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Understanding the Basic Types of Car Insurance

In other words: Car insurance for dummies…

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Due to the huge costs associated with vehicle insurance in South Africa, drivers often just opts for the cheapest policy available, often without studying exactly what they are covered for. Getting a suitable insurance policy for your car may not be a priority, but it really should be given the fact that it protects one of your biggest investments; your car.
South Africa, is known for being a country with high vehicle criminal activity as well as unlicensed road usage and poor road conditions. However, a good insurance policy can provide complete peace of mind by being financially and legally covered should you be involved in an accident or be a victim of car theft.
Getting the right insurance policy for your car can be a complicated affair and consumers who are not familiar with the various insurance products available are often left bewildered and / or end up paying more for their car insurance.


A car insurance policy is in essence only 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. The degree of financial responsibility the insurer assumes depends on the type of insurance policy you opted for, hence it is important that you read your policy and the schedule and make sure that you clearly understand the terminology, terms and conditions, and any possible exclusion / inclusion clauses.
When a claim is submitted, the insurer will pay out an amount based on a variety of factors that are determined beforehand as stated in the policy documentation. The main factors are: Make, Model, Age and condition of the insured vehicle.
A damaged car is quoted to be repaired and if found that repair costs exceed about 70% of the car’s value, the vehicle will generally be written-off. Insurers will typically pay the policy holder the vehicle’s ‘market’ or ‘retail’ value, depending on the terms of your policy. Market value is the average of the retail and the trade value and will usually not be enough to replace your car with a new one. Make sure your policy states that the vehicle is insured for ‘Retail value’.
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