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Does picking a red vehicle mean you have a higher risk of an accident? And will this influence your insurance premium? There are many “myths” about vehicle insurance - although some of them are in fact true.

Having an insurance checklist when purchasing a vehicle should be a must - it’s a significant asset. But like any first-time delving into uncharted territory, there are misconceptions. Some common myths for vehicle insurance are:

* Vehicle premiums should decrease as the vehicle's value decreases.

* Mechanical breakdowns are covered by a vehicle policy.

* Insurance is only required if the vehicle is on a hire-purchase agreement.

* When choosing an insurer, the most important factor is the monthly premiums you pay.

“When deciding on insurance for your vehicle, it is important that your decisions aren't based on insurance premiums solely,” says Marius Steyn, the personal lines underwriting manager at Santam.

“Motorists need to take into consideration the policy terms, including what the vehicle is covered for and applicable exclusions, as well as driver restrictions and the first amount payable by you in the event of loss or damage.”

Steyn debunks the common myths of vehicle insurance:

Myth 1: Colour choice plays a major role in premium costs. This varies from insurer to insurer. Statistics have shown that red and black vehicles are a higher risk for accident damage than white vehicles.

Myth 2: It costs more to be insured as the driver gets older. False - it actually works in reverse. Younger persons or persons with a driver’s licence for shorter periods of time are a higher road risk due to their perceived inexperience, which justifies a higher premium.

Myth 3: If another person drives the insured’s car, the other person’s motor insurance will cover them in the event of an accident. False. The other person’s insurance would cover the third-party damage caused in the accident. The insurer of the vehicle would normally cover the damage to the vehicle. It is advisable that the policyholder checks this upfront with their insurer to avoid any surprises.

Myth 4: Personal motor insurance covers business use of the car. False. A policyholder has the option to insure the vehicle for business and private use. Insurers will only allow business use to businesses that meet their criteria.

Myth 5: The insurance will pay out if I was a victim of remote jamming. Partly true. Most insurers exclude remote jamming and require that the theft be accompanied by forcible and violent entry into and out of the vehicle. At Santam, we do not exclude theft by means of car jamming, but if it can be proved that there was no attempt to lock the vehicle, the claim may be rejected.

Myth 6: The policy will cover damage caused by potholes. Circumstantial claims of this nature are dependent on the situation. Motorists are also able to claim from the South African National Roads Agency.

Myth 7: Men pay more than women for car insurance. For most insurers this is true, because women are perceived to have a lower risk profile. 

PERSONAL FINANCE