Cheap car insurance: Be wary of the risks

For cash-strapped South Africans, price is often the deciding factor in purchases. It’s wise to reduce costs wherever you can, but changing to cheap car insurance (which is tempting) could mean compromising important protection for you and your vehicle.

PARTNERED CONTENT

Considering the high rates of car accidents, theft, and hijackings in South Africa, you should change to cheap Car Insurance (downgrade your insurance policy to one with ultra-low premiums) only as a last resort. Did you know Budget Insurance offers Budget Lite – an alternative to cheap Car Insurance for owners of vehicles worth up to R250k that allows them to save on insurance without skimping on cover?

Is cheap Car Insurance better than no Car Insurance?

Having no car insurance whatsoever is a major risk that could cost you dearly in the long run. Car Insurance is there to protect you financially if something unexpected happens on the road – damage, theft, or legal fees from an accident. Without insurance, these costs all have to come out of your pocket.

However, going for the cheapest option may not be much better than having no insurance. Affordability should always be balanced with the quality of the cover and the reliability of the insurer. The best car insurance quote is one that is affordable for you and includes all the cover you need – because when you’re dealing with the stress of a damaged or stolen car, you don’t want your insurer adding to it.

The dangers of cheap Car Insurance

While some of the risks of cheap Car Insurance are known — and even listed in the policy documents — others are less clear. And you might find yourself so charmed by a low quote that you become blind to the obvious dangers. Before you reason you’ve never been in an accident, you need to consider that in only 3 in 10 vehicles in South Africa are insured (and that’s based on data published 6 years ago).

And if you suffer the misfortune of being involved in 1 of the hundreds of thousands of vehicle accidents that occur in the Republic every year, it could prove very costly even if another vehicle was responsible for the car accident. Other things to consider before choosing cheap insurance for cars include:

Limited coverage

That cheap policy you’ve just been quoted on might only cover the basics, leaving you to cover the costs for major damage. John is a prime example: he signed up for the cheapest car insurance he could find.

His car is parked in the open while he is at work, and one afternoon, a summer thunderstorm turns into a severe hailstorm. John’s car ends up with more dimples than a golf ball, and the windscreen is smashed.

Unfortunately for him, it is only after calling his insurer that he realises his cheap insurance doesn’t cover hail damage.

Difficulty getting claims processed

When you do need to claim from your insurance, you want it to be a fast, hassle-free process. Cheaper insurers may cut costs by having a smaller workforce, with each claims adjuster handling hundreds of claims simultaneously. And what should be a fast process ends up stretching on for weeks or months.

Poor customer service

Reducing costs might mean the insurer offers no online support, expecting you to call in for every query you have. In addition to long call waits, you’re likely to deal with staff who cannot answer basic questions.

High excess

We expect an excess to apply when making a claim, but what if your lower premium also means a higher excess? Peter brags about how little he pays for insurance, but never mentions his excess is R20 000.

After damaging a headlight and scratching his car’s fender while turning too sharply into his driveway, Peter gets a repair quote for R9k – because it is less than his excess, he will have to pay the R9k himself.

Hidden fees and costs

There are several disingenuous ways in which an insurer might appear to offer lower premiums. These include adding a monthly administration fee that is not reflected in the original quote.

Other fees you wouldn’t normally expect are admin fees every time you make changes to your policy, along with late or missed payment penalties.

Limited additional benefits

Some accidents can leave your car unsafe to drive. But you might find your cheap Car Insurance doesn’t cover towing or even storage, neither of which is affordable.

Less flexibility

A low-cost insurer could work with a smaller network of approved repair workshops. This might mean having to wait for a long time for your car to be repaired. Additionally, your ability to customise your cover could be severely limited, leaving you paying for cover you don’t need.

Vague policy wording

Your policy document should be easy to read and understand – an easy way to hide important info is by using ambiguous wording. Only when you try to make a claim do you learn of specific exclusions hidden in unclear Terms and Conditions.

Introducing Budget Lite

If you cannot afford to take out full Comprehensive Car Insurance for your vehicle, Budget Lite from Budget Insurance could be the solution you need, especially if your vehicle is worth under R250 000 and fully paid off. You need options, and Budget Lite offers 3 options to suit your needs and budget.

Different levels of cover

Budget Lite 1 protects you from theft, hijacking and 3rd-party liability (if you accidentally cause damage to someone else’s property (vehicle or structure/building) or injure someone. Hail damage and accident damage to your car are not included in this option.

Budget Lite 2 includes everything from the former, plus cover if your car’s written off because of an accident or hail damage, and Accident Assist for towing and storing your accident-damaged vehicle.

Budget Lite 3 is the most comprehensive option, covering all the above, plus limited accidental damage for repairs to your car (up to R15 000). Best of all, it is available for financed cars.

Reliability

Budget Insurance has a solid track record, so you know your claim matters. You can expect good customer service, reliable claims processing and financial stability.

Transparency

You know exactly what you’re getting, with no hidden surprises. Budget Lite offers straightforward plans that let you know your limits upfront.

Additional perks

While tailored for affordability, it still allows for optional extras you can add on. These include coverage for your vehicle’s audio system or bakkie canopy, and a Cash Back Bonus when you don’t claim.

Get affordable Car Insurance from Budget Insurance

Don’t let financial constraints prevent you from being protected on the road. Budget Insurance lets you tailor your coverage to your needs and pocket. Get a quote and see the difference for yourself.