Can you imagine if your financed car was written off or stolen and only later you realised that your insurance doesn’t cover the full outstanding debt on your vehicle? It’s not a scenario we ever want you to find yourself in. That’s why at First for Women we offer Auto Top-Up Insurance on our car insurance policies. It’s just one of the ways we try to protect you from financial shortfalls that might come your way.
What is auto top-up insurance, and how does it work?
Auto top-up insurance, which is also known as shortfall cover, is a type of insurance policy that protects you against any gap in your existing insurance coverage.
What this means is that if your car is stolen or written off, and the amount you owe is higher than what the car is insured for auto top-up insurance will cover the shortfall you owe.
There might be a shortfall because insurers use your car’s market value to work out what to pay if there is a total loss of the vehicle. The car’s market value can be less than the finance you still owe on the car.
Shortfall insurance bridges this gap between the market value of your car and the finance you still owe.
With First for Women’s Auto Top-Up Plus, there are added benefits that you get from this cover. You can upgrade your policy with a deposit protector. With this, First for Women will either pay back the deposit which you paid at the time of purchasing the vehicle or 10% of the insured value of the vehicle at the time of the claim. This will only happen if the vehicle is a write-off or has been stolen and not recovered.
Other benefits that you can choose to include are:
- Excess protection
This benefit is for when you have a successful comprehensive car insurance claim if your car is written off. With Auto Top-Up Plus, you are given a designated amount to help you to cover the excess that you will have to pay after making a claim.
- Installment protection
This benefit helps you pay your car installments while a comprehensive car insurance claim is being finalised. So, if your car is written off and you have made an insurance claim, the Installment Protector Benefit will pay up to two months of vehicle installments until the claim is finalised.
- Personal accident cover
This benefit covers the policyholder in case you are involved in an accident that results in accidental death, permanent disability, or accidental exposure to HIV.
Who should get shortfall insurance for vehicles?
Many people believe that if they have comprehensive car insurance, they will be covered for all eventualities – but this isn’t always the case. Because cars constantly lose value as time goes on, the car’s market value is often less than the replacement value, and you may find yourself with a shortfall if the car is stolen or written off.
So, for instance, if you bought your car brand new five years ago for R300 000 and it was stolen today, the market value of your car would be much less than the original price you paid. You may still owe R150 000 in finance on the car, but the actual market value, which is what you would get from your insurer, is R100 000. This leaves you R50 000 short.
While auto top-up might not be necessary for every car owner, especially if their car is old or isn’t financed, it is recommended for car owners who:
- Have a car that is financed
- Are buying a new car
- Can’t afford the shortfall
Buying a new car is lovely, but the chance of having a significant shortfall if the car is stolen or written off increases when buying your car ‘out of the box’. This is because a new car’s value depreciates as soon as you drive it off the showroom floor. Some estimate the loss to be as much as 20% within the first few seconds of the purchase.
Unfortunately, if something happens to your car – it’s stolen or written off in an accident – you will still have to pay the total financing of the vehicle. The way to protect yourself from this happening is to get Auto Top-Up Insurance. It can also assist with monthly installments and with repair costs if the excess is more than you can afford.
What are add-ons in motor insurance that you should consider?
Just like Auto Top-Up Insurance, there are several add-on insurance policies you could take out in addition to various car insurance policies. All these have extra benefits that can aid you while commuting on South Africa’s busy roads.
Some of the typical car insurance add-ons include:
- Tyre and rim guard insurance
With all the potholes on the roads, the area of your car that is particularly vulnerable to damage is the tyre and rims. With Tyre and Rim Guard cover, your insurer will take care of damage caused by potholes and uneven road surfaces. This cover will allow you to claim the repair and replacement of two tyres and two rims per year.
- Scratch and dent
This type of policy repairs chips, minor dents, and scratches on the outside of your car. A second option is an inside-out cover, which takes care of damage to both the outside and inside of the car, such as scruff marks and tears.
Get Auto Top-Up Insurance from First for Women
If your car is stolen or written off, don’t be caught out by an unexpected shortfall. Get a quote on car shortfall insurance with an Auto Top-Up policy from First for Women, and let us guide you on the best way to protect your financial health.
Pictures: GettyImages
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