3 different value options to insure your financed vehicle before driving it off the showroom floor.

In South Africa, comprehensive cover is mandatory if you have a financed vehicle. Not only is it a contractual requirement, but it's also there to reduce risks. You could end up paying for damages if you are involved in an accident, including your excess payments.

 

Why It's Necessary

A financed vehicle represents a significant financial commitment. Comprehensive insurance provides coverage for a wide range of risks, including accidents, theft, vandalism, and other unforeseen events. By having comprehensive insurance, you safeguard your investment and minimise potential financial losses.

Financiers usually require comprehensive insurance for financed vehicles. It acts as a safety net for both you and the financier, ensuring that the vehicle is protected against any potential damages or loss. By meeting this requirement, you comply with the terms of your financing agreement.

Value Options for Insuring a Financed Vehicle

  • Retail Value:

Insuring your financed car based on its retail value means that the insurance policy will provide coverage for the amount it would cost to replace the vehicle with a similar one. This option may be suitable for newer cars with higher market values.

  • Market Value:

This option means that the insurance policy will provide coverage for the average cost between Retail and Trade value. This is more commonly used for second-hand or older vehicles.

  • Trade Value:

With this, the insurance policy will provide coverage for the average price a car dealer would pay to buy your vehicle. This option may be suitable if you plan to trade your vehicle in, in the near future.

Insurance Options After Your Car's Paid Off

Even after paying off your car, maintaining comprehensive insurance is still highly recommended. It continues to protect your vehicle against various risks, ensuring that you are financially safeguarded in case of accidents, theft, or other incidents.

Third-party, fire, and theft cover is a type of insurance cover that insures you against damages to other vehicles or property caused by your car, as well as losses due to theft or fire. However, it does not provide coverage for your own vehicle in the event of an accident.

The third-party-only cover option is a minimal insurance option that covers damages to other vehicles or property caused by your car, but does not provide coverage when your own vehicle is damaged or stolen.

 

Whether your car is financed or fully paid off, it is crucial to carefully consider the value options and select the cover that best suits your needs. By having the right insurance in place, you can enjoy peace of mind and financial security on and off the road.