Comprehensive cover is the best car warranty for your motor because subject to various conditions and your prescribed excesses. For example, it covers you for all losses in an accident, theft, hail, fire and damage. But it is the most expensive type of insurance cover. As a result, insurers offer lower levels of coverage for your car that are more affordable. Generally, these are limited to cover for third party, theft and fire, and third-party-cover only.
These types of policies may be appealing to you, especially if:
- you have an older, low-value car, and it is paid off; and
- you don’t drive the vehicle very often and far.
For instance, you may be retired with an old car worth R20 000 and use it to drive to your nearest shopping center a couple of times a week.
If you opt for limited car warranty, however, you need to know precisely what is covered and what is not. Notably, the third-party cover will protect you monetarily against the potentially crippling costs of causing damage to someone else’s car, mainly if it is a costly model.
Who is the third party?
The third party in an insurance claim is the individual who has suffered a loss because of your actions and lodges a lawsuit against you; the first party is you, the insured person; and the second party is your company, which is responsible for settling the claim. The third-party is anyone, apart from you, to whom you have caused harm. It extends past natural persons to juristic persons, such as businesses. For example, in Motor warranty, the external party is most likely to be the driver of the other vehicle in an accident you caused. Some policies may exclude certain people in their definition of the third party, such as members of your house.
What does it not cover?
Third-party insurance cover does not cover your loss if you have an accident or mishap. In other words, any damage to your vehicle or other property is not secured and protected, and you will have to pay for it from your pocket. However, if the accident is not your fault, you can sue the other party.
Often, the fault isn’t entirely with one party or the other. For example, even though the responsibility may lie mostly on your end, you reversed out of a driveway without looking, the driver who dashed into you may also be partly to blame for not taking evasive action. The dealer will apply the principles of Apportionment of Damages and payout according to these principles. The apportionment of the damages will specify the number of damages payable about the amount of fault that rests on each of the two parties.
What is the difference between what insurers and the Road Accident Fund cover?
The Road Accident Fund covers your burden if a third party is harmed. In other words, it covers injury to yourself to the third party but not damage to material possessions such as their car. Your third-party insurance covers you for the other party’s material damage, but it reaches out to personal liability cover for an occurrence outside South Africa. It will also protect you from an “emotional shock” claim against you by a party not directly involved in the accident, which the RAF does not cover.
Up to what amount are you insured?
Say your motor warranty is worth R50 000, but if you write off a car worth R100 000, then you are fully covered for damage to the other vehicle, minus your excess, for which you are responsible. In this instance, the sum insured will depend on the limit of cover selected.