There are over a hundred types of insurance policies that are subscribed to by millions across the globe. Certain countries are more active in terms of insurance practices while others are catching up with the trend. South Africa, for example, is a very good example of a rapidly growing insurance market. The third party insurance clause in particular has seen a sharp increase in demand recently.
There are a number of different types of car insurance clauses which when put together form a complete car insurance policy. Third party insurance is one such type among other insurance clauses. It is a liability insurance clause purchased by a party from an insurer for protection against the claims of another party. The third party insurance clause enables the first party to get recovery costs for the repair of its vehicle regardless of who caused the damage. It is especially useful when a car is hit by an uninsured car. Given the fact that most cars in South Africa are uninsured, third party insurance comes in very handy for car owners who don’t want holes burnt in their pockets in the event of an accident due to the fault of another party.
In South Africa, there are different governmental organizations that are associated with managing various facets of the car industry. One of them is the South African Insurance Association (SAIA). It has been researching on the long term effects of insurance practices on the automobile industry. SAIA has found out that around 70 percent of the cars in South Africa are not insured. Hence, the companies that have insured the rest 30% have to bear all the burden of accidents that happen. Such dissymmetric pressure threatens the very presence of car insurance companies, especially those that deal in short-term insurance packages. The only way for them to preserve themselves is by raising the prices to offset the costs incurred because of the party, that caused damage to their client’s, inability to recover the damage done by it. Such a change in pricing is likely to decrease the number of clients. So what is the solution?
SAIA along with the Department of Transport of South Africa is of the opinion that third party insurance should be made compulsory for all car owners to spread the burden of loss caused by accidents in an equitable manner. Third party insurance will cover damage caused only to the vehicle and not to life or health. Private stakeholders are participating in the discussion about third party insurance with the government to help it fully understand the dynamics of the industry.
The most basic rule of economics is that when demand of a certain product rises, its price rises too and vice versa. As a smart car owner, you must understand that since currently third party insurance has not been made mandatory for all car owners, hence, neither the demand for it is that high, nor is the pricing. However, when the government will announce it to be compulsory, the demand for it will exponentially increase and so will its pricing. You, as a well-informed, proactive and wise car owner should take advantage of this information and buy third party insurance as soon as possible to get the best priced deals.
Mostly, the third party insurance clause is a part of a more holistic car insurance policy. However, you can buy third party insurance in an isolated form too that is commonly known as ‘standalone third party insurance’. Currently, in South Africa, there are three different types of standalone third party insurance companies. Different car owners opt for different types depending on their needs.
Having said that, there are many car insurance companies that sell third party insurance, a word of caution – not all companies are to be trusted. If you are at the receiving end, certain companies can give you a lot of trouble. A good idea is to first visit different car insurance websites that aren’t owned by insurance companies and which give useful and sincere advice. Doing so will help you find at least three South African insurance companies that will cater to your specific needs well.