Car insurance is sometimes an expense which we believe we could do without and we recently had a question regarding mandatory car insurance. The reader asked if she was required to have car insurance.
The answer is not straight forward and it is important to take note that if your car is financed you are required to have it comprehensively insured. While your car is still financed, the bank or financial institution that provided the financing still owns the car and in terms of the finance agreement you are required to protect their asset while you use it and that means that you have to insure the car against theft or damage.
The implications are severe if you do not have valid insurance on your financed vehicle and those are not only financial, it is an offence in terms of the contract if the car is not insured and could see you in all sorts of trouble.
If you own your car you are not required under any law to have car insurance but it is not the wisest of choices not to insure your car. Let us take the example of you being involved in an accident with a pedestrian where you have no third party cover. In this case the person you knocked down would have a claim against you personally and in these types of cases awards have been made in the Millions of Rands. Car insurance is not simply for accidents and theft, there are other parts to a comprehensive insurance policy that would include covering you for third party claims.
There are a huge number of uninsured vehicles on the road and in the event of you not being insured and someone smashes into you, you would have to firstly repair the car at your own expense and then make a personal claim against the other person which, with legal costs the way they are will be prohibitive. If you were insured on the other hand, the fact that the other party is not insured is not your problem, you pay your excess and hope that the Insurance company is able to claim the excess back from the uninsured person.