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Wednesday, May 18, 2022

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Is your car financed? Comprehensive insurance may not be enough

Although most people will take comfort in knowing their vehicle is comprehensively insured, there are still important conditions to be aware of if you are in a serious accident or your car is stolen. Picture: Freepik

Although most people will take comfort in knowing their vehicle is comprehensively insured, there are still important conditions to be aware of if you are in a serious accident or your car is stolen. Picture: Freepik

Published May 11, 2022

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Whether you are buying a new or second-hand car, the chances are high that the vehicle has been financed through a bank loan.

And until the car is paid off, it is owned by the financing company, meaning that it is not yet yours.

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Between dodging potholes and making it through busy intersections when robots are not working, being on the road can be hard to navigate, even for the most experienced drivers.

Although most people will take comfort in knowing their vehicle is comprehensively insured, there are still important conditions to be aware of if you are in a serious accident or your car is stolen.

“If your car is written off, for example, the bank will be paid whatever’s still owed on the vehicle,” says Christiaan Steyn, head of MiWay Blink.

Furthermore, he adds, if you financed the car with a big balloon payment, or over a very long term, the amount owed to the bank could be bigger than the insured value of the vehicle. This also applies when a car is stolen, and the driver will have to open a criminal case which must be reported to the insurer.

To avoid these scenarios, Steyn offers vehicle owners the following tips:

  • Have credit shortfall cover in place. This will cover the difference between the insured value and the amount owed on the car when a vehicle is written off or stolen.
  • Ensure that your car is parked somewhere safe at night, and when you’re at work.
  • Be conscious of your driving style and the speed limits.
  • Drive carefully and respect others on the road.

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