You will never appreciate having car insurance until an accident happens. It was Sunday the 15th September 2019 when some reckless driver turned into my lane abruptly without indicating. As you can imagine, I made all attempts to avoid a collision, but to my dismay my car was left damaged and the reckless driver nowhere to be seen.
Yes, he drove off like a manic leaving the scene of the crime hoping I did not recognise his registration number. Distraught and frustrated I tried to handle the situation at hand as calmly and humanly as possible. It is in moments like these that you will really appreciate having car insurance.
Calmly I stepped out of the car to assess the damage done and turned on the ignition to check if there were any warning signs. To my unpleasant surprise, the warning sign “STOP, Car experiencing oil pressure” came on. Any attempt to move the car would result in further damages, potentially damaging the engine. I had to call for towing services which meant more expenses (which I did not budget for). The inconvenience of this ordeal weighs heavily on my already burnout body, but alas the admin must be done.
Car insurance, like most insurance policies is a key component of risk management which is critical for planning your personal finances. As mentioned in my article titled “Why having insurance is important”, insurance is defined as a means of transferring financial risk by spreading the risk amongst a number of people who are exposed to the same risk (South African Financial Planning, 2018).
Car insurance is a short term insurance aimed at protecting us from financial loss caused by various personal risk as car accidents, theft or malicious damage in exchange for a premium (paid monthly or annually depending on the insurer). The challenge however, is that many people in Lesotho do not have car insurance (which is very scary) and their reasons for not having car insurance leaves a bitter taste in my mouth; I am trying NOT to judge though!
It is scary, because the financial implications that arise as a result of a car accident, theft or malicious damage can be detrimental to your financial well-being if uninsured. In my case, the potential financial loss likely to arise due to the damage to the car is +- M80,000.00 (without quantifying the disruption and inconvenience of not having a car). This potential loss is likely to set me back financially and/or leave me in financial ruin. Thank goodness for insurance.
So why do you need car insurance?
Protect your valuable possessions against loss
As mentioned above, should a car accident, theft or malicious damage happen, the financial loss could leave you in financial ruin. Having insurance helps to minimise the financial impact and reinstates you back to your financial position prior to the incident (you are indemnified). There are different types of car insurance policies to consider for example a comprehensive cover, third party and third party, fire and theft covers.
Each type of cover has its advantages and disadvantages for example the comprehensive cover offers the highest cover available and protects you against damage to your own car and damage caused by third parties. It also includes other benefits such as towing services, courtesy car (if applied for and paid for) and/or legal expenses. Other benefits include credit shortfall for those customers who financed their vehicles using instalment sale agreements with banks. This cover helps the customer to bridge the gap between the car’s market value and the outstanding loan on the vehicle. With comprehensive car insurance cover, you may also pay for additional benefits such as road side assistance in cases of punctures and breakdowns that are not as a result of accidental damages.
Other car insurance policies also have an Excess component that people often overlook. Excess is the amount that you agree to pay upon claiming against your policy and the difference covered by the insurer. Insurance companies have also started insuring different types of cars including Japanese cars. Speak to a legally registered insurance company or insurance broker for more details that suit your insurance needs.
Often times, people perceive insurance premiums to be expensive and administrative. Well, insurance companies have made it very easy, affordable and convenient to pay your insurance premiums. To make premiums affordable, insurance companies have introduced monthly payment options. Furthermore, insurance companies have introduced convenient channels to pay premiums such as mobile money payments, cash and electronic transfers.
Ensure you have peace of mind
Being in an accident is a traumatic experience for anyone. Having to deal with the trauma and still stress about the financial implications that the accident is likely to bring is unnecessary. Make sure you get car insurance and maintain your peace of mind. In my specific case, knowing that my car was comprehensively covered gave me peace of mind, despite the reckless driver driving off and the administration that comes with it.
The towing fees are also covered, saving me the burden of spending money I did not budget for. When comparing how much I pay annually in insurance premiums vs the total financial impact of +- M80,000.00 that could leave me in ruin; I am thankful for having car insurance. If you do not have car insurance, please visit your insurance company or broker immediately and protect your assets.