THE 411 0n car insurance

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Photo: Peter Matsebula.
Photo: Peter Matsebula.

THERE are questions that car owners ask insurers regularly and, though cover differs from insurer to insurer, knowing the answers to these questions could improve your experience when making claims.

One of the questions car owners often ask is: “Why does my premium increase even though my car’s value decreases every year?”

The value of a car depreciates over time, meaning it is worth less than it was a year ago for two reasons. Mainly the car ages, and the mileage increases every year.

A car with higher mileage is worth less than the same car with lower mileage.

So why don’t car insurance premiums go down every year if the vehicle is worth less than it was a year ago?

Head of MiWay Blink, Christiaan Steyn, said: “Premiums tend to increase in line with inflation over time. The value of your car is only relevant when your car is stolen or written-off and these types of claims only make up around 15% of all insurance costs.”

Steyn said the value of your car has a relatively small impact on your premium, as roughly 75% of insurance costs are spent on repair costs (parts, paint, and labour) and the cost of repairs goes up year on year.

“It doesn’t cost any less to replace the bumper on a one-year-old vehicle than it does on a brand new one. Doing the same repair job to the same car will cost more in future years, even though the value of the car is less. The result is that the increase in repair costs outweighs the reduction in value,” Steyn said.

Another question car owners might have is whether car insurance covers bodily harm in case of an accident.

In South Africa, car insurance does not cover bodily harm in case of an accident, it only covers the loss of or damage to the insured car and aspects linked to it like towing and repairs.

There is, however, the Road Accident Fund, which is government-established insurance for road users in South Africa that covers bodily harm in case of an accident.

Since the RAF is funded by fuel levies, anyone who gets injured on South Africa’s roads due to someone else’s fault, can claim from the RAF.

Just as much as road users are insured by the RAF for bodily harm, those who insure their cars for financial loss have options of cover.

In a nutshell, options available to car insurance customers vary from insurer to insurer but there are non-negotiable or basic aspects of cover, which don’t include cover for bodily harm in case of an accident.

For example, most car insurance policies offer Pothole Damage cover as a basis, but car insurance policies can be modified to suit the policyholder.

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