
Cheap car insurance policies generally have limited coverage and high excess fees, which could make them costlier in the long run than a policy with a higher monthly rate.
Different insurance policies have different terms and conditions, with the cheaper options usually being governed by much stricter rules.
For instance, many “cheap” insurers offer low monthly premiums but make up for it with sky-high excess fees when you claim.
“You might think you’re saving, but when you need to claim, it could cost you thousands,” said King Price.
Moreover, many budget insurers strip down their cover to the bare minimum – leaving you exposed when you actually need it.
Extras like roadside assistance, accident assist, and hail cover might not be included, either.
King Price advises consumers to take an in-depth look at the benefits versus the cost of coverage when deciding on a car insurance provider.
“We all love a good bargain, but when it comes to car insurance, cheaper isn’t always better,” said the insurer.
The critical car insurance question
Before claiming damages from your car insurance, be sure to ask yourself how much the repair is really going to cost.
If you can afford to pay it without going to your insurer for help, it may be a better choice to do so.
King Price explains that the cost of repairing a scratch or similar damages depends on various factors, such as the depth of the damage, the location, and the type of paint.
“In South Africa, even a small scratch could cost anywhere from R1,000 to R5,000+ depending on the work involved and if there’s any blending or repainting needed,” said King Price.
“If there’s any damage to parking sensors, cameras, or trim pieces, the cost climbs even higher.”
Let’s say you just came back from the shop and notice a new dent on your bumper with a bit of leftover paint from the car that made it to boot.
You might be tempted to call your insurer right away and get it fixed, but it may not be the best course of action.
Whether it will be worth getting the cover provider involved depends on the type of contract you have and your excess.
If you have third-party only, or third-party, fire, and theft insurance, then it’s a resounding “no.”
“These two policies are insanely cheap because they’re not covering the full range of risks that comprehensive car insurance does,” said King Price.
“So, damage to your own car won’t be covered.”
Perhaps you have comprehensive protection, in which case a tiny fender bender will be covered.
However, the decision on whether or no to claim is still not as clear-cut.
For example, if the repair costs R2,000, but your excess is R3,000, you will end up paying R1,000 more than you need to when going through your insurer.
Additionally, even if your excess is low, claiming for minor damage could affect your premiums at renewal.
Motorists who claim more frequently than others are seen as higher risk, in which case their premiums may go up by a bigger percentage than their peers during the annual fee renewal cycle.
“Generally, the advice is to weigh up the cost of the repair against your excess amount,” concluded King Price.
“If the repairs will cost less than or close to your excess, it’s probably better to pay for the fix out of pocket.”