Are you fortunate enough to be in the “new car” market every couple of years? As soon as the motor plan expires, you scoot into the dealership and pick up the latest model. If that’s you, this blog post might bore you to tears. But for many of us, a reprieve from the heavy monthly installments that seem to go on for 50 years, not 70 months, is a true God send. If you’ve decided to hang onto your car and save yourself thousands of Rand in finance costs, you need to listen up. As you rack up on the odometer, your car is likely to start giving you a few headaches. Granted, if you keep your vehicle serviced and don’t put the pedal to the metal every time you nip out to pick up milk and bread, you might be lucky and not suffer a serious breakdown that can leave you in a cashflow crisis.
You need Motor Warranty cover if you’ve made the decision to hang onto your vehicle and not buy a new one.
So what does a policy like this cover?
It doesn’t cover services. That’s important to note. Making sure your car gets a check up at least once a year is a minimum requirement if you take up a Motor Warranty policy.
What you are covered for is: “The repair or replacement of certain components which resulted from mechanical or electrical failure”.
That’s a broad and technical definition for most of us. Let’s break down the insurance jargon shall we?
You don’t need to be a Formula 1 mechanic to understand that your vehicle is made up of thousands of parts. The longer you drive your car, the greater the chance stuff simply ends up breaking or failing.
If you’ve ever owned an “older car” and found yourself on the side of the road in rush hour traffic, in the pouring rain, with one bar of battery left on your cell phone, you understand exactly what I’m saying.
If you don’t have money lying around to cover this unforeseen expense, you have a problem.
You have two choices if you are driving a car out of warranty:
- Run the risk and pray that nothing happens
- Cover that risk with a Motor Warranty plan
If a Motor Plan sounds like a good plan, let’s move on.
The policy will list a set of components you are insured for. Those components will have a Rand value assigned to them. If you have a breakdown and it’s a component listed on your schedule, you get a pay-out.
Going into the types of components listed wouldn’t be a time waster. Let’s just say that the stuff that is most likely to break will be covered.
There is however a catch. Insurance companies are always selling on price to attract new customers. If you are paying R100 for your Motor Warranty cover, you can bet your bottom Dollar that the coverage is going to be limited. It makes no sense at all to take out a cheap Motor Warranty plan and to expect to stick an R80,000 claim under the insurer’s nose. It’s just not going to happen.
The plans are also tiered. Most insurers will offer you a base line plan and a couple of hundred bucks up the ladder, a premium plan.
What is the difference between the base line and premium plan?
More components are going to be covered and those components are going to be covered at a higher rate. It makes sense to take your time and to shop around. Make sure that you get a breakdown of the components covered and if necessary give your mechanic a call and ask him if the sum insured values, per component, are adequate.
A few more tips before we sign-off.
Check if your insurer requires you to use an authorised repairer on their panel of approved partners. If you get your car towed to your local mechanic and decide to pay him cash, on the premise that you can simply claim, you might get a rude awakening when your insurer tells you he isn’t an approved partner.
Rather give them a call. They will have a 24/7 breakdown or towing service built into the policy you can make use of. Once the claim has been approved, they may or may not let you use your own mechanic.
Get your car serviced on a regular basis, and send proof of the service to your insurer. The biggest risk to insurers is that policyholders don’t service their cars on a regular basis. All that means is that the insurer is more likely to be flooded with claims because of “wear and tear” rather than legitimate unforeseen breakdown issues, which is what the policy is designed for.
If you fail to do this, you leave yourself open.
“Mr Khumalo. We see your car hasn’t been serviced for two years. We believe your breakdown was because of this negligence and as a result we can’t pick up the bill for your R20,000 component”
Until next time.
The Wise About Life Team
