The hows and whys of automobile insurance coverage

For a lot of South Africans, insurance coverage is a largely misunderstood idea, with the ins and outs of insurance coverage cowl usually missed by most coverage holders. Whereas many people are conscious of the significance of insurance coverage, in the case of submitting a declare, many policyholders are left confused or upset, misunderstanding the phrases of their settlement with the insurer, in addition to their very own stage of legal responsibility.

The easy reality of the matter is that every insurance coverage coverage is totally different and understanding the phrases is the simplest manner to make sure that claims are honoured. An insurance coverage coverage is an settlement between two events, each of whom are required to honour the phrases thereof to be able to guarantee its validity.

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Beneath we’ve unpacked among the most typical misperceptions about automobile insurance coverage and debunked some common myths about this often-misunderstood business:

  • What’s a credit score shortfall? Why do I nonetheless owe cash if my automobile was stolen or written off?

If you’re concerned in an accident utilizing a automobile that you just’ve financed by way of a financial institution or one other sort of economic service supplier, there could also be a niche between its insured worth and the quantity owing to the finance establishment. This is named a credit score shortfall and may end up in you owing cash for a automobile you not have.

On condition that insurance coverage insurance policies cowl the market, retail or commerce worth of your automobile, you’ll be lined based mostly on the worth of the automobile on the time of the accident or theft. Nevertheless, the quantity owed to the financial institution stays unchanged. To keep away from going through surprising prices, examine credit score shortfall insurance coverage – also referred to as hole or top-up insurance coverage – which is particularly designed to cowl this distinction. 

  • If my automobile’s worth declines, why am I nonetheless paying the identical month-to-month premium?

Whereas it may appear logical that the depreciating worth of your automobile would end in decrease premiums over time, that is sadly not the case. Premiums usually enhance 12 months on 12 months in keeping with inflation and the related prices of repairs. The identical goes for spare elements, which have a tendency to extend in worth regardless of your automobile’s worth.

And whereas the specter of theft or perhaps a complete write-off is actually attainable, the danger of such an prevalence is realistically far decrease than that of unintended injury, and as such, equates to a small proportion of the premium. Basically, your coverage is principally designed to cowl repairs within the occasion of an accident, which, most often, has little to do with the exact age and worth of the automobile.

  • Why has my coverage been voided?

Whereas many insurance coverage claims are honoured, these which can be rejected are because of an excluded occasion or a breach of the coverage circumstances. It’s vital to learn your coverage wording rigorously to know what you might be lined for – and what you aren’t lined for.

Full disclosure is essential when coming into right into a coverage settlement together with your insurer and it’s important that you’re 100% trustworthy relating to the worth of the gadgets you might be insuring if you wish to keep away from any issues down the road. Relatively than estimating the worth of your valuables, go for a extra exact strategy, creating a whole stock to which you’ll refer again within the occasion of a declare. If you’re uncertain of the merchandise’s worth, some insurers additionally supply a helpful on-line estimation service, which may help you in your estimations.

It’s equally vital that you’re upfront relating to any prior losses or claims, as these will have an effect in your threat profile which impacts your premium. Do you have to reply inaccurately in an effort to cut back your month-to-month premiums, you possibly can be penalised later. An insurance coverage coverage is a contract of utmost good religion. As such full disclosure is vital when taking out a coverage

  • Is my automobile solely insured if I’m driving it?

The reply to this query is essentially depending on the character of your coverage. Sometimes, automobiles are solely insured when the automobile’s ‘common driver’ – basically the one who drives it most frequently – is precisely listed. This could in fact be tough to outline in households wherein a automobile is shared between a number of events. 

As a result of the truth that one’s threat profile is calculated based mostly partly on years spent behind the wheel, many policyholders are inclined to listing themselves because the common driver, somewhat than their college going youngsters for instance, who pose a better threat, and because of this, are likelier to incur larger month-to-month premiums. 

Nevertheless, ought to your automobile be concerned in an accident while being pushed by another person, your automobile ought to nonetheless be lined, supplied that the proper common driver is listed. This is dependent upon the coverage and will end in you having to pay some extra extra, however supplied that you just’ve provided correct data relating to the automobile’s common driver, you need to nonetheless be insured. As such, it’s important that the data you provide to your insurer is 100% correct. Ought to the automobile’s common driver change at any level, it’s vital to maintain your insurer knowledgeable in order to forestall any issues down the road.

  • Why are my automobile elements being changed with after-market variations?

The intention of any insurance coverage coverage is to re-establish equilibrium and place you in the identical place you had been in previous to the loss. As such, claims shall be assessed based mostly on the state of your automobile previous to the accident and replacements shall be made accordingly to make sure that the automobile is returned to its earlier state. SABS accredited after-market elements will solely be used in case your automobile is out of guarantee. It’s an internationally recognised observe, accredited by our judicial system and in addition allows insurers to maintain insurance coverage premiums inexpensive.

Keep in mind that the important thing to any insurance coverage coverage is data. Not solely is it vital that you just hold your self knowledgeable relating to the character of your cowl, however additionally it is equally crucial that you just present your insurer with all the data they require to keep away from any potential future pitfalls.

Karabo Kopeka is head of claims at MiWay Insurance coverage