8 top myths about car insurance

myths about car insurance

There are certain false beliefs that people hold about short-term insurance that often trip them over or catch them by surprise especially during the claims process. Some of these beliefs are common reasons why claims are repudiated by insurers.

Here are 8 8 top myths about car insurance:

1. Myth: My vehicle insurance cover applies to all drivers of my car on the same terms.

Fact: Vehicle insurance policies are rated for the regular driver of the vehicle, i.e. the person who drives the vehicle the most. If you are specified as the regular driver of the vehicle but your 20 year old son actually drives the car more than you do, the insurance company may reject the claim if your son is the driver in an accident. This is because the premium was determined relative to your risk profile and not your son’s. If you son borrows the vehicle on a single occasion and is involved in an accident, the insurance company is likely to apply a young driver penalty excess. Check to see what excesses apply on your policy

2. Myth: A lapse in vehicle insurance will not affect my vehicle insurance rate

Fact: Frequent lapses in cover can result in higher premiums or declined insurance when a policyholder decides to resume cover. Although it may make financial sense to lapse cover as no premiums will be payable, insurers will view you as a higher risk than policyholders who keep on paying premiums.

SEE ALSO: Why you cannot be without car insurance

3. Myth: I do not have to pay an excess if the accident was not my fault

Fact: You will need to pay the excess regardless of whether or not the accident was your fault. If another person causes the accident, your insurance company will still charge you the excess stated on the policy but will refund the excess if a successful recovery is made from the third party. If the third party is insured with another insurer, your company is in a better position to recover the full amount of their loss (plus your excess) than if the third party is not insured. If the amount is recovered, your excess will be refunded.

4. Myth: I don’t need to tell my insurer about claims and uninsured losses that occurred while driving vehicle.

Fact: You should always disclose all claims and uninsured losses to your insurer so that they are in a position to apply the appropriate premiums and conditions. The insurer may check your claims history when you claim and discover that you did not disclose previous claims even if it is on another vehicle or other types of vehicles. Failure to disclose fully may result in the rejection your claim.

SEE ALSO: Car Insurance for your high risk car

5. Myth: I do not need home insurance as the insurance placed by the body corporate of my townhouse/apartment will cover the contents of my apartment/townhouse.

Fact: In case of sectional title homes, the body corporate is likely to place buildings insurance for all units in the complex. Building insurance only covers the structure, fixture and fittings of your home. This means that the contents of your home are not included in the cover and you need to take out household contents insurance to cover your contents (movable possessions such as furniture, electronics, valuables) against fire/flood/lightning damage as well as theft.

6. Myth: Products such as vehicle and contents insurance are standard across the industry, price is the major differentiator.

Fact: Insurance products vary significantly – the cover provided is specified in the policy wording and should be scrutinised carefully. Insurance companies may have different target markets and their products will be specifically tailored to these markets. This means that the cover/additional benefit you may need may not be offered by one insurer but could be included in the policy of another. For example, not all insurers offer accidental damage insurance for home contents and the limits for said coverage may differ substantially.

SEE ALSO: How to reduce your car insurance costs

7. Myth: My insurance company will automatically pay for car rental in case my car is not drivable after an accident.

Fact: Car rental is usually an additional option that can be added to your cover, however you will need to pay an additional amount for that cover.

8. Myth: Vehicle insurance rates reduces dramatically when a driver turns 25.

Fact: Younger and older drivers tend to have more accidents so age is a factor in determining premium. As you grow older the age factor may carry less weight as you become statistically less likely to cause an accident with more years of driving experience behind you

Factors usually used in rating are:

o Age of main driver
o How long the main driver has been licensed to drive
o Vehicle make and model
o Area of use
o Claims history

However, this is not the only factor. Other factors may tend to increase the premium. For example, if you purchase a new more powerful and higher valued vehicle on your 25th birthday, the premium may be higher than what you paid before.