Fact vs fiction: Demystifying 6 Car Insurance Myths

Never has the average person had access to as much information as they do now. At the same time, it's never been more challenging to tell what is true and what isn't. It's a common issue when people are choosing insurance. With all the misinformation out there, you may find yourself asking: “What does Car Insurance cover?” and “What does Car Insurance not cover?“ To help you make an informed choice and not fall for the usual Car Insurance myths passed around, here's what Dialdirect thinks you should know.

Assumption promotes Car Insurance myths

We all have Car Insurance myths we believe, whether we’re aware of it or not. These are usually informed by our past insurance experiences and by those of friends and family. We can also form inaccurate assumptions after reading stories on social media. These assumptions and myths become harmful if they influence us to make insurance decisions that prevent successful claims. Think your car colour affects your premium, or you don’t need insurance because you keep your mileage low? Think again. Let’s debunk these and other popular myths.

Debunking the 6 most common Car Insurance myths

Here are some of the top myths to ignore when you make major coverage decisions. myths to ignore when you make major covera coverage decisions. myths to ignore when you make major coverage decisions.

Myth 1. Low premiums equal great value for money

Insurers allow you to choose between paying a higher monthly premium and a lower excess should you make a claim or paying lower monthly premiums and a higher excess. While paying lower premiums might sound like the best way to save money, it isn't the smart financial move for everyone.

Choosing lower premiums will be a better option for you only if you can afford to pay the excess amount in full should you need to claim. It's a popular choice for those who drive infrequently and, therefore, tend to have a relatively lower risk of needing to claim.

Myth 2: Car colour influences insurance rates

Many people believe that the colour of their car can impact their risk level and premiums. This is based on the perception that certain colours are more attractive to car thieves or cost more to repair.

In reality, the factors affecting your premiums are your choices of car model and make, as well as how and why you drive.

Another widely believed Car Insurance mythis that all expensive cars are costly to insure. Surprisingly, some pricy cars have inexpensive parts, making them cheaper to insure.

Myth 3: Age is the most crucial risk-determining factor for my

premium

When hearing about what metrics insurers use to determine your risk level (and, therefore, your premiums), it's tempting to focus on one over the other. In reality, you can't single out any particular factor as being better or worse for you. [CS6] The best way to enjoy a lower risk profile and lower premiums is to practice safe and careful driving consistently over time.

Myth 4: Car Insurance is mandatory

Insurance is optional for South African drivers.  However, people financing their cars sometimes requirecomprehensive coverageas a term of their loan.

Many South Africans choose not to get insured because they're under the impression that they can lodge a claim with the Road Accident Fund (RAF) should they need to. While this may be true, according to BusinessTech, the RAF is currently facing a backlog of over 321,000, with the number of claims rising. This means that, if you file a claim, it could take years to pay out — if it pays out at all.

Myth 5. Car Insurance isn’t necessary for low-mileage vehicles

If your car spends most of its time in your garage, you may think you don’t need insurance. While you will face less risk of getting involved in a car accident on the road, you're still at risk of having your car stolen or damaged.

Myth 6. Your credit history doesn’t affect insurance rates

When applying for insurance, you may assume that only your driving history affects your risk profile. What you may not consider is that your credit history plays a role, too. Factors like how many financial agreements you have and how regularly you honour your payments influence your insurance costs.

How to rise above Car Insurance myths

So, how can you keep yourself from getting swept up in Car Insurance myths? Here are a few ways to get your information straight:

• Do your own research — Never assume anything about an insurance policy. Get your information in writing from your insurance provider.

• Ask questions — Find out everything you want to know for clarity on your policy before committing to anything.

• Read the fine print — Peruse all communication and documents you receive, as they could contain important details about your insurance coverage or policy.

Get a Dialdirect Car Insurance quote

If you've realised that your current insurance is not meeting your needs or now have better clarity on what you want or need from your insurance, it could be time to start looking elsewhere. Dialdirect can assist you with this, so why not reach out for aquote today? 

Dialdirect is a licensed non-life insurer and financial services provider. Terms and Conditions online.

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Sources:

[1] BusinessTech: South Africa’s Road Accident Fund being bled dry – this is who’s to blame

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.