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Why Do You Need Car Insurance? (Part Two)

In part two of this guide, we take a look at the top reasons why people avoid getting car insurance, and why you really need it.

We know, insurance companies sometimes sound a little like the mafia. 

“That’s a nice family you have there. It would be a real shame if something were to happen to them.” 

It’s also impossible to bring up the topic of life insurance with your spouse without it seeming like you’re planning on having them whacked. 

Coupled with all that boring paperwork and a number of other things, people like to stay away from all kinds of insurance altogether. Life insurance? Pffft… Why? So that your wife can get her new boyfriend a trampoline? 

Your car, on the other hand, is another story. The car insurance industry, in particular, is facing a crisis. With only 30% of the cars on the road currently insured, the chances of you ending up in an accident with another uninsured driver is pretty good. In Part One of this article, we looked at the types of car insurance you can get and the basic need-to-knows while sourcing quotes. We also underlined the importance of reviewing your policies carefully. This is critical, in order to avoid any nasty surprises when claiming. 

You need to ask the following:

  1. Does your policy include hail damage?
  2. Is the driving of your vehicle restricted to a named driver?
  3. Is cover for theft or hijacking subject to the installation of an immobiliser or tracking device?
  4. Are business-use extensions included in car and household insurance?
  5. What territorial limits are applicable?
  6. Are penalties imposed for young drivers?
  7. What excess payments apply in the event of loss or damage?
  8. Are you covered for loss/damage from mining operations, landslip or subsidence?
  9. Is there provision for car hire?
  10. What other value-added benefits are there?

Now, we’re going to be taking a closer look at why people avoid getting car insurance, and why you really need it.  

Dishonest Insurance Claims Are On The Rise

Why Do People Avoid Getting Car Insurance?

Driving around in South Africa without insurance is incredibly risky. For a number of reasons, people keep putting off getting insurance. Here are the top reasons:

1. It’s Not Affordable

Many South Africans can’t afford even the cheapest vehicle insurance, such as Third Party cover. Maybe the cost of insurance over a year is worth more than your car itself. For that reason, most people don’t even consider it.

2. They Just Don’t Drive That Much

People who work from the comfort of their home or who use a lot of public transport, for example, might not feel the need to insure the car standing in their driveway. If the bulk of your travelling consists of popping over to the mall and back, that monthly premium doesn’t seem worth it. 

The reality, however, is that most accidents happen close to home. Most hijackings occur right in your driveway. Insurance is vital, no matter how far from home you venture, or how often.

3. “It Won’t Happen To Me”

Everybody thinks they’re the best driver. The truth of the matter, though, is that even if you are – it isn’t always up to you. Accidents happen quickly, and for a number of reasons. In day-to-day commuting, we all contribute to the chaos. You think you’ll never be in a head-on collision. Or you’ll never accidentally reverse into an open man-hole and break your control-arm clean off, but hey, it happens. 

This phenomenon, known as optimism bias, is something we’re all prone to. This is when people think they’re less likely than others to have something bad happen to them. It works right across all of our expectations, but this means that our expectations and reality aren’t always aligned. 

So, many people believe they just don’t need insurance, until they really do.

4. They’re Unaware Of How Costly Repairs Are

Well, say you drive a cheapish car. You may might think that your skadonk repairs will be pretty cheap, too. But, they’re not. 

Wait until the cambelt snaps and bends all of your valves. Oh, brother, I hope you like the taste of 2-minute noodles for the next three months. 

Repairs can be exorbitant without vehicle insurance. Even worse, if your car is written off in an accident, most people just don’t have the means to buy a new one. Here’s something worth knowing: If the cost of repairs is more than 70% of the value of a car, that’s considered a write off. 

That’s the standard in the South African insurance industry. Which means that even a fender bender can result in hefty expenses.

5. They Don’t Really Care

For a lot of people, a car is just a means to get from point A to B. You pick up a few dings or scratches here and there and it’s not the end of the world. The car functions and that’s all that matters. 

They may not give much thought to doing any repairs on their own vehicles – but they don’t take Third Party into account. If you’re responsible for an accident, you might find yourself in hot water.

Why Do You Need Car Insurance?

Insurance is a means of protecting the insured party from some kind of financial loss. It’s also a risk management tool used to hedge against a contingent, uncertain loss. 

Car insurance, for example, not only protects you but also safeguards others who may be driving in your car. It covers you, your vehicle and anybody else who may be involved. 

As previously mentioned, insurance possession rates in SA has always been shockingly low. Here are a few reasons, though, why that needs to change:

  • If you cause a huge accident, you could leave a vulnerable victim without the care they need to recover from what is probably the worst ordeal of their life;
  • If you’re hit by an uninsured driver, and don’t have insurance yourself, your medical care won’t be covered. Neither will the repairs. What’s to stop that driver from simply reversing and fleeing the scene?
  • Should your car be stolen or written off and you can’t afford a new one, you’ll be without transport for quite a while;
  • You could be held personally liable for significant Third Party claims;
  • Your car could be damaged by weather at any time. It could be stolen or vandalized. These are unexpected events which nobody budgets for;
  • One serious collision is enough to bankrupt the uninsured for a long time. Simply put, without insurance you could lose everything. Medical expenses, lawsuit judgments, car repairs. It’s just not worth the risk to go without it anymore.
  • Knowing you are insured against the unexpected is peace of mind. To know you’re protected against whatever might happen. Including those horrifically inept CF licence plate drivers.

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