Car insurance shouldn't be a grudge purchase, but rather be seen as an investment in peace of mind and long-term financial security.
Image: ALS Paramedics
With South Africa’s roads ranking among the most dangerous in the world and the festive season fast approaching, car insurance isn’t just a grudge purchase - it’s your lifeline when the unexpected happens.
It’s estimated that between six to seven out of every 10 drivers have no car insurance because people either want to save money or think they can’t afford it, and “because it won’t happen to me”.
This can be extremely short-sighted because, according to Ernest North, co-founder of Naked digital car and home insurance, whether you cause the accident or are the victim of another driver, the financial and legal fallout of driving without insurance can be severe, and recovery can take years.
Car insurance, he says, shouldn't be a grudge purchase, but rather be seen as an investment in peace of mind and long-term financial security.
Here’s what happens in various accident scenarios:
The immediate consequence of being in an accident where you were legally at fault is that you will be liable for all damages. That means you will not only face the bill for the repair of your own car, but also for the other vehicles involved in the collision and for costs such as legal fees.
If the other driver is insured, they will usually claim from their insurer. Their insurer will, in turn, send you a bill, called a recovery claim.
“If you’re unlucky enough to collide with an expensive, luxury car, the repair cost may run into hundreds of thousands or even millions of rand. If you can’t pay or refuse to pay, the insurer may take legal action.
“This can lead to a court order requiring you to pay back the damages with interest, affecting your disposable income for years to come. In some cases, the insurance company can also seek to attach assets like your car or home,” says North.
If the other driver is also uninsured, they may take you to court themselves to get you to pay for their repairs, legal expenses and costs such as car hire.
A big drawback in both these instances is that usual insurance rules and protections don’t apply. For example, without insurance, you will not be able to complain to an ombud or regulator about how the insurer treats you.
If you were not at fault, you can claim from the other driver.
If they are insured, you can approach their insurer directly with your claim.
If they are not insured, you’ll have to negotiate directly with them to try to recover costs or take legal action yourself. For damages under R20,000, you can use the Small Claims Court without a lawyer.
But the path to recovering money for your damaged car is uncertain and stressful:
You may need to pay for repairs to your car first, and then try to claim it back from the other driver.
You will need to prove the other driver was at fault. This can be difficult when you are facing an insured driver’s legal team. In court, it might be your word against that of another driver or their insurer’s experts. In addition, you will need to get a number of quotes to show there was a loss on your side.
Fault is not always clear-cut. In fact, under the ‘Apportionment of Damages’ law, both drivers can be found to be partially at fault. For example, you could be held 30 percent responsible and still owe money even if the other driver was mostly at fault. The majority of accidents have multiple parties at fault, even if a small percentage.
You might need to take the other driver to court to recover your money. Court cases can take months or years, and even if you win, the other driver might not have the money to pay.
Most insured drivers have comprehensive insurance because banks will insist that customers get insurance before they finance their cars. This includes cover for theft or any damage to your own car, as well as damage you cause to other vehicles or property.
“Many drivers avoid comprehensive cover because it seems too expensive, especially if they are driving an older, low-value car,” says North.
“If that’s the case, it’s still important to at least have third-party insurance. This protects you against legal liability for damage your vehicle causes to other people’s property, whether it’s a car, streetlight, or a wall. The insurance provider will also help if there is a legal dispute.”
Traditional third-party cover often starts from R200 per month, but digital platforms have made it much more affordable.
If you shop around, you can get up to R10 million in third-party cover from just R70 per month, with no excess.
“That’s less than a basic Netflix subscription, and far more affordable than the costs and long-term consequences of an accident if you’re held responsible,” North says.
“The bottom line is that whether you cause an accident or are hit by an uninsured driver, the financial risks of driving without insurance can follow you for years.
“Even the most basic third-party policy can protect you from severe consequences and give you the peace of mind that, if the worst happens, you won’t be left facing it alone.”
In a country where potholes, reckless taxis, and unpredictable traffic are part of our daily commute, driving without insurance is a dangerous gamble. With road fatalities climbing each festive season and the high cost of living, the fallout from even a minor accident can be financially devastating.
Shop around for what suits you best and have peace of mind when you put your feet up during the holidays and, for that matter, every time you get behind the wheel.