that around 60-70% of registered vehicles on SA’s roads are uninsured!

This information comes from a report by the Automobile Association (AA), along with statistics from the Road Traffic Management Corporation (RTMC) which indicates that there are more than 800 000 crashes in South Africa annually!

“Based on the insurance statistics, this equates to around 520 000 cars which are involved in crashes and which are uninsured,” says the AA.

What’s more is that motorists who do have insurance, are often choosing insurance based on the lowest possible premiums, while it’s extremely important to understand the benefits and shortcomings of the insurance they are considering.

“It is sometimes difficult to get insurance which matches your pocket, and which gives you the cover you need or want. For this reason it is necessary for motorists to read their policies carefully, and to understand all the aspects of the insurance they are planning on taking. Too often, low premiums sound good but fall short when claims are made,” the AA warns.

The AA considers a good example, where the excess fee may be payable when a claim is made. The excess fee pays towards a claim for loss or damage to your car, regardless of who is to blame. This can mean that although you’ve chosen an insurance plan that offers low premiums, the excess you pay in the event of an accident or theft, can be substantially high.

“When this happens some people are shocked when the costs of repair to a vehicle may be carried entirely, or in part, through the excess fee, with little or no money being paid by the insurer. Lower monthly premiums in this case will not count for much as the motorist still has to pay a big portion of the costs out of their own pocket,” notes the AA.

The Association says motorists who want to insure their vehicles must understand the terminology of their contracts, and ask for clarification of any unclear clauses before committing to a specific insurance policy.

Critical questions to ask when considering insurance are:

  • What is my excess? Is there a different excess for loss and for damage?
  • Is the excess a flat rate, or is it calculated as a percentage of the loss or damage?
  • Besides the initial excess fee, are there any additional excess fees payable when I make a claim?
  • Are there any penalties for claiming within the first six months, or in the first year? (If there are, determine exactly what these penalties are)
  • What is the turnaround time for claims?
  • Will I be covered if other people drive my car? (And, if you are covered, is there a difference in the coverage if the car was driven by an 18-year-old driver or a 45-year-old driver?)
  • Is my car covered for resale or full retail value?
  • Is this insurance comprehensive insurance?
  • Are there any limitations on where or when I can drive my car?
  • If something happens to my car, is car hire included in my cover while it is being repaired or replaced

Also read: How to file an insurance claim

“Insurance is a necessity but it is more important that when taking out insurance motorists understand exactly what they are getting, and how much it will cost them if they do claim,” concludes the AA.

Source: The Automobile Association (AA)