Cause a crash and you pay for the other car: how being uninsured could bankrupt you

Many motorists feel they cannot afford to have vehicle insurance, but can they really afford not to either?

According to the Automobile Association, owners who don’t insure their vehicles don’t just risk having to pay to fix their own cars after an accident, but the other vehicles too.

“The risk of not having vehicle insurance means that when an uninsured motorist is involved in a crash and they are at fault, they will have to pay for the damages to their own and the other vehicle out of their pocket,” the AA said.

“This could leave the driver with several major issues including not enough money to cover repairs on their own vehicle and therefore leave them without transport, and financially worse off than they would have been with insurance.”

The association estimates that about 65% of motorists in South Africa are uninsured, and there are about one million road crashes per year, meaning the odds are not in favour of those who remain uninsured.

Unlike many other countries, insurance is not a legal requirement in South Africa. Some nations, such as Australia, integrate a compulsory third party insurance fee with the annual vehicle licence cost.

It is a bit of a catch 22 in some ways as high insurance costs are cited as the main reason motorists choose not to insure, however increasing the number of insured vehicles on our roads would lead to lower insurance costs across the board.

Motorists should at the very least consider having third-party cover on their vehicles, as this would cover the costs of compensating another motorist. After all, hitting an expensive car could mean paying it off for the rest of your life.

However, comprehensive insurance is always first prize and apart from the fact that it will cover you if your car is crashed or stolen, it could also protect your credit record, the AA says. For instance, it would be hard to get a loan for another vehicle if you were still paying off the car that you crashed.

The AA provides the following tips for saving money on vehicle insurance.

• Downgrade to a cheaper car: An obvious one, but vehicles with a lower value will cost less to insure.

• Ask for a policy review: Vehicles depreciate every year and circumstances may change too, so be sure to request an annual review with your insurer.

• Secure surroundings: Cars that are safely locked up in a garage at night will cost less to insure than those left outside.

• Technology is your friend: Tracking and anti-theft devices can make cars cheaper to insure, as do telematic devices that monitor driver habits and vehicle usage.

• Don’t sweat the small stuff: Not claiming for small damages and thus keeping a claims history in check will have a positive effect on your premiums in the long run.

• Remain insured: Don’t let insurance lapse and avoid temporarily cancelling because it costs too much as gaps in your payment history will lead to higher premiums.

• Drive less often: Less time on the road reduces your risk of an accident, theft, or damage, which could harm your record.

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