How to get insurance when buying a car from a used car dealer

Jun 2021

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When you buy a car from a used car dealer, one of the first things you must do is to make sure that you have insurance on the car once you drive it out of the dealership. Numerous insurance companies offer various plans on newly purchased vehicles, but how do you know which one you should choose? To help make this process a little easier for you, we put together some of the most important aspects you should consider first.
Why do you need to have insurance?
It’s safe to assume that anyone who has driven on South African roads has felt a moment of panic because they’ve either driven through a pothole, had to quickly react to avoid an accident due to a reckless driver which nearly caused an accident,  or because of taxis, buses and/or trucks who believe they have right of way – whether they do or not. Insurance is there to help you cover the worst-case scenario.
Here are some reasons why you need insurance when buying a vehicle from a used car dealer:
  • Pay for damages: Damage to your car and another car, when the accident was your fault, will be covered by the insurer.
  • Replaces stolen car: If this is a part of your cover, your insurance will be able to put an amount towards a replacement car for you.
  • Fire protection: This sometimes also includes hail damage. This type of insurance will include the payment for repairs after the fact.
  • Roadside assistance: This can include anything from helping when you have a flat tyre or if you are stranded without petrol. Make sure you know what you are covered for. Some insurers also offer additional services like Guardian Angels where they will send someone to stay with you to ensure your safety while you’re waiting for whatever assistance to require. The latter is especially important if you are a single woman driving alone at night.
  • Discounts for good driving: Most companies offer cashback rewards when you do not claim for long periods of time (as specified in the contract), or reward you with discounts if you drive well.

What type of car insurance do you need?
While there is various type of insurance available, it will be up to you to decide which one you will benefit from the most when buying a car from a used car dealer. In South Africa, there are three main types of car insurance:

  • Comprehensive vehicle insurance: This is the most expensive type of insurance but provides the best cover and protection if you are in an accident, had your car stolen, or experienced any damage, including flooding and fire, to your car.
  • Third-party fire and theft: This insurance is less expensive and, as the name states, covers any damage caused by fire, theft, or hijacking. This insurance type does not cover replacing your vehicle should be stolen or damaged due to fire.
  • Third-party cover: This is generally the cheapest insurance option on the market, and only covers the damage that other vehicles obtain in an accident.

While it is still recommended to have insurance, it is important to remember that it will not cover the following:

  • Normal wear and tear
  • Intentional damage
  • Loss or damage from outside of South African’s borders without the necessary permissions

Car insurance factors
When buying from a used car dealer, you will be buying an older model car, which means that you will be saving on insurance costs, as the monthly premiums of used cars are cheaper. While this is one of the biggest factors that allows for cheaper insurance on cars from used car dealers, many factors are taken into consideration when insurance companies work out the rate you will have to pay for your insurance each month.
Other factors include:

  • The driver: The driver’s age and whether they are male or female has a big impact on the premium of the insurance. Different factors here will determine if you are a high- or low-risk driver when it comes to insurance. A younger male in their early twenties will pay a higher monthly cost compared to a female driver in the same age group.
  • Where and how you use the car: Where will your car be kept at night? And what kind of security does your work offer – is it an office park with security guards and fingerprint identification, or is the office at a house in the suburbs where there is little to no security? These factors will be considered when the insurance company calculate your monthly premium.
  • The type of insurance you need: If you drive a relatively new car, comprehensive insurance is the one you will most likely be offered, with the other options mentioned in this article as add-ons to your contract. If you have a low premium, you should know that this could mean you will have to pay a high excess amount should something happen to your vehicle.
  • The car and person driving’s information: Older cars are cheaper to replace, so insurance for these models will also be lower. Certain cars are on the high-risk vehicles list, which could raise the cost of insurance.

With all these various factors to consider, the most important one is that no matter what, you need to have your car insured before you leave the floor of the used car dealership.