Rising used car prices, inflation and parts shortages could mean that car owners are significantly underinsured if they do not review their sums insured and align them to the changing market dynamics, says Mandy Barrett, Business Unit Head: Marketing and Volume Sales, Aon South Africa.
Barrett said, “There are a number of important market factors at play which require careful scrutiny of how this will impact the insured and replacement values of your vehicle should you need to claim as a result of accident or total loss, as well as the terms of your car hire while your vehicle is in for repair.”
Here’s a look at what people should consider when revisiting their car insurance policy:
Do your market research: Check out the current value of your insured vehicle according to the Auto Dealers Guide compared to what the retail price is of your vehicle if it was purchased today from a used car dealer. You may find discrepancies between the two values warranting a review of the insured sums on your insurance policy.
Price of spares and availability: According to data released by Audatex which tracks vehicle parts inflation, some vehicle brands have seen parts inflation as high as 15.8% in March 2022 compared with March 2021. This means that the cost of vehicle repairs to insurers has increased and it is likely to have an impact on your insurance premiums.
Short supply of cares for hire: Car hire is a benefit that insurers cover you for transportation while your vehicle is sent for repairs. However, there is a shortage of hire cars in an industry where fleets have been reduced due to the economic impact of Covid-19.
If you are planning to send your car for repairs, first check if a rental vehicle is available before booking the vehicle for repairs. Also check when the parts for the repairs will be available and plan your way around this in terms of how long your vehicle will be out of action.
Don’t assume you are covered for everything: Certain things like tyre cover and hail damage cover are not always covered on a standard car insurance policy. People may need to purchase these covers at an additional premium.
Remember to specify any add-ons to your vehicle that are not standard features on the vehicle such as mag wheels or a sound system. These features add extra value to the vehicle and need to be accounted for in your sum insured. The add-ons are likely to be more expensive to replace now than when you installed them due to inflation.
“When it comes to shopping for insurance an expert insurance broker can protect your best interests. They are also adept at negotiating with your insurer to get you the cover that you need.”
“Given the rapidly changing market dynamics, meeting with your broker to reassess your covers and plug any holes for potential underinsurance is likely to be one of the most financially important exercises you’ll do this year,” Barrett said.
IOL Business