Motorists taking chances with their old cars in South Africa

A lot of motorists in South Africa believe that the cost of insuring an old vehicle isn’t worth it, but driving without coverage can open you up to enormous risk.

This is according to Naked Insurance, which recently warned of a concerning trend of motorists opting out of insurance for various reasons.

The company noted that approximately 800,000 vehicle accidents are reported in South Africa every year, which means all road users are exposed to substantial risks.

For many people, these risks are exacerbated by the fact that they do not have any form of insurance, which means they have no protection from liability in the even they are held responsible for a car accident.

“Many first-time buyers and owners of older cars often question if insurance is worth it. They often assume that a car accident won’t happen to them, but the reality is that around one in five drivers are expected to be involved in an accident in any given year,” said Ernest North, co-founder of Naked Insurance.

“That means most of us will be involved in an accident once every five years, though it can even happen more often.”

“Being held responsible for an accident can have a big impact on your finances, even if it’s just a minor bumper bashing in a mall parking lot.” 

North warned that the risks of being uninsured apply to all motorists, regardless of age and the value of their vehicle.

However, many individuals are skipping on insurance in a short-sighted attempt to reduce their monthly spending in response to the current cost-of-living crisis.

“Whether you drive a brand-new luxury car or a 15-year-old set of wheels, the risks of being uninsured are very real,” he said.

“In today’s economic climate, many people are trying to save money wherever they can, but skipping insurance entirely can be a costly mistake. Even the most cautious drivers can end up being held partly or fully liable for an accident.”

Even if you are only held partially responsible for an accident, you could be liable for hundreds of thousands or even millions of rands in damages to other vehicles or property.

Naked cautioned that, in a worst-case scenario, a person may be on the line for a multi-year repayment agreement with their insurer.

This may even include attachment of your assets if you are unable to pay.

“These kinds of debts can drain a person’s disposable income for years.”

Comprehensive vs third-party insurance

North explained that many people do not think insurance for older cars is worthwhile or affordable.

“However, it is important to understand the difference between comprehensive and third-party only insurance, and to know that you have options.”

Comprehensive car insurance covers damage to your own car, theft of your car, and damage you cause to other vehicles or property.

This can be a valuable option for well-maintained older models, as the payout can go a long way towards a panel beater or a deposit for a replacement car.

Alternatively, you can opt for third-party insurance, which only covers the damage to the other person’s car or property in an accident that was deemed to be your fault.

Naked stated that this option makes more financial sense for low-value, older cars, particularly if the affected individual is able to replace their own vehicle.

In these cases, the greater risk is being held liable for damages to a much more valuable asset, such as when a person crashes into a supercar costing millions of rands.

North said that one of the biggest barriers to insurance adoption is cost, as many third-party options typically start at around R200 per month, which is difficult for low-income households to maintain.

Even so, the risks of driving uninsured far outweigh the small savings a person can achieve by skimping on coverage.

The company said to consider the following aspects when looking for insurance:

• Make sure you understand the difference between comprehensive and third-party liability cover.
• Think about your ability to pay for costs such as repairs or replacement of your car out of your own pocket when weighing up your options.
• Seek quotes. With an online insurance platform like Naked, you can experiment with options such as different excess levels and comprehensive versus third-party insurance to get the right cover for your needs and budget. 
• Remember that the insurer considers factors such as your age, accident history, where you live and store your car, and driving experience, in addition to the age, brand and model of your car to determine your premium.
• Always read the wording for policies you are considering. 

“Driving completely uninsured is risky, not just for you, but for everyone else on the road. At the very least, third-party insurance gives you peace of mind and protects you from debts that could take years to pay off.”

“This is why third-party insurance is mandatory in many other countries as a means to protect all vehicle drivers from unnecessary financial losses. But in South Africa, people typically buy comprehensive insurance or none at all.”