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Third-party liability insurance – A good option for motorists on a budget

Third-party liability insurance is a good option for motorists who are driving older vehicles or who are under financial strain and can no longer afford comprehensive insurance, according to Ernest North, co-founder of Naked Insurance.

A third-party insurance policy protects drivers from legal liability when damaging another person’s property, in contrast to a comprehensive policy that covers drivers for damages to their own or someone else’s property, as well as theft.

As such, a third-party insurance policy is generally more affordable, said North.

A multi-car collision or something as small as a scratch on a new sports car can be costly to repair, and without any insurance, the driver responsible for the incident will have to pay it out of their own pocket.

“Third-party car insurance protects you from the legal liability that arises from you damaging someone else’s property in an accident that was deemed to be your fault. Property may mean a vehicle and its contents as well as a building or set of traffic lights you collided with,” said North.

“Without insurance, the other drivers’ insurer will seek to recover the cost of the damages from you. You could get caught up in a long court case and end up repaying the insurer for damages for years.”

With over 800,000 vehicle accidents across South Africa each year, coupled with 60-70% of the 11 million vehicles on the country’s roads being uninsured, third-party cover is a practicable way for motorists to get the minimum level of insurance.

“What’s more, buying a third-party policy for your first car is a bit like getting a credit card to build a credit history,” said North.

“If you’ve had five years of third-party-only insurance by the time you buy a new car on credit, it can help to bring the costs of your comprehensive cover down. That’s because insurers tend to see drivers who have never had any insurance as higher risks.”

How to choose insurance

North provided the following tips for motorists who are stuck choosing between insurance providers:

  • Read client reviews and seek multiple quotes
  • Carefully read the policy wording for each individual policy you are considering
  • Know the difference between comprehensive, third-party liability, and stationary cover
  • Carefully assess your ability to repair for maintenance and repairs out of pocket before deciding on a final policy
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