Including insurance costs in car-buying calculations means peace of mind
Rational thought often vanishes when a car lover examines a gleaming vehicle. A part of his or her brain will say “you are getting in too deep, it costs too much”. Unfortunately, many will give in to the voice that looks at the monthly installment and says “you can handle it”.
Buyer’s remorse soon follows as the costs of insurance, maintenance and fuel are added to the monthly payment. The solution is usually to save money by compromising on insurance.
Cutting back on insurance brings instant relief to a hard-pressed wallet. As with most actions, it does have consequences, and some of the results can be catastrophic.
WHAT NOT TO DO
The most dangerous action of all is to have a knee-jerk reaction and cancel the policy. It’s best at this point to remember that cars bought on installment sale in South Africa have to be insured.
If you are a high-stakes gambler who thinks that the risk is minimal because you are a good driver just be prepared to live with the unforeseen costs.
“They include paying all your expenses, and an insurance company suing you to recover the money spent on repairing a client’s car that you may have collided with.”
Of course, also to be considered is that your car could be damaged beyond repair. Without insurance, there will also still be installments to be paid. It’s a guaranteed balance sheet breaker.
What is most concerning in these times, is buyers who take compulsory insurance so that a car’s sale paperwork all looks fine and then cancels the policy a month or so later. As many finance houses run checks on insurance during the year, protection is purchased again, only to be cancelled a little later. The results can be the same as not having insurance at all.
THE REALISTIC OPTIONS
The time to begin thinking about insurance payments is when you buy the car. As a consumer, you are not obliged to take a policy offered to you by a seller or finance house. Delaying the delivery of the dream wheels by a day or two allows you to shop around or ask a broker to do the homework for you.
Opting for a lower premium by agreeing to an increase in the excess payment,” is always an option. The problem is that the lower the premium, the higher the excess.
It’s one thing to have an excess bumped up from, say, R2 500 to R5 000 if you can afford it. Let it go too high and personal budgets and hard-won savings can go out the window very quickly,
The way is always open for a driver with only third-party cover to claim for repairs from another driver if that driver is comprehensively insured. The element of blame has to be proved, however, and can take some time while you sit without transport.
“Times are tough, but having a car insured is a ‘must-have’. Rather than expose yourself to unnecessary risk, approach your broker to see what can be done to reduce premiums, or shop around yourself. While doing so, remember that all policies are not created equal.
Cheap insurance isn’t necessarily good insurance. Read those T’s and C’s, or get your broker to advise you.
Always remember, you get what you pay for, if its cheap, there is a reason for that
For any assistance or advice please feel free to leave your details on our website www.esbrokers.co.za
Published in The South African
written by Charles Skinner