Mangle your insurance?

2010-06-12 14:00

Getting the right vehicle cover can save you from financial ruin,

especially now that more motorists are holding onto their cars for longer.


The right cover can save you money with lower premiums.


Insurance experts believe that underinsuring your vehicle may be

the best option because the value of your car depreciates ­every year.


But the Ombudsman for Short-Term Insurance, which ­investigates the

bulk of complaints ­relating to insurance ­disputes, advises consumers to seek

­opinion from insurance brokers before downgrading on existing policies.


Brian Martin, the ombudsman has observed that car owners are

increasingly keeping their cars for longer ­periods and downgrading from

comprehensive cover to third-party ­insurance.


Martin says fewer cars are now comprehensively insured.


This can mean that a driver who causes an accident might have

enough insurance to cover the ­repairs to the other vehicle, but not enough to

fix his or her own car.


Martin says: “Consumer ­education remains one of the biggest

challenges facing the ­industry.”


Standard Bank Insurance says it is wise to choose comprehensive

insurance for new and used vehicles.

Spokesperson Keith Watson, director for

strategy and business support, says comprehensive ­insurance covers damage to

­other people’s property, damage to your own vehicle and also ­covers

passengers.


“It gives the widest protection, but it also means paying a higher

premium. The value of most cars ­decreases every year. So, the need for

comprehensive insurance may eventually fall away,” says Watson.


As the replacement value of the car decreases, consumers should

consider reviewing their cover to reflect this situation.


Watson says an older car may not represent a serious ­financial

loss if it is stolen or damaged.


However, an older car may ­cause damage to an expensive vehicle in

an accident.


The minimum cover protects a policyholder from legal liability for

other people’s property and their passengers.

 

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