What is car insurance?
Car insurance can be defined as a policy which outlines a formal undertaking by the insurance company that they would accept a certain degree of financial responsibility for any loss the insured or other parties may incur through accident or other damage or theft to a vehicle.
When a claim is submitted, the insurer will pay an amount based on a variety of factors that are determined beforehand as stated in the policy documentation.
About the car insurance industry in South Africa:
In South Africa, car insurance isn’t mandatory, but government is working on making sure that individuals have the most basic cover. Statistics show that while there are approximately 10 million cars on South African roads, only 35% of these cars are insured. This means that those who are insured have to carry the burden of higher costs. Insurance companies also have to pay for higher repair costs as a result of the weakening currency.
The insurance industry in the country is highly competitive so there are various companies which you can use for car insurance. There are numerous online platforms available as well, which means that consumers have access to a wide array of insurance companies from which to choose.
The industry is regulated by the Short Term Insurance Act, while only registered bodies are allowed to administer car insurance services.
As a consumer, it’s important to make sure that you choose an insurance type that is suitable to your individual needs.
There are a number of factors which you should consider, such as:
- How much you earn
- How old your car is and how much it is worth
- Whether you own your car or if it’s financed
- How much you are willing to pay out-of-pocket
- How often you drive
