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Beware of Cheap Car Insurance

Thursday, 17 September 2009 07:11

Shopping around online for cheap car insurance will render results as varying as the price of the cars being insured. While one insurer offers comprehensive insurance at R800, another, for the same cover, will offer R1,400. It begs the question whether it is in fact the same cover and why the difference. Making an informed decision regarding your cover should take into account more than the cost of the premiums. Cheap car insurance will mean less cover.

While you are promised the cheapest car insurance on the market with free rental and roadside assistance built into the price you might not be getting the correct cover or the protection you need. Not even a cash-back bonus will balance this out.

Lower premiums usually mean higher excess. While this may be voluntary, it doesn’t make sense to pay a high excess amount. This sort of defeats the purpose of insurance which is, after all, to put you in the same financial position as you were before the accident or theft. Being out R5,000 for excess is not the ‘same financial position’ no matter which way you look at it.

Certain aspects of the cover may not be included in the cover offered by an insurance company with lower premiums. Instead of comprehensive, you might be getting ‘no-frills’ insurance without the road assist or rental car or other ‘value added benefits’. Your insurer might tell you this cover is included but not as extensively as it would otherwise be. While you might get a rental car with the cheaper policy, it may be for a shorter period of time than the more expensive policy.

There may be a named driver clause in the cheaper policy too. This means that a claim can only be made if the designated driver of the vehicle was driving at the time of the incident.

Your insurer may specify who will fix the vehicle. This is standard practice, but the panelbeater your cheaper insurer chooses may be dirt cheap for a reason.

When choosing cover make sure to compare the same cover and not just go for cheap car insurance. Although two policies may be labelled comprehensive, they may be different. Make sure you understand the benefits and exceptions to the cover before deciding.

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