Common car insurance terms explained

Legal and car insurance terms can often sound like a foreign language, leaving many South African drivers scratching their heads. However, understanding these terms is crucial before signing any policy. At Prime South Africa, we take pride in giving you transparent car insurance solutions that are both reliable and budget friendly.

Drivers deserve the peace of mind that comes with having quality car insurance while understanding exactly what their insurance policies cover. Let’s break down some commonly used car insurance terms using plain language:

The insured car is the vehicle the insurance company promises to protect against certain risks according to the insurance contract.

Replacement cost is the amount needed to repair or replace your damaged car with a brand-new one of the same make and model without considering its wear and tear.

If your car is so damaged that fixing it would cost more than what it’s worth, it’s considered a total loss.

Think of the market value of your car as the current financial worth of your car in the market. It considers factors like how old your car is, its condition, and what similar cars are selling for.

The car’s retail value is the estimated price at which dealers would sell the car at the time of loss, as agreed upon by the insurer.

When we say insurance covers damage, it means it helps pay for the harm, loss, or injury to your car in certain situations.

If you have a reason to care about something, like your car, that’s called an insurable interest.

This is the most money your insurance will pay if your car is written off or damaged.

Written off refers to when the cost to repair your car after an accident exceeds its value. Your car is considered a write-off when it’s too damaged to repair or is stolen and not found, leading to it being declared a total loss.

Your insurance premium is the monthly fee you pay to keep your cover active so you’re protected financially in case of an accident or theft.

The policyholder is the person responsible for car insurance premium payments.

If you’re stuck on the side of the road with a flat tire or an empty gas tank, roadside assistance coverage will come to you with the help you need.

Medical payment coverage pays for the medical costs for you and your passengers hurt in an accident, no matter who’s at fault.

Comprehensive insurance offers you the most coverage of any insurance plan, including for road accidents, theft and natural disasters, as well as damage to other cars or properties, windscreen and glass repairs.

Liability insurance coverage protects you from financial harm when you accidentally hurt someone or damage their property.

When your car is damaged, the cost of repairs is the total amount it costs to restore your car back to the condition it was in prior to the accident.

Active cover means that your policy is active, therefore meaning that your car is currently covered, and the benefits outlined in the policy are available to you as long as you meet your policy terms and conditions

When your cover has lapsed, it means your insurance coverage has ended due to non-payment of premiums, and benefits are no longer available.

Consecutive premiums are monthly payments you make without missing a month. This is done so your insurance coverage stays active.

The amount agreed upon beforehand that you must pay your insurer before you can claim.

The difference between what you owe the financial institution and the current retail value of your insured car at the time of loss, excluding extra charges.

Activities with a potential risk of injury or death are considered dangerous and may not be covered by your insurance.

A motor vehicle accident happens when your car accidentally crashes into another vehicle, a still object, or a person or if it gets damaged due to an external, forceful event.

A natural fire or disaster refers to natural events like fires, earthquakes, lightning strikes, floods, or wind storms.

The regular driver is the person who drives the insured car most frequently, as named on your insurance policy.

The other driver is a person who is not a regular driver but drives the insured car with your full and prior permission.

Road hazards include road damage, imperfections or objects, such as potholes, uneven surfaces, or debris.

At Prime, we believe in straightforward insurance that’s easy to understand and even easier to claim from. This is so you can know exactly what your insurance covers and make better-informed decisions about your policy.

For car insurance that’s easy to understand, take a look at Prime’s various packages for every budget and need. So, get your quote today and drive confidently, knowing your insurance provider has your back.

This article provides general definitions for common car insurance terms. However, not all terms are listed here, and definitions may be different from one insurance provider to another. Therefore, always do your own research, so you fully understand your policy.

Remember to buy car insurance with much thought and only through a certified financial services provider.

Reach out to us today to learn more about getting affordable, comprehensive car insurance with fixed premiums* and a reduce-to-zero excess*. *T&Cs apply.