Everything a student needs to know about car insurance

Being a student is one of the more enjoyable periods of one’s life but it also comes with many new responsibilities that are a rite of passage into adulthood. In a country like South Africa, where public transport is still patchy at best, one such responsibility is the opportunity to drive your first car in order to get to and from your place of study.

However, the thrill of owning your first set of wheels can sometimes supersede the obligations that come with such a responsibility. Among the first such obligations is insurance, which is an essential expense for someone still short on driving experience.

“Statistics show that new drivers are almost certain to have some form of accident before the age of 25, which is why younger drivers typically have to pay higher premiums than older, more experienced drivers,” says Louis Hay, Head of Short-Term Insurance at Standard Insurance Limited.

“If you are a student driving your first car it is very important that you sit down, preferably with your parents who are most likely paying for your car and insurance, to know exactly what you are covered for and under what conditions.”

Hay says the very first consideration for any student insuring their first car is to make sure they pay their monthly premiums. While this may seem fairly obvious, Hay says a surprising amount of first time insurers, and cash-strapped students in particular, forget to pay their monthly premiums and are then surprised when they find their claims are rejected.

“If you’re relying on your car to get you to lectures every day make sure your insurance premiums take precedence over your entertainment budget,” says Hay. “If something happens to your car you’re not going to be able to participate in your studies so you should really view this as part of your education budget.”

If you are in the fortunate position where your parents are paying for your monthly insurance premiums, make sure that they have thoroughly gone through the policy to ensure that you will be covered in the event of an accident or other claim.

Hay says that often parents who purchase a vehicle in their own name with the intent of letting one of their children use it for commuting to and from university, will simply add it on to their existing insurance policy without actually checking to see whether this would impact the validity of a claim.

“It’s normally cheaper for a parent to just add the car insurance of a child’s car on to their own policy as they will pay a lower premium by virtue of the fact that they are older and more experienced,” says Hay.

“However, certain policies are only offered on a named driver basis so if they haven’t clearly informed their insurer that their child will be driving the car, they may not be covered.”

Even if this is not the case, Hay says it is still worth checking with the policy provider to find out whether the car would be insured in the event that the person driving the car when an accident occurred was not the person named in the policy. This is important as often students will allow a friend to drive their car, which could potentially render a claim invalid unless the policy makes specific provision for this.

Another important thing to remember is that if you were involved in an accident whilst breaking the law, you will not be covered. For example, any collisions that occur whist under the influence of alcohol or drugs, as well as due to excessive speeding, will not be covered. Students also need to know the value of their insurance excess.

This is the amount payable by you in the event of a claim which covers the uninsured portion of your loss. While your insurer might cover the bulk of your claim, you will still be liable for an initial portion, which typically ranges from R3,000 to R7,000 depending on the nature of the policy and claim.

You also need to remember to keep your vehicle maintained so that it remains roadworthy as failure to do so will result in your claim being rejected. Tyre condition is also critically important as failure to keep tyres in the condition specified by your policy may also invalidate your claim.

“The tyres need to have at least the minimum level of tread specified by the policy although an insurer cannot legally reject a claim on the basis of tyre condition if the reason for the claim was not linked to tyre condition,” says Hay. “For example, if a storm causes a tree to fall on your car while it is parked in a parking lot an insurer cannot reject the claim on the basis that the tyres were not in good shape.”

Other things to consider are whether the insurer requires the car to have an alarm and/or tracking device or whether there are specific conditions around where the car is stored each night. For example, your policy might require that the car is parked in a locked garage each night.

Unlike life insurance, a short-term insurer is permitted to cancel an insurance policy with 30-days’ notice if it deems a person too great a liability. If this happens to you it could impact your future ability to get insurance as well as the premiums you will be expected to pay.

“An insurance policy is a contractual agreement between two parties,” says Hay. “Make sure you are fully aware of the terms of that agreement.”

EDITOR’S NOTE – This article is produced by Magna Carta, a communications company based in South Africa.