WHAT IS CAR INSURANCE AND HOW DOES IT WORK IN 2019?
It’s important to know what car insurance is all about because it protects one of your most valuable assets. Your car is something you cannot afford to lose or get damaged.
You are requested to consider this article as information only, because car insurance is not straightforward. However, if you are interested in a car insurance product, please contact a certified, financial advisor for professional advice.
WHAT IS INSURANCE?
Insurance is a financial product that people, as policy holders, purchase from a company called the ‘insurer,’ to prevent them from suffering financial loss. In order to protect themselves in this way, they need to pay a monthly ‘premium’ to the insurer. A policy holder cannot proceed to be reckless, just because he or she is covered. If the item that is insured is involved in a type of accident, the company that sold the insurance will pay out to the policy holder what is owed. Both parties have to abide by certain ‘rules’.
WHAT IS CAR INSURANCE?
Car insurance is a type of insurance that protects people from financial loss in the event of a car accident. This means that most of the R50 000 damage caused to your car would be paid out by the insurer. This is provided the company is satisfied that all the conditions for a payout have been met. The price of any car today is so great, that basically no one would be able to afford to pay privately for any damage done to such cars. Thus, a type of car insurance called comprehensive insurance is compulsory for those financing a new car.
HOW DOES CAR INSURANCE WORK IN 2019?
Car insurance in 2019 would operate much the same as it did in previous years. Car insurance not only covers cars, but can also cover motorcycles, light delivery trucks, caravans and trailers. Car insurance may be divided into several categories, depending on the affordability of the person buying car insurance. There is comprehensive car insurance, third party fire and theft cover, and third party cover. Let’s unpack each type.
COMPREHENSIVE CAR INSURANCE
If you are paying off your car via a financial institution, then comprehensive insurance is compulsory. This cover is the most expensive because it is so ‘comprehensive.’ It covers, first of all, any damage done to your car, less the excess which you have to pay yourself. It also covers damage done to the other vehicle (third party cover). It also covers your car in the event of fire, theft or hijacking. Different insurance companies may vary in what they insure, and thus you must always carefully read any policy before you sign.
THIRD PARTY, FIRE AND THEFT COVER
This type of car insurance is cheaper than comprehensive insurance, but unfortunately your car is not covered in an accident. Fortunately, damage to the other vehicle will be covered if the accident was your fault. Remember, you may lose your car completely in an accident if it is your fault, and that is a massive financial loss. If it was the third party’s fault, and that third prty was covered, you would be able to claim from the other insurer. Your car is also insured for damage or loss, when due to fire, theft or hijack.
THIRD PARTY COVER
This type of insurance only covers damage done to a third party. For this reason, it is the cheapest of all car insurance types.
ARE YOU SURE YOU KNOW WHAT IS COVERED AND WHAT IS NOT?
It is so important that every policy holder is fully aware what a policy covers and what is excluded, especially when it comes to small print. Should you not understand something, ask the insurer to provide full explanations. You don’t want to be disappointed at claim time.3 When you want to rush off to Mozambique for a lovely beach holiday, make sure your car is adequately covered outside South Africa, and that you take with you all the right papers.
BUY ADEQUATE AND AFFORDABLE COVER WITH PMD
You’ve read how car insurance protects you from disastrous situations. PMD offers you affordable car insurance, which you can purchase, using PMD’s Online Insurance Purchase Platform. The whole process doesn’t take long and is not difficult, and you can access it any time of the day or night. No need to call anyone, but there is a call-back facility available if you need help. Audio and video materials are also provided for further assistance.