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Tips when buying a new car

South Africans are on a record breaking car-buying splurge; but sometimes overlook the insurance implications or potential additional costs of optional extras.

Santam Chief Executive Steffen Gilbert says, "Few people find out beforehand what impact their decision will have on their motor insurance costs." For example, the owner is only covered for the standard motor, without any extras, unless notified.

"So if you add air conditioning, alloy mag wheels, radio/CD, or electric windows you will need to take out additional cover, and this must be clearly stated on the policy. If for example you buy a car for R100 000 and the extras cost R20 000, you can't just take out insurance for R120 000 - this is seen as over-insuring your vehicle."

So when insuring your vehicle for a sum total of R120 000 make sure the policy includes details of those extras that account for the extra R20 000.

"Insurance cover is nearly always last on the list of things to be arranged when someone buys a new car. And once they discover that insurance will cost them quite a bit more there is a mad rush over quotations, available options and negotiations with brokers and insurers."

Mr Gilbert says the best advice is to start arranging vehicle cover at the same time that you begin to consider a specific vehicle. He suggests people should prefer insurers that offer the option of additional or 'top up' insurance.

"Otherwise, if your vehicle has to be written off within the first year you could suffer a severe financial blow." This is because of normal depreciation in market value of the insured vehicle compared to the cost of a replacement, aside from the outstanding loan.

Also bear in mind that when a vehicle subject to finance is written off or stolen the insurance payout is made directly to the lending institution. Any difference outstanding between the insurance payout and the remaining debt will be for the client's account.
For more information please call Santam on 0860 122 747.