Nowadays, you can’t flip between your favourite TV channels or radio stations without landing on an advert about cheap car insurance. Most insurers seem to focus on their low premiums and cost-effective offering. But cheap isn’t always cheerful. Behind that attractively low monthly figure, lies a much greater lump sum called excess. The less you pay every month, the more you’ll fork out in the event of an accident or theft. If you’re thinking about buying a new car, or you’re not 100% happy with your current broker, consider the following before you scour the internet for car insurance quotes. Here’s a scary statistic: The Automobile Association of South Africa recently reported that more than 65% of cars on the road are uninsured. Yikes!

Premium vs. Excess

The amount you pay, once a claim has been paid out by your insurer, is referred to as excess. Remember that even if an accident is not your fault, you might initially be liable to pay excess. Be mindful of this when choosing a broker. Cheap car insurance sounds great – until you’re required to pay a hefty lump sum. Weigh up all the pros and cons when it comes to your premium.

Insurance with benefits
Some insurers offer a bonus if you don’t claim over a set period, while others give you cash back or other value-added services. Consider what’s important to you before signing on the dotted line. See what each potential car insurance broker offers, and how these benefits relate to your lifestyle. You might definitely need comprehensive car hire, if your vehicle is in for repairs. Then make sure that’s included in your policy.

Do your research
Whether it’s by word of mouth, search engine or a comparative site – like Deals on Tap – you should take a look at what’s out there before committing to an insurer. Getting car insurance quotes can be painful, but you’ll be glad you did your research later on. There’s a wealth of information at your fingertips.

Risk and restrictions

Paying a premium doesn’t mean that you’re guaranteed to get paid out when you claim. Read through your car insurance policy to get a thorough understanding of what is, and isn’t included. Your broker might insist that you get a tracking device fitted to the vehicle. Or perhaps there are penalties in place for young drivers. Is the policy restricted to a named driver? These things are important and should be considered.

The next time you see an ad for cheap car insurance, take a moment to consider these factors. While you may feel that it’s easy jumping between brokers, it’s also unnecessary and time consuming. You can find the right car insurance to suit your lifestyle, first time.

Car insurance and motor warranties are two different creatures, but both are necessary when driving in the urban jungle

Vehicles are not considered to be investments because of their relatively short life-spans and the many ways in which they can be damaged, but with sufficient car insurance and a suitable motor warranty, you can ensure that your four-wheeled baby maintains its optimum value. Before you owned your car, you might have imagined car ownership as something like the slicked-hair-combing, pelvis-thrusting, Pink Ladies-dating John Travolta with his Grease Lightning. Unfortunately, car ownership in real life involves far more paperwork and diligent planning than the movies would have us believe. Between potholes, taxis, drivers playing Candy Crush on their way to work, and just plain bad luck, there is never a time that you don’t need both car insurance and a motor warranty every time you drive out your garage.

Car insurance is a service you pay an insurance company to offset the expenses should you be involved in an unfortunate event in which your vehicle is damaged or written off. Three types of car insurance are available in South Africa – Comprehensive, Third Party, Fire and Theft, and Third Party. Comprehensive insurance, as its name suggests, covers most accidental damages sustained to your vehicle caused by yourself or someone else. It includes cover for damage caused by natural disasters (like floods), as well as third party cover, meaning it covers the costs when you’re responsible for damage caused to someone else’s vehicle, property or person. Comprehensive insurance also covers loss of a vehicle as a result of theft or hijacking. Third Party, Fire and Theft insurance offers insurance for only these three conditions – third party cover for when you are responsible for damage to someone else; fire or natural disasters; and theft. Significantly, this type of insurance does not cover you for accidental damage to your car in the form of a car accident or your own “preventable” actions when operating your vehicle. Finally is Third Party insurance, which covers only the damage that you cause to someone else. Any of these circumstances are at best inconvenient and unpleasant, and car insurance can help ease the financial woes that they bring.

A motor warranty, on the other hand, covers expenses that arise when parts of your vehicle malfunction. Car parts are designed for a specific function and with the intention of lasting for a certain time-frame without undue stress or forces acting on them. This means that if a part stops working through no fault of your own or without the intervention of an outside force (such as an attempted theft or natural disaster), the warranty acts as a guarantee that the parts will be repaired or replaced based on the specific value of the part and its age. The mechanical and electrical integrity of today’s cars are fundamental in their safety and longevity, but because perfection is unfortunately unattainable, motor warranties help protect you as a consumer from malfunctions.

Despite what car commercials and music videos would have us believe, vehicles are unfortunately a liability, rather than an asset. However, instead of comparing car insurance versus motor warranties, they should be seen as services that go hand-in-hand to promote the lifespan, value and safety of your vehicle. A motor warranty can ensure that your vehicle operates at its optimum, which in turn can help prevent accidents. But because of the uncertainties of life, car insurance ensures that even in the case of an accident, you, your car, and your wallet can be protected. So just like Danny and Sandy, car insurance and motor warranty go together like “ramma lamma lamma ka dinga da dinga dong.”

Are you thinking about buying a used car? Or perhaps you’ve already bought one and are feeling a bit unsure about its mechanical or electrical state. Did you know that you can extend the motor warranty of any used vehicle by buying an extended car warranty?

Most used car dealers will offer a short motor warranty – SA warranties are usually 30 days or 2,000 kilometers (whichever comes first). Really cheap vehicles are sold cash as they stand (voetstoots), and will come with no motor warranty.

An extended car warranty is an insurance product that’s developed to protect your car against mechanical or electrical failure, after the manufacturer’s warranty has expired.

In South Africa, you’re able to select an extended car warranty provider that can offer you a number of product options. These options have different levels of warranty at different prices – giving you greater cover when you need to claim.

How much does an extended car warranty cost?

Let’s consider, for example, you’re interested in buying a used Toyota Corolla 1.6. The vehicle is 2 to 4 years old, with between 40,000 and 80,000 kilometers on the clock. It also has a full service history.

For a used vehicle with this profile, you can expect to pay between R126 and R277 per month for an extended motor warranty from a reputable insurance company.

Some of the important components that should be covered are:

Component	Value of cover
Engine	R12 500 to R20 000
Gearbox	R8 000 to R12 500
Clutch	R1 000 to R4 000
Electrical	R3 000 to R4 000
Differential	R8 000 to R12 500

Most insurance companies should also include handy benefits like:

Benefit	Value of cover
Vehicle hire – usually a 2-day rental in the event of mechanical repair or service of your vehicle	R500 to R1 000
Hotel accommodation – usually covered if your breakdown occurs in excess of 300 km from your place of residence	R500 to R1 000
Vehicle towing – usually covered in the event of a valid claim	R500 to R1 000

Your level of cover increases as you pay more for the motor warranty. It can also decrease a potential shortfall if you discover that it will cost more to repair or replace an item. Many SA warranties also offer additional benefits like medical evacuation from an accident or road side assistance.

What are the benefits of an extended car warranty?

• Peace of mind: Your vehicle can be protected against unforeseen mechanical malfunctions (e.g. engine or gearbox failure) that are not covered by a general service or maintenance plan
• Saving money: An extended car warranty is like financing potential repairs at below cost
• Backing and support: You’ll receive assistance from the company that backs your extended car warranty. Many of us are at the mercy of professional mechanics. It’s not a problem if they are honest and trustworthy, but unfortunately, this is not always the case
• Your warranty can inform the repairs company that you are not alone and that you have immediate assistance if you need it
• Maximum resale value: A motor warranty is transferable to the next owner of the car, so it can increase your resale value.

The South African car insurance industry is made up of three main types:

• Third party insurance
• Third party, fire and theft insurance
• Comprehensive insurance.

Although policies may differ from company to company, the three categories above are the most general options. Each of them serve specific needs, and may offer policy benefits like:

• Installation of a vehicle recovery system.
• Lifetime guarantee on all approved vehicle repair work.
• 24-hour roadside and medical assistance.

So what is the difference between the types of car insurance? Let’s have a look…

Third party insurance

This is usually the cheapest car insurance option available. It covers you against any damage that you may cause to someone else’s vehicle. It also covers the accidental death or injury to third parties involved in the same accident. It won’t however, cover you against loss or damage to your own vehicle that were caused by accidents, fire or theft.

Third party insurance is a good idea if:

• You’ve already paid off your vehicle
• The value of your car is relatively low, but you want to protect your finances against causing damage to someone else’s vehicle
• You don’t drive often
• You’re only looking for cheap car insurance.

If, for example, you’re buying a VW Polo Vivo 1.4, your estimated costs for third party car insurance could look something like this:

Male – 25 years old and driving for 7 years				Female – 25 years old and driving for 7 years
New		Used (2 years old)		New		Used (2 years old)
Monthly premium	Excess	Monthly premium	Excess	Monthly premium	Excess	Monthly premium	Excess
R110 to R170	R1 700 to R8 000	R110 to R160	R1 700 to R8 000	R110 to R160	R1 700 to R8 000	106 to 155	1,700 to 8,000

Third party, fire and theft insurance.

This type of car insurance will cover you:

• For any damage that you cause to someone else’s vehicle
• For the accidental death or injuries to third parties involved in the same accident
• If your car was stolen, hijacked or damaged in an attempted theft
• For damages caused by fires, lightning or explosions.

Third party, fire and theft insurance is a good idea if:

• You still owe a minimum amount on your car
• You drive an average amount of kilometres.

Let’s say you’re buying a Toyota Corolla 1.3, your car insurance quotes could be:

Male – 25 years old and driving for 7 years				Female – 25 years old and driving for 7 years
New		Used (2 years old)		New		Used (2 years old)
Monthly premium	Excess	Monthly premium	Excess	Monthly premium	Excess	Monthly premium	Excess
R294 to R326	R1 700 to R8 000	R290 to R318	R1 700 to R8 000	R270 to R300	R1 700 to R8 000	R269 to R293	R1 700 to R8 000

Comprehensive insurance

This type of car insurance covers a wide range of risks, and is highly recommended if you drive a new vehicle. Comprehensive insurance is usually the most expensive of the three types, and covers you against:

• Theft
• Accidental damage to your car
• Accidental damage to the vehicle or property of a third party
• Accidental death or injury to a third party
• Certain natural risks like hail damage.

Comprehensive insurance is a good idea if:

• You still owe money on your car
• Your car is expensive
• Your car is still relatively new
• You frequently drive a lot of kilometres.

Let’s have a look at car insurance quotes for comprehensive cover. The below example is based on someone who is buying a BMW 320:

Male – 25 years old and driving for 7 years				Female – 25 years old and driving for 7 years
New		Used (2 years old)		New		Used (2 years old)
Monthly premium	Excess	Monthly premium	Excess	Monthly premium	Excess	Monthly premium	Excess
R1 570 to R2 282	R5 550 to R11 050	R1 020 to R1 710	R5 550 to R11 050	R1 376 to R1 780	R5 550 to R9 050	R915 to R1 325	R5 550 to R9 050