May 3, 2023
If you’ve ever been tempted to cancel your car insurance, you’re not alone. With the rise in interest rates and inflation, many South Africans are looking for ways to cut back on their monthly spending. However, there are other ways to trim your budget that won’t have such a ripple effect.
Unfortunately, many people who cancel their car insurance policies aren’t aware of the risks of doing so and how it costs them more in the long run.
Car insurance is not designed for unsafe or frequent drivers only. It’s there to help you pay should the unforeseen happen to your car, whether accidents, hijacking or theft. Therefore, cancelling your car insurance could end up costing you more than the premiums you’ll save.
If you’ve decided to cancel your car insurance or you’re considering switching insurance, make sure you understand all the risks that come with not having cover for your vehicle.
While you may be a good driver, your car still faces the danger of other people’s poor driving. As many road users drive around without car insurance coverage, your insurance policy could be your only means to pay for damages caused by someone else.
Even if you’re not involved in an accident, your car still faces the risk of being stolen or hijacked. When this happens, having the right type of insurance will allow you to get back behind your steering wheel quite quickly after an incident.
Every day, even good drivers make mistakes. When an accident is your fault, you could be held liable for hundreds of thousands of rands in damage claims or even face a lawsuit against you. The resulting stress and financial strain won’t be worth having saved a few months’ premiums.
Most car financiers require comprehensive car insurance for the duration you’re paying off your car loan. If you’re still busy to fully pay off your car, and you cancel or downgrade your insurance, you’re likely violating the terms of your agreement with your financing company.
By cancelling your insurance, you risk losing your car entirely. Alternatively, your car financier may take out insurance on your behalf and add it to your monthly instalment. Since you won’t have a choice as to which insurance provider will cover your car, you could end up paying even more than you did at your previous insurer.
If you’re planning to sell your car, the fact that you did not have active car insurance with a full claims history can also put off potential buyers and even potentially lower the resale value in some cases.
Most car insurance companies will charge you a cancellation fee to cover administrative costs if you cancel your car insurance. This will depend on the car insurance provider so you should always ensure you read your policy terms and conditions carefully.
The longer your car has been insured without claims, the less risk you pose to insurers. This means that over time you’ll pay lower monthly premiums. However, when you cancel your car insurance, you damage your risk profile which determines how much you pay for insurance every month.
To cancel auto insurance is seen as a lapse in coverage. As a result, should you wish to insure your car again in the future, your premiums will likely be higher as you could be considered high-risk. Some insurance providers may even refuse to provide cover for your car.
At PMD, we understand times are tough and cancelling your car insurance might seem like the only way to make ends meet. This is why we’re committed to making car insurance affordable by offering various packages to suit every pocket.
If you’re considering cancelling your car insurance, why not talk to us about creating a customised package to suit your budget and needs? This way, you won’t run the risks that come with not having car insurance. Moreover, we guarantee that your premium will stay the same for 24 months if you remain claim-free – no surprise price hikes here!
Furthermore, at PMD, we understand that some months are tougher than others and try our best to be transparent and fair with you. We have a grace period to support you, and you can always reach out to our friendly PMD family who will try to best assist you.
Get your car insurance quote today to find out how much you can save.
This article provides general information on the disadvantages of cancelling your car insurance policy. Always do your research before cancelling or downgrading your policy.
Remember that you should always buy car insurance with much thought and only through a certified financial services provider.
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