HomeSmart MoneyThings first-time car owners need to know about choosing an insurer

Things first-time car owners need to know about choosing an insurer

Whether it’s a gift from your family or the product of your first real, full-time salary, taking ownership of your first car is a big deal. It represents freedom and independence. Suddenly, you can go wherever you want, whenever you want (provided you have enough money to keep your fuel tank full). It’s no surprise that so many people view it as a cause for celebration, complete with photos and giant ribbons.

But taking ownership of your first car also comes with serious responsibilities. Aside from maintenance and fuel costs, you should insure your vehicle too. While cars aren’t legally required to be insured in South Africa, not having insurance can have serious consequences. Not only will you have a much more difficult time repairing or replacing your car in the event of an accident, but you may also have to pay out of pocket if you’re in an accident with someone else.

At the same time, you shouldn’t go in blind when it comes to choosing an insurer. With the right knowledge in place, you can ensure that you get the most comprehensive coverage available while also paying the best possible price on your insurance.

Understand the insurance basics 

Before choosing an insurer, there are some basic things you should know. First off, it’s important to know that you’ll be presented with a few options when you ask for an insurance quote. These options can broadly be broken down into three categories: third-party cover, third-party, fire and theft cover, and  comprehensive cover.

Third-party cover is the minimum cover you should have and covers you if you damage someone else’s car in an accident that’s your fault. Third-party, fire and theft cover adds protection to your car in the event of a fire or if it’s stolen and comprehensive cover takes care of nearly all of your vehicle insurance needs. Which of these options you choose will impact your premium (the amount you pay each month).

If you do register a claim, you will also have to pay an excess. Simply put, it is the first amount payable by you in the event of a valid claim, this is you carrying the risk while the insurer carries the larger sum of it. In general, the higher your excess is, the lower your premiums are. It is therefore important to know whether you are more comfortable paying a little extra each month or if you would rather draw from savings when choosing an insurance policy.

Your age matters 

There’s no easy way to say this, but if you’re under the age of 25, you are going to pay more for insurance because of  the higher risk profile

While there is nothing that you can do about your age (except wait for the natural passing of time), you can still  lower your premiums . By choosing an insurer with telematics backed into its app, for example, you can demonstrate responsible driving behaviour and get discounts as a result.

Sweat the small stuff 

If you have the chance to choose your first car, don’t just base your decision on things like looks and performance. You should also factor in how much the car will cost to insure before making a purchase.

Several things impact a car’s insurance costs, including make and model. Some makes and models of cars are more susceptible to theft and hijacking, making them more expensive to insure. Other factors, including a vehicle’s safety features, are taken into consideration too. Even the colour of a vehicle can play a role. The bodywork on cars painted in plain colours, for example,  are cheaper to repaint than those with metallic bodywork, which impacts insurance costs.

If you are able to, ensure that your car is parked somewhere secure and undercover when you’re at home and work. Having those things in place not only means your car’s less likely to get stolen but also that it is less likely to get damaged by hail or falling branches during periods of extreme weather.

Beware of modifications 

You may be tempted to stamp your personality on your new vehicle. While nothing is stopping you from doing so, you should know that any modifications you make to your vehicle may impact your insurance.

Installing a new sound system, for instance, could increase the value of your car and drive up your premiums. If you do install non-standard accessories to your vehicle, remember to insure these to be covered in the event of a claim. Conversely, things like aftermarket turbos and dropped suspensions could make your car more dangerous and therefore more expensive to insure. Extreme modifications like a nitrous-oxide installation, meanwhile, could make your car uninsurable.

The extras matter 

You may think that you’re making a financially responsible decision by choosing the most basic, bare-bones insurance policy possible, but that isn’t always the case. Choosing an insurer that includes extras, such as roadside assistance, in its offerings can save you a lot more money down the line. Getting your vehicle towed, for instance, may not seem that expensive until you have to pay for it yourself.

You should also choose an insurer that makes setting up a policy and making a claim as simple as possible. The last thing you want when you’ve been in an accident or your vehicle’s been stolen is to have to find, print, and fill out dozens of forms. Some insurers let you claim by simply sending photos of the incident and answering a few questions on its app. These may seem like small things, but in the long run, they can make a huge difference.

Getting insurance right from the start 

No matter how big, small, cheap, or expensive it is, you’ll likely make a lot of memories in your first car. But those memories will quickly turn sour if your car is in an accident and you can not repair it or if it gets stolen and you can not replace it.

It is critical that you not only have insurance, but that you choose an insurer that understands and can give you full value from your policy.