If there’s something even more complicated than some of those gevaarlike gymkhana circuits of the old days, it has to be insuring your car. It’s a minefield, characterised by an avalanche of information, so much that it’s challenging to figure out what’s important, what is not, and what is not being mentioned that is important.
You can get so confused that you end up making an impulsive decision just to get it done, then regretting it later.
It’s too much for one article, but Bobby Nitro looks at a couple of things to consider when choosing insurance. First, be patient. You’ve got to check out the terms and conditions carefully and consider what it’s going to cost you if you do have to lodge a claim.
Beware the low premium. This is the first thing you’ll consider, how much will insurance cost me every month, and you’ll notice big disparities among different providers when it comes to monthly premiums. The low premium options usually come with a high excess. In other words, you might be saving R200 a month, but if you do have an accident, the excess could be to the tune of tens of thousands. You need to ask yourself if you can fork out this money. General rule, the lower the premium, the higher the excess.
Next, make sure you know what the ‘basis of loss settlement’ in your policy means. It gets complicated, but here are some basic definitions to help you work out the jargon. Retail value is the price at which a dealer will sell a second-hand vehicle to you. Market value is the average difference in price between retail value and trade-in value (what a dealer would pay you if you were to trade the car in). List price is the out-of-the-box price, but that kind of cover usually lasts for no more than 12 months.
Mandy Barrett, of insurance brokerage and risk advisors Aon SA, says: “You really want to know and understand the detail of what you are covered for before claims time. It’s unlikely to be the most riveting thing you’ve done lately, but getting a handle on your risks and how your insurance cover will respond in a claims scenario is likely to be one of the most financially important exercises you’ll do this year.”