Know the Facts: Easy insurance guides from MiWay
Writing off a car, or having one stolen, is a stressful event. Things can get even more stressful, though, when it comes to claiming from insurance – many people get an unpleasant surprise when their payout is less than they expected. So how do you avoid this disappointment? Here are the top things you need to know:
1. The difference between retail value, trade value and market value
The retail value of your car is the average of what the same vehicle is currently selling for at car dealerships, and is the highest price you can insure it for. The trade value is what you would get if you traded it in. The market value or fair value is the average between retail and trade value. The value of your car further depends on the condition and mileage on the car.
2. How car values are determined
Car values in South Africa are determined (and benchmarked against) a system called the TransUnion Auto Dealers Guide. Every month, TransUnion collects data from motor manufacturers and dealers across South Africa on the sale prices of over 40,000 vehicles. With over four decades of experience, they are the experts at valuing vehicles and their guides are the standard reference when it comes to setting prices.
3. The danger of shortfall
If you are still paying for your car and it is stolen or written off, you may find yourself in the nasty position where what you owe the bank is more than what you are insured for. This is called a shortfall. To avoid this, it is usually a good idea to insure your car for its retail value, especially if it is financed with a residual or balloon payment. You might also want to consider taking additional credit shortfall insurance. Check with your insurance provider about this.
4. Lower premiums mean lower payouts
Insurance companies work out their premiums based on what they expect to pay out if they need to replace or fix your car. If your car is insured for its retail value, they will pay out more than if it is insured for trade or market value – so the premiums will be higher. In the same way, insuring for a lower value means you pay a lower premium.
5. Consider your lifestyle and needs when you choose insurance
Anytime you choose an insurance product, you have to make a decision about which is more important to you: Paying a lower premium now, or getting a larger payout if you need to claim. If you are a disciplined saver, you might choose a lower premium, but put aside some extra money every month to make up the difference if you ever need to claim. If you don’t have any savings and don’t trust yourself to put extra money away every month, it might make sense to pay a higher premium in return for the peace of mind of knowing you are insured for a higher amount.
[Info byRené Otto]
MiWay offers a range of financial products and services direct to the consumer. MiWay’s offering includes short-term motor and household insurance, motor warranties and credit life. The company’s long-term plan is to extend this to offerings such as investments, personal loans and possibly credit cards. MiWay will ultimately offer a complete array of services under one convenient umbrella, directly contracted with the client and all managed online.
For more information about MiWay, their offerings or to get an expert opinion on insurance related topics, please contact Carine Conradie-Haffejee directly. MiWay experts are available for interview on topics ranging from claims handling to insurance rates and premiums or general insurance insights.
René Otto, the CEO of MiWay, is a seasoned business personality and expert on all topics related to direct or broker-based insurance.