Having your car stolen or hijacked is a traumatic experience - and what can be just as shocking are the unexpected expenses involved. Firstly, the insurance company will pay out the current market value of the car which, in this case, is only R342 000. Bear in mind that motor vehicle insurance is not based on replacement value, and is usually settled on the average between the trade and retail prices which are ascertained by the insurance company from the Mead and McGrowther Auto Dealers Digest. And there are even more costs. In all, Mr X is out of pocket by around R44 000.
Few people can afford to pay out tens of thousands of rands in excesses and other costs.
And it's not simply a matter of everything returning to normality once your insurance claim is settled. This problem is compounded if the bank imposes a penalty interest on early settlement of your finance contract. According to Andy Taylor, underwriting executive at Aegis Insurance Company, many people who are insured believe they have no obligation to meet their hire-purchase obligations when their car is stolen. The truth is, you have to continue paying until the claim is settled. To overcome the problem of settling the difference between the insurance payout and the HP agreement, Taylor advises that, during the first two years, the vehicle should be insured for the HP amount.