Having comprehensive vehicle insurance is a must – especially when your vehicle is financed – as the vehicle has to be insured to protect both the financial service provider as well as you, the consumer against accidental damage or losses. A basic vehicle cover will not be enough to prevent financial loss in case of an accident, theft or a breakdown. “Insurance has developed into a holistic product and service offering that gives consumers options to cover them in every event” says Lize Badenhorst, General Manager: Short-Term Insurance at Iemas Insurance Brokers.
Buying a new vehicle is a very exciting process, but also a huge financial commitment. Risky as it may be, many consumers take a short-term view and just take the basic insurance option and even worse, sometimes cancel their insurance policy a few months after the vehicle has been bought. “This is very dangerous as it puts both the consumer and the finance provider at risk. In addition, many consumers take basic or third party insurance which offers very limited cover. There are many different options that add a lot of value and have to be considered when taking out vehicle insurance. Covering your vehicle should not be an afterthought,” explains Badenhorst.
So what are the options?
Most consumers are familiar with comprehensive insurance and third party insurance. Comprehensive insurance covers the consumer for the damage to their own vehicle as well as the damage to the other vehicle (third party), it also covers the vehicle in the event of a fire or theft. Third-party insurance only covers the damage to the other vehicle, however fire and theft cover can be added on. The value added or additional cover options that consumers often forget about includes car hire, shortfall cover, roadside assist, own vehicle damage/loss, mechanical breakdown cover, excess waiver and tyre insurance.
“Car hire seems like a ‘nice-to-have’, however how do you get around when your vehicle is being repaired or being serviced? Our clients have the option to hire a vehicle for 30 days or 60 days – you never know when you will be involved in an accident and sometimes the damage takes a long time to repair” says Badenhorst.
When financing a vehicle, the financed amount is often more than the retail value, which means that the shortfall (difference between the financed amount and retail value) needs to be covered. This is a very necessary product as many consumers do not take this into account when they finance a vehicle.
“Roadside assist is the product you always wish you asked your broker to include in your policy when you are stuck next to the side of the road” says Badenhorst. Roadside assist includes anything from petrol supply when you run out of petrol, to towing your car when it breaks down (mechanical breakdown). It is important to know exactly what your roadside assist includes and to save the number on your phone when you need it most.
Mechanical breakdown cover, is different from roadside assist in that it is not a value added service but rather a product that covers your vehicle for any mechanical malfunction or breakdown when your manufacturer warrantee expired. “Warrantees expire, so it is important that you include this in your policy for when the warrantee is no longer valid”, says Badenhorst.
Another all-important insurance cover product that comes in handy when you need it – even when the accident was not your fault – is excess waiver. In most cases, a shortfall amount is required when you are involved in an accident. This is the amount that is not covered by your insurance policy, however if you have excess waiver insurance, you will not have to pay the excess out of your own pocket.
We all know how expensive tyres are and many of us are not aware that most insurance products do not cover damage to your tyres alone. This is where tyre insurance come in; it covers you for any damage to your tyres including damage from dreaded potholes where the vehicle itself was not damaged and not covered by your underlying policy.
“Vehicle insurance is not a one size fits all and sometimes it can seem quite complicated as there are many options available. However, it is advisable to discuss all the above-mentioned options with your broker to make sure that you are not caught off-guard and under-insured when something happens to your vehicle” concludes Badenhorst. It is therefore very true with insurance, not to reduce your cover during hard times as it may just be a penny wise, pound foolish decision.