Take Your Pick: The Different Types of Car Insurance

The insurance industry has evolved since its inception, and one of the best changes was the introduction of different policy types. Insurance providers recognise that South Africans require the same service, but said service needs to consider that we lead separate lives.

That is why car insurance coverage mainly comes in 3 types: Comprehensive cover, Third-Party and Third-Party Fire and Theft.

The future of car insurance promises coverage tailored to your individual needs, and companies are slowly introducing ways to get there quicker.

Let’s take a quick look at each type of coverage's key features and benefits, including the level of protection provided, the cost, and the exclusions.

We’ll also help you determine which type of car insurance is best for you based on factors such as your budget, risk tolerance, and coverage requirements.

  • Comprehensive cover.
  • Third-Party cover.
  • Third-Party Fire and Theft.

Comprehensive Cover

As the name suggests, this type of cover includes all or nearly all elements or aspects, making it the coverage that offers a fundamental level of protection.

Comprehensive car insurance covers many risks, including accidental damage, loss due to theft, vandalism, as well as damage or injury you may cause to another person or their property. 

Comprehensive cover is perfect for first-time car owners or individuals that are buying their vehicles brand new. Most new cars require financing from a bank or financial institution, and the cost can be astronomical in the case of a write-off.

The added benefits, such as credit shortfall cover, are also great about this type of insurance.

Shortfall cover or credit shortfall helps pay the difference between your comprehensive insurance and the outstanding balance owed to your finance house, ensuring you never pay out of pocket.

In terms of affordability, this type of cover is typically the most costly. 

The monthly premiums are slightly higher than other coverage options, but this is because of how extensive the coverage is.

However, even extensive coverage has its limitations. Comprehensive car insurance will cover you for everything except the following events:

  • Normal wear and tear/mechanical breakdowns.
  • Damage caused by driving under the influence of drugs or alcohol.
  • Driving in an illegal, negligent or reckless manner.
  • Damage or loss while driving without a valid or suspended license.
  • Voiding the terms and conditions of your cover (e.g. for commercial use or outside of a specific geographic location).

Some insurance policies may cover natural disasters but exclude certain events like floods and hailstorms. 

A word to the wise: read the fine print of your policy, and ask your insurance provider about any specific exclusions or limitations that apply to your policy.

Comprehensive car insurance is highly recommended for all motorists, and in South Africa, that number is meagre. 

Of the more than 11 million registered vehicles driving on our roads, 60 to 70% are uninsured. 

Meaning that should you be involved in a collision caused by another vehicle, the likelihood of the driver at fault having the means to cover your damages is about 30-40%

So it’s a good idea to take matters into your own hands by insuring your car against unforeseen accidents. In that way, you can protect yourself against other drivers and, in the same breath, protect other drivers from you.

Comprehensive car insurance is perfect for first-time car owners or individuals that are buying their vehicles brand new. Most new cars require financing from a bank or financial institution, and the cost can be astronomical should the vehicle be written off.

Specific requirements vary depending on the insurance company and the policy you pick. However, generally, you may be required to pay a higher premium for the coverage, and you’re required to pay an excess when claiming.

Third-Party Cover

Third-Party insurance is the most basic coverage offered by insurance providers in South Africa. This type of insurance protects the policyholder should they be held liable for accidents resulting in damage to property, injuries or death of a third party.

While this policy covers damages sustained by another driver or a passenger in another vehicle, it does not cover any damages to the insured party or your car, making it very limited.

The cost of Third-Party insurance can vary depending on factors such as the type of policy and the risk factors associated with the insured party. However, it is typically an economically friendly option.

Compared to Comprehensive coverage, Third-Party insurance policies have more exclusions due to their limited range. Such exclusions include:

  • Policyholder's stolen or damaged items
  • Damages to the windscreen or windows.
  • Theft or fire damage.
  • Injuries incurred by the policyholder. 

Although basic in its coverage offering, Third-Party insurance does have benefits that make it a worthwhile investment. 

As a policyholder, you will have protection against financial loss resulting from liability claims, and it helps manage the risk of financial loss and protects your assets and income.

And best of all, it’s relatively cheap, meaning the cost of comfort that comes with knowing that you’re covered at an affordable price.

Third-Party Fire and Theft

Another basic form of car insurance is Third-Party Fire and Theft, which covers any accidents where the policyholder is held liable for damages or injuries caused to a third party in an accident. 

In addition, the coverage includes loss due to theft, carjacking and fire.

Older cars often have electrical problems and are prone to overheating. Both issues can cause a fire, so fire protection is a good idea.

Third-Party Fire and Theft does not cover damage to the policyholder's vehicle due to an accident, meaning you’re responsible for damages to your car.

Third-party fire and theft cover is typically less expensive than a fully comprehensive policy, as it provides a lower level of protection. This type of insurance is perfect for older cars that are paid off and not worth much. 

Conclusion

From Third-Party coverage, which provides the minimum level of protection, to fully comprehensive coverage, which offers the highest level of security for both the policyholder and third parties, there is a policy to suit every driver. 

Only you know the ins and outs of your insurance needs, and they are highly dependent on your budget, risk tolerance, and coverage requirements.

It's essential to consider the level of protection you require and your budget when choosing a car insurance policy. That’s why we encourage you to do as much research as possible; the more you go, the better you’ll feel about what your policy entails.

It's also important to read the policy carefully and understand what it does and does not cover. This way, you can ensure that your car is covered and has the proper protection in case of collisions, accidental damage and other similar incidents.

If you’re still in need of more information, head over to our website at https://www.pineapple.co.za/car. Or, if your ready to commit to comprehensive car insurance... get a quote!

Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply. Premium is risk profile dependent.

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