Thursday, 29 July 2021

Top tips for insuring your previously loved car

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Top tips for insuring your previously loved car

Your ‘previously loved’ car is as good as new and gets you where you need to be, reliably.  Your decision to buy a used vehicle that you can comfortably afford is a super savvy decision. For one, you’ll be able to pay off a used car much faster than a new one, and you’ll save a fortune in financing fees and interest. You will also not be paying a whack of money every month for a new vehicle that depreciates much faster in value than you can pay it off – with a used car, the bulk of that depreciation has already happened. 

“As reliable and trustworthy as your vehicle is though, there are some important insurance considerations to look at in terms of insuring your vehicle for the correct replacement value, protecting your pocket against the unexpected costs of a major mechanical component breakdown, as well as managing your routine servicing costs,” explains Carl Moodley, Chief Underwriting & Claims Officer at GENRIC Insurance Company Limited.

GENRIC offers the following tips for insuring your ‘new used’ car, and protecting your pocket against any unexpected and uninsured losses:

  1. Insure your vehicle for theft and accidents
    • Insure your vehicle correctly for theft and accident. The cost of your insurance is influenced by many aspects such as the make and model, cost and availability of parts, whether you are using the vehicle for business or personal purposes, the age of the regular driver (young, inexperienced drivers typically pay more for insurance) and the security measures such as an immobiliser or tracking system and where it is parked overnight.  Always disclose all relevant information that the insurer requires including any extras on the vehicle as well as who the regular driver is to avoid having a claim declined or a claim pay-out being less than expected due to non-disclosure of material facts.
    • Always insure your vehicle for its ‘retail value’ – this is the price at which the dealer will sell a used vehicle to you, versus ‘market value’ which is the value you could expect to sell the vehicle for, and is typically less than retail value.
    • It is especially important that you maintain your vehicle in good working order according to its servicing requirements, that it is roadworthy and driven according to the laws of the road, to avoid any issues should you need to claim.  As a simple example, if you are involved in a car accident, and it turns out that your tyres were smooth and below the legal tread limit required, you could find your claim declined since your vehicle would be deemed unroadworthy.

  2. Get cover for major mechanical failures
    • Typically, a new vehicle comes with a basic manufacturer warranty which would cover any mechanical and electrical parts for repair or replacement should they fail within a certain mileage or age – usually under 100 000km or anywhere between two to four years, manufacturer dependent.  With a used vehicle however, these warranties may already have lapsed which leaves you at risk of costly ‘out of manufacturer warranty’ breakdowns.
    • In such circumstances, a Mechanical Warranty Insurance policy is an invaluable financial planning tool that covers the repair of your car due to mechanical failures or breakdown once it falls outside of its factory warranty period.
    • GENRIC’s mechanical warranty product covers your car for mechanical or electrical failures up to 220 000 kilometres or as long as the car is younger than 12 years old.  Over 30 components are covered such as the engine, transmission, gearbox, turbochargers, bearings, cooling system and electrical components.
    • In the event that your car breaks down as a result of mechanical or electrical failure, the warranty will take care of repairing or replacing the parts subject to the policy limits defined per component, and subject to the benefit option you choose.
    • For a relatively low premium starting from around R150 per month, a major mechanical breakdown such as an engine, cambelt or turbocharger failure – which can easily top R25k or more in costs – will be taken care of and you won’t have to fork out the full repair cost from your own pocket.
    • If you don’t have the means to finance such repairs, and you don’t have mechanical warranty insurance, you may very well end up with a car that you cannot drive, and you won’t be able to sell it, at least not for what it’s really worth to you, if in a state of disrepair.  It’s an invaluable cover at a time when a big financial knock could set you back for years, or force you to write your car off.
    • It is important to understand that mechanical warranty is not the same as a service plan, so you cannot claim for parts that fail due to wear and tear such as brakes, batteries, tyres and so on.

  3. Service and Maintenance Insurance
    • A service and maintenance plan like GENRIC’s DriveWize provides cover for the scheduled service and maintenance that your vehicle will need either at certain mileage intervals or during a certain time frame, whichever comes first.
    • Instead of having to pay for the service in one large upfront lump sum, you pay a much smaller, more affordable monthly payment which will go towards the cost of your car service. The benefit is that paying a few hundred Rand per month is a lot more affordable and manageable than having to instantly pay a large sum of a few thousand Rand, especially if it’s a major service.
    • Depending on the option you choose and the make of your vehicle, your service plan will typically cover the general service components such as air filter, engine and transmission oil, brake fluid, coolant, fuel and oil filters, pollen filter, spark plugs, sump wash and related labour, subject to the policy limits.
    • Under the maintenance component of your plan, you get the added protection for the replacement and repair of the wear and tear parts including alternator, brake discs and drums, brake pads and shoes, cambelts and tensioners, clutch, engine control units and drive belts, front and rear suspension (wear and tear only), mountings, shock absorbers, steering components, V-belts and wiper blades. 

“Maintaining and servicing your vehicle is important, not only to ensure that your vehicle is reliable and safe to drive, but also to maintain its insurability if you are ever involved in an accident.  In fact, wear and tear and lack of maintenance are often reasons why an insurance claim may be rejected or the settlement less than expected as the vehicle may be deemed unroadworthy.  By adopting a comprehensive insurance approach on your vehicle, you protect yourself from the hard financial knocks should something go wrong – whether that is an accident or theft, to a major component breakdown, to a major car service which comes at a significant upfront cost,” explains Carl. 

For more information visit https://www.genric.co.za

GENRIC Insurance Company Limited (FSP 43638) is an Authorised Financial Services Provider and licensed non-life insurer. T’s & C’s apply. The contents of this article does not constitute financial advice and should not be construed as such.

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