Everything you need to know about car insurance in plain English

The ultimate guide to car insurance: from why you need it, the types of car insurance on the market, what impacts your premium to how to claim or even complain about your insurer.

We’re often told that we need car insurance if we own a car. Yet only roughly 30% of cars on the road in South Africa are covered by insurance. That’s quite a scary statistic when you think of how much cars cost these days and the damage that can be caused by accidents – no matter how minor.

Here at Naked, we are keen on making car insurance accessible for everyone. One of the ways we are doing this is by lifting the veil on the car insurance fine print and jargon, and providing a breakdown on everything there is to know about it: from why you need car insurance, the types of car insurance on the market, and what affects your premium, to how to claim or even complain about your insurer.

What we will cover

Why do I need car insurance?

Car insurance is designed to cover the cost if your car is damaged, stolen, or causes damage to someone else’s property. Without it, you could be left significantly out of pocket.

There are many things that can go wrong when you own a car. You could, for example, damage it in an accident, it could be stolen, or you could damage someone else’s car or other property. When these sorts of things happen, it could be up to you to come up with the cash to repair the car or fix someone else’s property, and these costs could add up to large amounts. Car insurance is designed to cover the cost of these losses when they do happen, ensuring that you are not left significantly out of pocket.

Also, most finance houses won’t lend you money to buy a car without you first having car insurance. This protects their interest (the money they lend to you) if something were to happen to your car while you are still paying it off.

What is car insurance?

Car insurance is essentially financial protection for bad things that can happen when you own a car – bad things like damage to, or the theft of, your car or being held financially responsible for damages to another person’s property that were caused by your car.

In exchange for an agreed monthly/annual payment (your premium), most insurance companies will cover the costs of:

  • Car accidents – this could involve another car, or just yours;
  • Theft or hijacking of your car;
  • Damage caused to your car by Mother Nature like hail, floods, lightning, earthquakes, etc.;
  • Damage caused by fire;
  • Other accidental damage to your car, like a tree falling on it or someone maliciously scratching it, etc.; and
  • Damage to another’s car or property caused by your car.

However, how much of the above your insurance covers depends on what type of car insurance you go for.

Types of car insurance and what they cover

The level of cover you get depends on the type of car insurance you buy. Here are the main types you will come across:

Comprehensive

Comprehensive car insurance is an all-in-one cover option and the highest level of cover that you can get. This is also generally the most popular option and the one your car finance house would insist on.

It covers you for loss or damage to your vehicle caused by hijacking, theft, Mother Nature, fire, lightning, explosions, and malicious or accidental damage. Comprehensive cover will also cover you if you are in a car accident where you damage someone else’s car or property and you are held legally responsible to cover the cost of their damage.

With comprehensive cover, some insurers also offer some additional benefits that are automatically included with your cover. These can include cover for things like:

  • Loss of keys and remote controls;
  • Emergency repairs;
  • Transport, towing, and storage; and
  • Windscreen and glass repairs or replacements.

Then there are usually some optional benefits that allow you to personalise your comprehensive cover like:

  • Car hire, for when your car has been in an accident or stolen;
  • Credit shortfall, to make sure you can pay off your car loan fully when your car is irreparably damaged (written off) or stolen;
  • Cover for extras that you have added to your car, like tow/bull bars, fancy lights or sound systems; and
  • Tyre protection, for when bad roads damage your tyres.

Buying comprehensive cover can sometimes be a bit overwhelming with all of the added extras and optional benefits. Check out this blog which gives you a couple of tips when it comes to buying comprehensive cover.

Third-party liability only

Third-party liability is the most basic and affordable car insurance you can buy. Think of it as protection for everything that your car might damage while you are driving it, except for the car itself.

‘Third-party’ refers to the person who holds you responsible for damage caused to their property by your car. Third-party liability cover will cover the costs when the third party lays a claim against you.

People who drive older cars and are able to replace their cars at a moment's notice, i.e. they have the cash in the bank, would usually consider this type of cover.

Third-party liability with fire and theft

Third-party liability with fire and theft provides additional cover to third-party liability. In addition to the cover you get under your third-party liability cover, you will also be covered if your car is damaged/written off in a fire or is stolen.

Not many people choose this kind of cover – it might appeal to you if you have a car in long-term storage.

TIP: If you have a car that is parked in long-term storage, the third-party portion of this cover is usually wasted. A better option might be to buy cover just for the bad things that can go wrong while your car is parked. Naked has an option called CoverPause on comprehensive cover where you can pause your comprehensive cover and just have stationary cover, which will cover you for all the bad things that can happen to your car while it’s parked safely.If you are using your car to make money you need cover that is specifically tailored for your needs.

What car insurance doesn’t cover

In essence, insurance doesn’t cover foreseeable and expected costs that come with owning a car – it covers events that are unforeseen and unexpected. However, it’s best to have a look at your policy as insurers can differ when it comes to what they will and won’t cover. Here’s a list of the most common things that car insurance doesn’t cover.

General wear and tear

This includes:

  • Wear and tear from the ordinary day-to-day use of your car;
  • Exposure damage due to natural forces such as sunlight and rain; and
  • Rust, corrosion, or decay of the bodywork or battery of your car.

Electrical breakdowns or failures

Electrical breakdowns or failures are also not covered. Signs of electrical breakdowns or failures could be your headlights dimming unexpectedly, your electrical windows no longer working, or when your car jerks or stalls.

Any damage that was not sudden and unforeseen

Any damage that was not sudden and unforeseen, like birds making a nest on the top of your car and it becoming scratched over time is not covered.

Any damage caused from not taking due care

Any damage that was caused from reckless behaviour or not taking due care, like you choosing to drive your car over a cliff (Thelma and Louise style) is not covered.

Anything covered by a warranty or service plan

Anything that would, as a rule, be covered under the manufacturer’s warranty or a service, or motor plan won’t be covered by your insurance company. This will still apply even if your warranty or service plan has expired.

Any damage done to your car before you insured it

Any damage that is already on the outside or inside of your car when you take out your policy will not be covered, which includes damage caused by bad workmanship. This is known as pre-existing damage.

If it’s found that you were untruthful when answering the questions the insurer asked before you bought cover or when you make a claim

Before you buy car insurance, the insurer asks you a couple of questions to try and tailor the cover to fit your risk profile as well as what you use your car for. If it’s found out that you weren’t honest when answering these questions, and you file a claim, you will not be covered. You will also not be covered if it was found that you were dishonest when making a claim.

When using your car for business and commercial purposes and you’re not insured for that use

Business use is covered under most comprehensive personal policies and it is defined as when you drive your car a couple of times a week for the purpose of business: for example, if you are a consultant who visits clients on a regular basis. Every insurer will have their own definition so it’s best to check.

Business use is very different from commercial use. Commercial use is usually not covered under standard comprehensive cover and requires a specific commercial policy. Commercial use would be when you use your car to make money. Here are some examples of what we mean.

You are seen as using your car for commercial purposes if you:

  • Use your car as a courier or delivery vehicle;
  • Rent out your car for use by others, e.g. if you have a small rental car agency or have an extra car that you rent out to the public for money;
  • Use your car to carry passengers for reward, such as a taxi, Uber-like services or a limousine service (excluding lift clubs); and
  • Use your car to carry out your trade, such as plumbers, electricians, builders, garden services, farmers, etc.

TIP: If you are using your car to make money you need cover that is specifically tailored for your needs. The insurer will look at what exactly you are using your car for and then design the cover to make sure you do not put your income or business at risk.

Have a read on the different types of uses of your car and why you need different cover for different uses.

Accidents that happen while under the influence of alcohol or drugs

Driving after having a couple of drinks or after taking drugs (even those prescribed by your doctor that could impair your reflexes), is not legal. If you have an accident or damage someone else’s stuff with your car while under the influence, your insurance will not cover it.

Any add-ons that you did not specify

Any modifications that are not listed under the manufacturer’s specifications will not be covered under your car insurance. However, in some cases, your insurer might allow you to add additional cover for specific modifications like tow/bull bars, fancy lights or sound systems.

Unroadworthy cars

It is illegal to drive a car that is unroadworthy. For example, if some doors on your car won’t open from the inside or outside, it’s deemed unroadworthy. The same goes if the seatbelts aren’t working properly or your tyre tread is too low. So if you have an accident and it’s discovered that your car wasn’t roadworthy at the time of the accident, your insurer will reject the claim or limit the payout.

TIP: Get your car serviced regularly to make sure that everything is in working order but also do regular maintenance checks to see that there’s enough tread on your tyre and that your brake pads are still okay.

Further loss or damages that you may suffer as a consequence of an accident

Let’s say you have an unfortunate bumper bashing on the way to the airport, and it causes you to miss a flight. Your insurer won’t cover the cost of you missing your flight. This is known as consequential loss and most insurers don’t cover it.

Personal things you keep/left in your car

If you are in a car accident where your laptop is damaged or your car is broken into and your phone is stolen, your car insurance will not cover the cost of those damages/losses. To have your personal belongings covered in these instances, you would need separate insurance for them.

Will your car still be covered if it’s in an accident and you weren’t driving it?

It depends on what type of cover you have with your specific insurer: some insurers require that you explicitly add additional drivers to your policy to ensure your car remains covered when they are driving it. These types of policies are referred to as “Named Driver Policies” and these other drivers that are added to the policy are called "named drivers" or "additional drivers".

Some insurers are more relaxed and don’t require that you formally add other drivers to your cover. You just need to tell them who drives the car most often (known as the regular driver) and if someone else drives your car now and then, they will automatically be covered, as long as they have your permission and a valid driver’s licence. If the regular driver of the car changes, then you will have to let your insurer know about it to continue to have full cover.

Can you insure a car if you aren’t the owner but drive it regularly?

One doesn’t always have to own a car to be able to insure it.

One doesn’t always have to own a car to be able to insure it. Your company could own the car, or it could still be owned by your parents. If this is the case, it can sometimes be hard to know if you are able to insure it yourself.

The general rule is that if you will personally lose money if the car is damaged or stolen, you can insure it. This is called having an insurable interest in a car.

For example, your employer has given you a car but told you that you are responsible for it and if anything bad happens, you will be held financially liable. This means that you will be directly out of pocket if your car is stolen or damaged in an accident, indicating insurable interest.

When you have insurable interest, you can insure it. We would however recommend that you tell your insurer about your particular situation if you're not the registered owner.

How to buy car insurance

First, get a couple of quotes and read some reviews

To help you find the best cover to suit your needs and budget, do a bit of research on who the various insurers are and what their track records look like. Google, Hellopeter and even Facebook offer reviews which can help you form an opinion on each company. This will give you a good idea of what to expect if you ever have to claim.

If you already have home contents or single item insurance, it might make sense to get a car insurance quote from the same company. Otherwise a good place to start is to gather as many quotes as you can to compare costs and coverage.

Getting quotes can be quite time consuming. If you are dealing with a call centre it can involve talking to a few call centre agents and a bit of back and forth on emails before getting the physical quote.

If you are strapped for time and don’t like the idea of long conversations with call centre agents, getting a quote online or on an app might be preferable.

There is also the option to use online aggregators who get you various quotes from different insurers at once. However, going this route might mean you end up with call centre agents phoning you to try and close the deal. Plus there’s the chance that you aren’t comparing apples with apples as the exact level of coverage offered by the different providers might vary.

TIP: When you decide to get a quote via a website or app, make sure that it is a binding quote that you can actually buy then and there. Some online quotes still require a phone call with a call centre agent to finalise your cover.

At Naked, we give a binding quote either through the app or website which allows you to buy cover there and then – no calls required.

Compare your quotes

Once you’ve gathered quotes you’re happy with, make sure that the coverage is right for you and your needs. You want to make sure that you’re comparing apples with apples and not apples with oranges – the policy wording is a good place to start.

Consider the excess carefully. You want to make sure that you are able to pay that amount at a moment's notice. Also be aware of any additional excesses that might catch you off guard.

Switching insurers

If you are switching insurers you will need to cancel your policy with your current insurer. Chat to your current insurer so that you cancel just before your new cover starts. You don’t want to be driving without any cover in place, but you also don’t want to pay double for your insurance.

TIP: Find an insurer that can help you cancel with your current insurer – it removes a lot of the admin and sometimes long phone calls. At Naked, we don’t leave everything up to you – we help you cancel your cover with your current insurer and also make sure that you never double up on your premiums.

Everything there is to know about your premium

What makes up your insurance premium?

Your car insurance premium will be based on factors specific to you, but it’s also dependent on a couple of other things specific to the insurer. Here’s a broad breakdown of the main factors that will determine your car insurance premium:

  • Factors specific to you, like your car’s make, your age, etc.;
  • How your insurer sells policies. For example, call centres and brokers are generally more expensive than selling online;
  • The use of technology to service policies and claims. For example, with some insurers you have to phone in to make a claim, while with others you can claim through an app, which is cheaper;
  • Cash-back benefits. If you are promised cash back for not claiming, the insurer usually loads your premium to fund this benefit;
  • Sasria premiums, to cover losses from political riots and terrorism;
  • Value added tax (VAT); and
  • Profit.

What factors affect your car insurance premium

The car you drive: Typically, the more expensive vehicles attract higher premiums as they will cost more to repair or replace. All else being equal, older cars might also attract higher premiums relative to their value. This is because the cost of the parts required to repair accidental damage would be the same whether the car is, for example, a brand new Polo or one that is 10 years old.

Type of car insurance you buy: There are a number of bad things that can happen to your car: it can be stolen, damaged or written off. The cost of your premium depends on which bad things you want covered. You can either choose comprehensive cover (the highest level of cover and most expensive), third-party with fire and theft (which doesn’t cover any accidental damage to your car) or third-party liability (the most basic and cheapest form of cover there is).

Use of your car: Your insurer will want to know what you use your car for. The more you drive during the day, the more opportunities you have to get into an accident. Accordingly, a car used to drive to clients and meetings most days poses a higher risk than a car that is used just to drive to work and back.

How long you have had your driver’s licence for: Evidence has shown that relatively inexperienced drivers are at greater risk of getting into an accident. The main reason is that they have not developed that level of judgement that one can only get by spending lots of time on the road facing different situations.

Your claim record: The number of claims you’ve had in the past is taken as an indication of how many claims you are likely to have in the future. So keep in mind that the longer you go claim-free, the lower your premium will be.

The number of years of uninterrupted car insurance: The longer you’ve had car insurance (with any provider), the better your premium will be. This gives the insurer an overview of your risk over a longer, ongoing period – it also makes your claims history more reliable when calculating your premium.

Drunken driving and forced cancellations by your insurer: Insurance companies generally ask if you have ever been convicted of drunken driving or if an insurer has ever cancelled your insurance for reasons other than not paying your premium. Again, this information gives them insight into your driving behaviour and your likelihood of claiming.

Location and security measures: Insurers usually also ask for your postal code so that they can determine how safe your neighbourhood is. If it’s an area where there are a high number of cars stolen, your premium will more than likely increase. They might also ask about the security around where your car sleeps (whether in a locked garage, under a carport, on the street, etc.). This gives them a good idea of how likely it is that your car will be stolen or damaged by hail.

The excess you choose: A lower excess means a higher premium, and vice versa. Always pick an excess that you can afford, as you’ll have to pay this at a moment's notice if something bad happens.

The value your car is insured for: Insurers either insure your car for retail, market (lower than retail) or trade value (lower than market). The amount that your car is insured for will influence the level of your premium.

Added extras: Adding cover for things like modifications to your car, shortfall cover, and car rental will increase your premium as you are essentially adding more coverage to your policy.

If you do not pay your premium do you still have cover?

If it is your first premium payment, you have to pay it in full before you will have any cover. From your second premium you will have at least 15 days grace to pay for your insurance from the date that your premium is normally due. During this period you still have cover if something were to happen to your car. However, your insurer will require you to settle your outstanding balance before they consider any claims. Check your specific wording, as some insurers will give you a slightly longer grace period.

Why do your premiums change every year?

Insurers generally review your premium once a year on the anniversary of your policy. At that time your premium will usually increase or decrease depending on a few factors:

  • Inflation – Each year as inflation goes up, so does the price of parts for repairs on your car as well as the cost of labour and paint;
  • The age of your car – Because damage on older cars often has to be repaired with new parts, the likelihood that the cost of repairs will be more than the total insured value of your car increases over time as the value of your car reduces. In addition the parts on very old cars might not even be available. This means the insurer is more likely to pay out the full insured value if an older car gets into an accident;
  • The number of claims you've had in the past year – If you signed up with zero previous claims, then made a claim, your premium is likely to increase when it is renewed. If you instead signed up with one claim from the previous year, then made no claims, your premium is likely to decrease slightly or stay at a similar level at review.
  • The cost of your car – The value of your car might reduce over time, especially for brand new cars. This could decrease your premium (albeit usually minimally); and
  • The number of years you’ve had your licence for – If you had your licence for less than three to five years when you bought cover, every extra year of experience will count in your favour.
  • Factors that aren’t always specific to you – There are a number of factors that you might have no control over. For example, you may live in an area where a lot of cars have been stolen in the past year, this could affect your premium even though you didn’t claim.

What is Sasria?

Insurance companies in South Africa don’t provide cover against loss or damage caused by war, terrorism, riots, strikes and other protest actions. Instead, there is a “special risk insurer” that provides cover for these kinds of events called the South African Special Risks Insurance Association (Sasria). When you look at the breakdown of your premium you will usually see an amount being added specifically for Sasria cover. This small amount is paid to Sasria on your behalf by your insurer. You do, however, have the right to opt out of this cover, you just need to let your insurer know that you do not need it.

All there is to know about excesses

An insurance excess is the amount of money you contribute toward a claim. Your excess is selected when you buy the insurance.

What is an excess?

An insurance excess is the amount of money you contribute toward a claim. Your excess is selected when you buy the insurance.

So if you have a R3,000 excess and your car is involved in a bumper bashing, costing R20,000 to repair, your insurance company will contribute R17,000 and you will contribute R3,000. Think of it as, “If I claim for a car accident, I will contribute my excess and my insurance company will pay for the rest.”

Different insurers offer different types of excesses:

Flat excesses – Flat excesses are fixed amounts you agreed to when you bought insurance. This amount is always the same; it does not change if you have a big or a small claim.

Percentage excesses – Percentage excesses are where a certain percentage of your claim is paid by you. This means the amount you will have to contribute will vary by the size of your claim. For example if your excess is 10% of your claim, you will contribute R10,000 if you have a claim of R100,000 and R1,000 if your claim is R10,000.

Additional excesses – Additional excesses are amounts that you are required to pay on top of your basic excess when you claim. There are certain things that influence whether you have to pay an additional excess, for example if the accident happened after 10pm, the driver is younger than 25 or your policy is less than a couple of months old.

Not all insurers have additional excesses so best to check your policy wording for that. With Naked we only have one flat excess you choose.

How to choose an excess?

The higher your excess, the lower your premium and vice versa. So, choosing an excess is about finding a sweet spot between what you pay on a claim and what you pay each month for your insurance.

One way to calculate an appropriate excess is to determine the maximum amount you can comfortably afford to pay out of your pocket if you had to make a claim tomorrow. Picking this level means you’ll avoid getting into trouble when it comes to claiming, while minimising the amount you have to pay for insurance each month.

How often do I need to pay an excess?

Car insurance excesses are normally required to be paid every time you make a claim.

In some cases, you might find that the damages you are claiming for cost around the same as your excess – it might make more sense to have the damage repaired yourself instead of letting the claim affect your claims history and possibly your premium.

If you’re still looking for more information on excesses, we’ve unpacked it all here.

Everything there is to know about claiming

An insurance claim is when you make a formal request to your insurer to pay for the damages to your car (after an accident), damages done by your car (when someone else’s property is damaged) or for the replacement of your car (if it is stolen or written off).

What is an insurance claim?

An insurance claim is when you make a formal request to your insurer to pay for the damages to your car (after an accident), damages done by your car (when someone else’s property is damaged) or for the replacement of your car (if it is stolen or written off). Your insurer will need proof of the accident, damage or theft in order to pay out the claim that you are making, plus your premiums will need to be paid up before the claims process can begin.

How much time do you have to make a claim?

You generally have 31 days to let your insurer know about any event that could result in a claim. This may differ from insurer to insurer, so just double check the policy wording or ask your insurer directly.

As for liability claims, things work a bit differently. By law, third parties have the right to take you on for damages for up to three years after the accident happened. On these claims, your 31 day counter will only start once you have been approached by the third party, within that three year window. However, if you were in an accident where you think you were at fault (to an extent), and there is damage to another's property, your insurer will most likely want to know about it within 30 days of the accident happening.

What if I am not sure if my claim is valid?

There is always the worry that your specific claim is not covered by your policy and that it will count against your insurance record if you do try to claim. If you are unsure about whether your insurer will cover a claim or not, do some research beforehand to see what they cover and what they don’t. The policy wording is a good first place to look. You can also always contact your insurer directly and ask, they will be able to clear up any confusion.

As for whether the invalid claim will count against you, the insurer usually won’t count a claim towards your record, unless they have already spent money on the process. For example if they’ve sent out an assessor to assess your claim, they would have paid them and because of that the claim would count, even if the damage is below your excess.

How to claim

In order to make a claim you will usually need a police case number. Your first port of call after a car accident, hijacking, theft of your car, or criminal act taken against your car would be to report the incident to the police within 24 hours.

Next, contact your insurer about the incident, whether it be through an app, an online portal or via a phone call. From there your insurer will guide you in terms of what to do next – generally, they will ask you to tell them the exact details of what has happened, where it happened, when it happened and who else was involved. They might also ask for photos and contact details of witnesses, so be sure to get this information at the scene of the accident.

From there, your insurer should keep you up to date on the progress of your claim and what happens next.

What you need to pay

When you buy insurance, you agree to an excess amount that you will be responsible for if you ever need to claim. This amount is usually paid to the service provider who is repairing your car. If your car is declared a write-off, and you are going to be paid out for the loss, your excess will be deducted from the payout.

When will your car be declared a write-off

If your car has been in a serious accident, your insurer decides whether it can be repaired, or if it should be declared a write-off and replaced. Your insurer will usually write-off a car if the cost of repairing the damage to your car is more than or very close to the insured value of your car or if the damage is irreparable. The chance of this happening is always greater on older cars as the cost of new spare parts will be the same whether your car is old or new, making it a lot easier for the cost of the repairs to exceed the insured value of your older, low-value car.

If you write-off your car, will it be replaced or will you be paid out?

If your car is declared a write-off, your insurer will pay you or your bank (if you have an outstanding car loan), your insured value (minus your excess) at the time of the claim.

Depending on your cover, if your car is less than 12 months old, your insurer could replace your car with a brand new car or pay you the value of the brand new car at the time of the loss. This is called ‘new for old cover’, so check your policy wording to see if you have this add-on.

What happens if your car is written off or stolen and you still have a car loan?

If your car is declared a write-off or if it is stolen and you still have an outstanding balance on your car loan, your insurer will ask you to get a final settlement balance from your bank. They will then first pay off your outstanding loan amount directly to your bank and if there’s any money left over, that will be paid to you.

It's possible that your outstanding loan amount is larger than the value of your vehicle in certain circumstances. For this reason it is important to consider credit shortfall insurance if you have financed your car.

What would happen if you claim and you’re not the registered owner?

If the car is in an accident, there are usually no implications if you are the regular driver and not the registered owner or policyholder. The insurer will usually repair the damage as long as everything checks out.

If the car is beyond repair (written off) or stolen, the insurer will pay out the insured value of the car in cash, less the excess. This amount will be paid to the registered owner of the vehicle or the bank if you have an outstanding car loan. This means that if you are not the registered owner, you will not receive the cash yourself. So it is important that you are comfortable with the payout going to the registered owner and not to you if your car is written off or stolen. It is recommended that you disclose your specific circumstances to your insurer.

What to do if the car accident wasn’t your fault

The last thing you feel like doing after a car accident is dealing with the admin, especially when it wasn’t your fault. If you are involved in an accident that was not your fault, you have four different ways to approach claiming for the damage done to your car:

  1. You can claim from your insurer and get them to recover the cost from the responsible party or their insurer (if they have insurance).
  2. If the person at fault has insurance, you can opt to claim directly from their insurer.
  3. If the person at fault does not have insurance, you can attempt to get them to pay for the damage (this might require legal action).
  4. If the repair cost is less than your excess, you can attempt to recover the damage from the responsible party via the Small Claims Court. Claims have to be smaller than R20,000 for you to be able to go via the Small Claims Court.

If the accident wasn’t your fault, it can be a bit confusing on what the steps are. We’ve outlined all there is to know so you don’t have to spend hours googling.

What if your car was stolen and subsequently found?

If your car has been stolen and you have already been paid out, the recovered car belongs to your insurer. However, if any of your property, such as a cell phone or laptop, is found in the car it will be returned to you.

Sometimes the car is found before you have been paid out by your insurer. If this happens, either the police or the tracking company will let you know and you will then have to let your insurer know.

In this circumstance, make sure you get a clearance certificate from the police in order to get your car taken off the stolen vehicle database. Otherwise you might be pulled over in your own car and have the police think you stole it.

It’s quite common for stolen cars that are recovered to come back damaged, as they are usually stripped. If this happens to your car, report the damages to your insurer. The claim should then proceed as a damage claim rather than a theft claim.

To get the full lowdown on what you can do if your car is stolen, click here.

Under what circumstances might your insurer not pay your claim?

If your premiums are not up to date for the month, your insurer will insist that the outstanding balance is settled before they will consider any claim. Other possible reasons your claim will not be considered are:

  • If the cost of the repairs are less than your excess;
  • If you’re claiming for damage that happened before you took out the policy;
  • If the event that caused the damage is not an insured event. For example, if the damage is a result of wear and tear;
  • If your car is not roadworthy (even if the event that caused the claim is covered);
  • If you were involved in an illegal activity like using your car in a robbery or driving under the influence of alcohol or drugs;
  • If you lied when you took out your policy or when you reported the claim. For example, you lied about your claims history or what you use the vehicle for; who was driving the car at the time of the accident or how the accident went down exactly; or
  • If you cancelled your cover before the damage happened, even if the cancellation was done a couple of days before.

TIP: Some insurers also have a waiting period before full cover starts, so we suggest that you check the policy for that.

Things to look out for in your policy

What value your car is insured for

The value that your car is insured for depends on the insurance company but keep in mind that it will have an impact on your monthly premium. It can be covered for either retail value, market value or trade-in value.

Retail value – Retail value is the average amount that a car dealership would sell your car for. It’s the highest value your car can be insured for.

Market value – Market value is the amount that you would sell your car for if you were to sell it privately. A bunch of factors like your service history, mileage on the car or how old the car are taken into consideration.

Trade-in value – Trade-in value is the amount a car dealership would pay you for your car if you were to trade it in. This is usually the lowest of the three values for which you can insure your car.

For classic cars or cars that are not traded on a regular basis, your insurer would generally ask you to provide them with the value you want to insure your car for. This would usually require you to get a valuation from a car dealership.

TIP: Always ask your insurer what value they insure their cars for. It could help you when you’re deciding which insurer to go with. At Naked we insure cars for their retail value as it helps our clients get into the same position they were in before they experienced their loss.

Additional excesses

Your insurer might include an additional excess where the driver is below the age of 25 or has had their licence for less than two years. Some insurers also apply an additional excess if the car has been stolen – this might be calculated as a percentage of the value of the vehicle. These are just a few examples of some additional excesses that insurers might apply to your claim. Giving your policy wording a once-over (maybe more than once) will give you a good idea of what you will be expected to contribute when you claim.

Tracking devices

You might be required to install a tracking device before your cover can start, so make sure you double check with your insurer before taking up your cover.

Administration fees

Your insurer might charge a once-off administration fee when you start your policy that will be in addition to your normal premium, and is usually between R500 and R800. There is also sometimes an ongoing admin charge that insurers load onto your monthly premium – it’s usually between R15 and R100.

Your responsibilities as a car insurance policyholder

When you buy a car insurance policy, you are entering into a legal agreement with your insurer. You both accept the terms of the agreement and agree not to take advantage of one another. Here are a list of things that insurers will expect of you in order to make sure your policy works as you expect it to:

Activating your cover with a pre-inspection

In order to be covered, your new insurer might require an inspection of your car (called a pre-inspection) to prove that it is roadworthy and that it is not currently damaged. There is usually a grace period to get this done but you should try to get it done as soon as you can. You will either be required to go to a specific shop or assessment centre to get this check done or you’ll be asked to do a walk through video of your car.

Take good care of your car

You should protect your car from damage or theft to the best of your ability. Don’t park it in a place where it is clearly at greater risk of being damaged or stolen. If it is found out that you were negligent, the claim might be denied.

Your insurer will also expect you to service your car regularly and to keep it in a roadworthy condition all times. Read more here.

Let your insurer know if any details on your policy have changed

If the details under your insurance policy have changed, then you should let your insurer know about the changes. The most common changes they would need to know about are:

Your address – You might’ve moved to a different part of town or to another city.

Use of your car – If you start to use your car for business errands.

The regular driver of the car – If your partner or teenager starts to drive the car more frequently than the current regular driver.

New modifications – You might decide you want a new sound system or towbar installed.

Where your car sleeps at night – Instead of your car sleeping in the garage, you might choose to park it in the street outside your house.

Report any damage, accidents or theft as soon as you can to the police and your insurer

If there has been an accident or your car has been stolen, it’s important to call the police as soon as you can.

Here’s what to do if you’ve been in an accident and steps to follow if the accident wasn’t your fault.

Pay your premium on time

Pay the premium on time. By law, from your second premium onwards, you have a grace period of at least 15 days to pay your premium but it is always best to pay your premium when it is due to ensure there are no complications when making a claim.

TIP: If your premium is paid monthly, you can usually ask your insurer to move your payment date to coincide with the date that your salary hits your bank account. This way you can be confident that there will be funds available in your account when your insurer collects their premium.

Keep your licences up to date

It is illegal to drive your car without a valid driver’s or car licence, which means that your insurer will expect you to keep your car and driver’s licence up to date at all times.

Take due care when driving

The fact that you have insurance does not mean you have the freedom to drive recklessly. Your insurer will expect you to drive with care and focus and to obey the laws of the road at all times. This includes not speeding, not driving when you are tired, under the influence of drugs and or alcohol, or while on your phone.

The responsibilities of your insurer

Apart from meeting their obligations in terms of the cover you bought (i.e. what they said they would cover in the policy wording) and settling your valid claims there are a number of other things that you can expect of your insurer:

  1. Your insurer needs to give you 31 days’ notice of any changes to your policy wording or premium rates.
  2. Your insurer needs to give you access to the details of your cover, including your full policy wording.
  3. Your insurer should provide you with a detailed breakdown of the different elements of your premium, i.e. commission, admin fees, Sasria, VAT, etc.
  4. Your insurer should have a complaints escalation and review process that is easy to understand, with simple requirements. They also need to make it clear where and how complaints can be submitted and what the steps are that you can expect from there.
  5. If your claim is rejected, your insurer should tell you the reason why it was rejected.
  6. From your second premium payment onwards, your insurer needs to give you at least 15 days’ grace to make your premium payment from the date that it was due. During this time they will keep your cover in place. (You will need to settle up to have your claim paid though.)
  7. If you are held legally liable by a third party for damage caused by your car, your insurer will take on the responsibility of providing representation for you if your case goes to court, provided that the event is covered by your policy. They will represent you even if the accident was your fault. They will also cover you financially if you are held responsible for damage caused by your car.
  8. If the accident was not your fault, your insurer has the legal right to attempt to recover their damages from the responsible third party on your behalf (subrogation rights). If they then make a recovery on your claim from the responsible third party, they need to refund your excess. The amount of the refund will depend on the success of their recovery. If they managed to recover 100% of the loss, you will receive your full excess back. If they only recovered 50% of the loss, you will receive 50% of your excess back – and so on.
  9. Your insurer needs to respect your data and privacy. Despite the fact that there is a legal requirement to keep your data for five years from any interaction, they should only keep data directly relevant to the service they provided.
  10. Your insurer also has to treat you fairly in all interactions in accordance with the Treating Customers Fairly (TCF) regulatory requirement. This also includes, but is not limited to, the way in which their products are designed, the advice they give, how they handle your claims, your complaints, etc.

What to do if you are unhappy with your insurer

If you’re unhappy with your insurer and the way they’ve dealt with your policy or claim, there are specific ways to raise, and escalate a complaint.

TIP: You have a window of 270 days after the date on which the insurer, for example, made a claims decision you did not agree with to raise your grievance.

First, start a paper trail

First things first, you need to lodge a formal complaint with your insurer. This should generally be done in writing to create a paper trail. Try to write a clear, concise email that follows a logical sequence, and mentions dates of relevant events. From there your insurer should begin an investigation and contact you accordingly to try and resolve the issue.

TIP: Your insurer should have a dedicated complaints team and a specific email address on their website that only deals with complaints, so make sure your email is sent to that address.

If you are not happy with the response, contact the Ombudsman

If you are still unhappy after contacting your insurer and getting their response, you may send your complaint to the Ombudsman.

Who is the Ombudsman?

The Ombudsman for Short-Term Insurance is a service created to help resolve disputes in the South African short-term insurance world. The Ombudsman serves as a mediator between the policyholder (you) and the insurance company.

Once the Ombudsman has received your complaint, they will notify you and your insurance company. They will also let you know if they need any more information regarding the dispute. After the insurance company has responded to your complaint, you will also be required to respond. From there the Ombudsman will decide whether to rule in your favour or that of the insurance company.

Use review platforms to leave a complaint for future policyholders to see

Use platforms like Hellopeter, Google reviews or Facebook to complain about your experience with the company. This could help future customers in their decision to buy insurance. But also feel free to leave positive reviews – it not only helps the company know that they are doing a good job, but also helps future customers.

Although the above should give you a good overview of how car insurance works, check out our Insurance 101 blog section for in-depth articles on common insurance questions and topics.


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