Know what car is worth before insuring

Thousands of SA motorists are either over- or under-insured and both can be bad if a car is stolen or written off.

Being over-insured also means you are throwing money down the drain.

So says True Price managing director Darryl Jacobson, who bases his warning on feedback received from users of trueprice.co.za.

In many cases, the insured value of a car is completely different to the price on auction.

“When you insure your car, you want to be able to replace it if it’s stolen,” he said.

However in many cases this simply won’t happen.

“For instance, we have a client with a 2012 Fiat 500. She is paying a premium based on a value of R95,000.”

This value is scandalous, Jacobson contends, considering the real value of the car is only R66,000.

“Were her Fiat to be stolen, she could acquire a near-identical car for R66,000. That’s what they go for on auction. So she is completely over-insured.”

The Fiat 500 so-called “trade

In many cases, the insured value of a car is completely different to the price on auction

value” is R73,000 while the retail value is R85,000.

“Were the car to be stolen, the owner would only get about R79,000 – or the market value – from her insurer.”

Other clients are under-insured.

“We have a client with a 2006 Toyota Corolla. Her car is insured for R40,000. Trade is about R44,000 on that car and retail is about R50,000. Were her car to be stolen, her insurer would probably give her about R47,000 to acquire another car as this is the market value.

“The same car would probably cost her about R67,000, hence that’s what the agreed insured value should be.”

But what’s the solution? You need to shop around for car insurance.

“Some insurers won’t budge; they will only insure your car for so-called ‘book value’ – which may or may not be appropriate to the value of the car. Others will insure a vehicle for a mutually agreed value,” Jacobson said.

It’s important to get an accurate indication of your car’s worth and that’s where

trueprice.co.za can be useful, as free valuations are offered.