According to the Automobile Association (AA), less than 35% of vehicles in the country are insured, while the rest are not.
Many South Africans are unaware of the different values they can insure their vehicles for, leading to potential financial setbacks in the event of a total loss or major damage to their vehicles.
When accidents occur, vehicle owners who do not have insurance on their cars risk having to pay out of pocket, which could be a huge financial setback, not only for themselves but also for others involved in the accident.
According to the Automobile Association (AA), less than 35% of vehicles in the country are insured, while the rest are not.
Understanding the different insurance values
Siyakha Masiye, spokesperson at Miway, provides the four key insurance values to help make informed decisions on car cover:
Retail value – “The price a dealer would sell the vehicle for today. This option provides the highest payout in case of a claim and is typically recommended for newer vehicles.”
Market value– “The average of what similar cars are selling for, considering depreciation. This is a balanced option, as it keeps premiums reasonable while offering a fair payout.”
Trade value – “The amount a dealer would pay if the car were traded in. Choosing this option results in lower premiums, but may not cover replacement costs in the event of a total loss.”
Special Agreed value– “Typically used for classic, rare, or heavily modified vehicles, this value is set between the insurer and the policyholder based on an agreed-upon amount.”
ALSO READ: Vehicle break-ins on the rise in SA: List of cars and areas targeted by criminals
Ways to save money on vehicle insurance
Masiye advises motorists to carefully consider their insurance needs and choose a value that best suits their financial and vehicle conditions.
“To save money on car insurance, consider buying a cheaper car, as lower-value vehicles cost less to insure. Annually reviewing your policy makes sense too, as cars depreciate over time and your circumstances may also change.”
He says driving less to reduce accident and theft risks, and keeping your car secure in a locked garage can lower premiums.
Installing tracking or anti-theft devices is also wise, which can make insurance more affordable.
“Avoiding unnecessary claims to maintain a good claims history positively impacts your premiums. Most importantly, staying insured and not letting your policy lapse could lead to higher costs in the future, so it’s best to keep insurance consistent.”
If your car is written off or stolen
He adds that many customers opt for market value when it comes to their car cover, as it balances affordability and payout expectations. Still, it’s important to understand the implications of each option available.
If your car is written off or stolen, your payout depends entirely on the value you selected.
“Many insured drivers are not aware of the different values at which they can insure their vehicles, leading to potential financial surprises at claim stage. “Motorists should regularly review their policies to ensure their chosen value still aligns with their financial situation and risk appetite.”
NOW READ: Five habits that make your car worth less when you sell it
