Be realistic – writing down a groceries list is the same way you would write down a budget. It might be a good idea to set your budget tight for festive spending as a way to curb over-spending. It would be necessary to shop around for better deals targeting discounted festive prices. While sticking to a budget, it is important to not get carried away when doing your shopping. Shopping lists come in handy and should be a guideline of what you need.
27 November 2012
The rising cost of motor insurance in South Africa is fast becoming unsustainable for many consumers. This, combined with the high volume of uninsured vehicles on the roads, has made it increasingly crucial that new measures such as compulsory third party motor property insurance are implemented, in order to widen the risk pool of participants and reduce the cost of insurance to policyholders.
Santie Stevens of Insurance Busters comments “Due to the high volume of uninsured vehicles on our roads, the people that are paying for vehicle insurance are ending up having to pay more and more as repair costs increases. It is speculated that 63% of households with vehicles are uninsured.”
The introduction of a compulsory form of insurance for all motorists would mean that everyone has at least some form of basic protection through insurance cover and will ensure a more equitable distribution of the financial burden of motor accidents.
Third party insurance is purchased by the insured (first party) from an insurance company (second party) for protection against another’s (third party) claims. Currently, in South Africa consumers can purchase third party cover, which covers any costs associated with the injury to passengers. However, a problem arises when insured motorists are involved in an accident with uninsured motor vehicles.
The reality is that currently many insurance companies struggle to recoup costs from third parties who have no form of insurance. If the insurance companies are unable to recover this money then they must fund these repairs themselves; and the only way to do this is to increase premiums for the wider pool of policyholders. As a result, those who do have insurance cover are being forced to cover the costs for those who do not.
As a result compulsory third party motor property insurance would make insurance more affordable for all those who do currently insure their vehicles as the costs to insurance companies will be reduced.
Introducing compulsory third party motor insurance will also enhance road safety as a whole. If vehicles involved in accidents are repaired properly this will enhance the general roadworthiness of vehicles on the road. This in turn, will have an effect on the number of road accidents. Vehicles which are not roadworthy contribute hugely to the sheer volume of accidents that happen on our roads on a daily basis.
A client has an outstanding balance owing to the bank of R250 000
The client’s vehicle is uninsured due to financial strain and the insurance which was taken out at the time of delivery of the vehicle has been cancelled due to two unpaid payments about 6 months ago. The cost of the insurance for the vehicle previously cost R1,200 per month..
Due to the fact that the vehicle is uninsured the client is now in breach of contract. A limited cover quote was offered to him along with a comprehensive insurance quote.
As the client is under debt review, R1,200 was allocated towards his living cost budget to pay for the vehicle insurance.
He received the quotes and was informed about the consequences of being uninsured and he said that he will contact the insurance consultant as soon as possible.
The limited cover quote was R700 per month and the full comprehensive quote received was R1,000, which result in a R200 saving compared to his previous comprehensive quote.
On his way to work, the client loses control of his vehicle and drives into the back of a Mercedes Benz. The damage to the Mercedes Benz was in the region of R100 000 and the owner of the Mercedes Benz holds the client liable for the damage caused.
As the client did not take up any of the quotations offered he was therefore uninsured.
His vehicle is now unrepairable and the third party is holding him legally liable to repair the damage caused to the Mercedes.
If the above client took out the limited covered that was offered, this insurance would have covered the outstanding balanced owed to the bank and he would have been liable for the third party’s damage only.
If the client took up the offer for comprehensive cover which was quoted, the amount owed to the bank would have been settled and the damage caused to the third party would also have been repaid.
Due to being uninsured, the client ends up paying for a vehicle he no longer has and is further in debt now as a result of being uninsured.