This is the problem with car insurance
In a country with a high mortality rate, many brave hearts have decided to take on the challenge of South Africa’s dangerous roads without insurance.
Car insurance is essential for financial protection and road safety. However, driving without insurance remains a significant problem in SA.
Approximately 65% of South African drivers still don’t have car insurance!
Here’s why.
Financial challenges
South Africans typically list economic constraints as a top reason for not having car coverage.
The cost of living continues to increase, so the average South African household’s budget is constantly stretched thin.
“For people whose budget is almost maxed at the end of the month, insurance is unfortunately one of the first things to be sacrificed,” said Pineapple Chief of Finance Jan Bezuidenhout.
Financial hardships also lead to some policyholders cancelling their policy within months of getting insured.
A lack of financial literacy
Insurance protects you from the financial consequences of losing your car to an accident, hijacking or write-off.
However, misconceptions around coverage, premiums and claims continue to deter the public.
“A common misconception about car insurance is that it’s a safety net and an allowance for clients to do whatever they want,” said Tim MacKeown, Compliance Officer at Pineapple.
“Having an insurance policy doesn’t give you free rein to speed, drive under the influence or, exhibit other reckless behaviour.”
The phenomenon called optimism bias then makes people believe that perils like collisions, theft, and vandalism will not happen to them.
Distrust of the insurance industry
The perception of insurance as an investment rather than a risk protection measure has soured the industry’s reputation.
Additionally, experience or word-of-mouth anecdotes about rejected claims could contribute to the general public’s distrust of the insurance industry.
The high cost of not being insured
Immediate consequences of suffering from an accident while uninsured include footing the bill for repair and replacement costs.
You may also have to pay medical and legal fees for a nasty crash, and if your vehicle is financed, you may struggle to receive a loan for your next car.
“For me, car insurance is similar to medical aid; you pray that you never have to use it, but when you do, you’re very thankful that you have it in place,” said Bezuidenhout.
The impact of accidents and the ripple effect on insured drivers
“Hardly anyone thinks they’ll cause an accident, and therefore, most people might not see the need for insurance,” said Bezuidenhout.
“But what happens if their entry-level car, say a Polo, crashes into a Lamborghini? You’re liable for millions and millions of rands.”
South Africa has more than 800,000 road accidents every year. That’s roughly 2,200 crashes a day before accounting for the festive season.
For insured drivers, this means bearing this burden by paying higher car insurance premiums to compensate for the risk posed by drivers without coverage.
The road to a safer South Africa
Driving without insurance is a gamble few people win, and it can leave you facing financial hardships in the future.
However, the insurance sector, and society as a whole, has a lot of work to do to change people’s sentiments.
“I think financial education is important, and it doesn’t start with insurers; it starts at home, in schools and so on,” said Bezuidenhout.
Together, the insurance industry and its customers can transform mentalities about car insurance, saving more people money.
Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.
Click here to get car insurance from Pineapple.
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