Updated: Cancelling car insurance? Know these things first

Accidents happen, and insurance is what makes our finances safe and stable when they do. If you’re involved in a car accident, whether it’s your mistake or someone else's, your car insurance policy will help. Furthermore, how much it does benefit is up to you, and this is dictated by the variety of choices that your insurance policy provides.

Car insurance premiums differ by age, gender, years of driving experience, history of accidents, where you live, and other factors. In these tough economic times, many South Africans are looking for ways to cut back on their budget and some people might think cancelling car insurance is the way forward. It’s a move that could cost you more in the long run.

  • It could affect your premiums in the future

If you remain insured, you'll create a low insurance risk profile, which could translate into lower premiums. 

If you cancel your policies, you can end up falling into a higher category of risk. This could result in higher premiums, and some insurance companies may even deny the applications in the future.

  • Safe drivers need insurance too

You might consider cancelling car insurance because you know you’re a good driver. Unfortunately, the roads are full of less vigilant drivers who definitely cause accidents – and if you're involved in one, you will be relieved if you’re covered, especially when you consider that a large percentage of the cars on South Africa’s roads are uninsured.

  • Driving without insurance could cost you more in the long run

Theft and hijacking are also undeniable risks in South Africa. If you're a victim of vehicle crime and you’re not covered with insurance, you will receive no financial compensation. 

It could end up costing you hundreds of thousands of Rands in damage claims if you drive an uninsured car and end up driving into another vehicle. You will be liable for the cost of fixing or replacing that vehicle, as well as your own. This could result in expensive lawsuits brought against you by the insurance company of the other driver, with the final bill running easily into six figures.

If the accident wasn’t your fault, the other person will be responsible for your damages. Hopefully they would be insured, and their policy will cover the costs. If you were at fault, it’s important to make a statement with the police as soon as possible because the other person could sue you for damages.

  • Cancelling car insurance could put you in breach of contract

Virtually any car financing plan allows the owner to keep a robust car insurance policy when paying off the outstanding amount. When you cancel your car insurance, you will be in violation of the terms of your loan agreement, and you may lose your vehicle altogether.

  • You don’t need to cancel car insurance to make it more affordable

Driving an uninsured vehicle is like "playing Russian roulette with your finances," experts warn. Can you do anything to protect your vehicle while at the same time cutting back on the amount you spend on car insurance?

You’re taking a major financial risk if you’re driving your vehicle uninsured. Before making such a decision, follow these steps to try lower your insurance:

  • Change your coverage from a comprehensive policy to a policy for third parties, fire, and theft–particularly if your car is several years old and fully paid off.
  • Shop around for lower insurance premiums. MotorHappy insurance agents are available to source a variety of quotes from South Africa’s leading vehicle insurers. We will guide you through the process and help you select the best insurance for your budget and your needs. Contact us today for a quote
  • If you prefer to stay with your current insurer, make sure you’ve updated your details with them. If you have changed jobs or moved to a new house, your premiums might be lower. You could also ask them to give you a new quote – sometimes you might be pleasantly surprised with lower premiums!
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