Fewer things are more exciting than purchasing a vehicle. After braving the dealership and navigating the financing, you may be itching to take to the streets and show off your new ride.
@pineapple__sa Is this a rule? 👀🍍 #PineappleSA #CarInsurance #DoYouNeedCarInsuranceFromTheDealership
But that’ll only happen after you provide the dealership with proof of insurance.
Very rarely, if ever, will a dealership allow you to drive off without ensuring the vehicle’s protection. And it’s not just a formality; it’s essential for your peace of mind and financial security.
Let Pineapple guide you through the ins and outs of insuring a car at the dealership. We’ll cover everything from legal necessities to smart insurance decisions, and if you get a quote for our comprehensive car insurance, we’ll even cover you!
TL;DR – Our version of “I’m not reading all that, *SparkNotes pls.”
- Having car insurance is not a legal requirement in South Africa. However, dealerships and financial institutions may require that you have proof of insurance before releasing the vehicle to you.
- Without car insurance, you’re at financial risk if the vehicle gets damaged or stolen. You’ll be responsible for the loan repayments even if your car is written off.
- Without vehicle insurance, accidents, theft, and other perils can cause emotional and financial distress: crippling debt from panel beater repair costs, third-party medical bills or even legal fees.
- Pineapple offers insights into insuring a vehicle while it’s at the dealership and provides quick, easy and affordable comprehensive car coverage.
Is Car Insurance Mandatory Before Taking Delivery of a New Vehicle in South Africa?
There are no legal requirements for car insurance in South Africa, as vehicle insurance is not mandatory. But that doesn’t make it unnecessary, especially when buying a financed vehicle from a dealership.
Financial institutions (banks, private lenders, etc.) require proof of insurance, typically comprehensive coverage, before allowing you to drive your dream car off the lot. This is standard procedure to ensure they protect the financial interest they’ve invested in the vehicle.
Tiffany Franco, Pineapple’s Dealership Area Manager, said, “The bank needs to ensure its interest is protected, which is why it requires insurance coverage on the vehicle. This means that the dealership must have confirmation of insurance, which includes the bank’s interest, before it can submit the financing deal for payout. The vehicle will not be released to you until this is in place.”
Plus, knowing your vehicle is fully protected against accidents or theft can give you confidence, especially while you’re still paying it off.
Imagine you get into an accident or fall victim to hijacking, and your car is written off; it would be classified as a total loss. However, you’d still be expected to make payments on the car, whether it’s in working condition or not.
So, let’s say your dream car is a 2024 Hyundai Grand i10 1.0 Premium Hatch. It typically has a starting price of R 224,900, meaning if your car is financed but not insured, you’d have to pay this amount out of your own pocket.
And that’s not including the interest charged over and above this amount!
“For cash purchases where no financing is involved, dealerships can certainly offer insurance and recommend that clients consider it; however, they cannot mandate it,” Tiffany explained. “To protect themselves, dealerships typically ask clients to sign an insurance waiver, ensuring that clients are aware that obtaining insurance is optional.”
So, even if a dealership allowed you to leave its premises without an active insurance policy, you would still be at risk. Driving without insurance exposes you to financial setbacks, emotional distress and a world of painful regrets.
That’s why, while not mandatory, car insurance is still essential when buying a car at the dealership.
Risks of Driving a New Car Off the Lot Without Insurance
Driving without car insurance in South Africa is risky, even if you’re just going around the corner. Accidents can happen at any given time, or you could be a victim of hijacking minutes after leaving the dealership.
Picture yourself facing crippling debt from panel beater repair costs, medical expenses and potentially legal fees. Not our idea of fun.
Tiffany shared, “If [a motorist] experiences a complete loss of the vehicle, they may not be able to replace it immediately and would need to save up again.”
Plus, if the accident or theft results in a total loss, you’ll be paying for a written-off car—an asset you can’t even use! Tiffany continued by saying, “This scenario can place the client in a difficult financial position, especially since many rely on their vehicles for daily commutes or even as a primary source of income if they are self-employed.”
Without comprehensive coverage, that could be your reality.
Should anything happen to the vehicle, you’ll be financially responsible for the damages to your new car and any other property or vehicles involved. This may not be an issue if you have enough savings, but unfortunately, the average South African struggles to build sufficient savings.
According to Standard Bank’s data, more than half (52%) of entry-level private banking clients had less than a month’s worth of cash for unexpected events like retrenchment or urgent medical care.
The picture we’re trying to paint is that an unforeseen accident can leave uninsured drivers in a tough financial spot, which could take years to recover from. This is especially true for new vehicles, given their higher price tag.
Not to mention, the stress of being under severe financial strain can negatively affect your mental health.
“In addition to the financial implications for their own lives, clients should also consider the potential consequences if they cause an accident, said Tiffany. “If [you] are found liable for damage to someone else’s property or for medical expenses, it’s essential to ask whether [you] would be able to afford a replacement vehicle as well as cover the third party’s claim and any incurred medical costs.”
Unfortunately, this is an all-too-common scenario in the insurance industry. One that could have been avoided by securing your car’s insurance while still on the dealership’s showroom floor.
So, here’s a checklist to ensure you avoid this nightmarish scenario:
- Ensure you have proof of insurance before taking delivery of the vehicle.
- Understand the type of insurance coverage you need.
- Ensure your insurance policy includes protection against perils other than accidents, i.e. theft, fire and weather damage.
Recently brought yourself a brand new VW Polo? Check out our insurance for VW’s!
How Pineapple Provides Immediate Coverage for New Car Owners
Pineapple understands the excitement of buying a new car—hello, we insure them every day (‘them’ being new cars, in case that wasn’t clear). But we also understand that it can be stressful. The last thing you want or need is to shift through even more pages of paperwork just to get a quote for car insurance.
With your comfort in mind, and after selling hundreds of policies, we’ve streamlined our process to provide immediate cover, given the situation’s urgency and delicacy.
Pineapple uses a multi- or all-channel approach to make insurance easily accessible and seamless. We also know that time is of the essence, which is why you can get a quote in 90 seconds or less and activate your policy in under 5 minutes.
The all-channel approach lets our clients enjoy increased flexibility. They can choose how they’d like to interact with us:
- Online via our website,
- Via Pineapple’s award-winning app,
- On WhatsApp, where they can chat with customer support agents.
The all-channel insurance approach is all about customer-centricity; the client is at the heart of all our decisions, processes and methods. Allowing clients to choose the channel that best suits their needs gives them greater convenience and accessibility, simplifying their insurance buying journey.
Our responsive digital platforms and mobile app make getting a quote (in 90 seconds, no less!) easy to activate your policy quickly.
In fact, here’s how to get a quote for comprehensive car insurance with Pineapple in 3 easy steps:
- Get a quote in 90 seconds on our website (pineapple.co.za) or app.
- Choose your coverage and customise it to suit your needs (add car hire or shortfall to make your Pineapple policy perfect).
- Activate your policy instantly; no waiting periods, just pure insurance and total protection.
So, fear not; securing coverage before leaving the dealership may be the least painful part of buying a new car… But only if you’re doing it with Pineapple.
Understanding Comprehensive vs. Short-Term Insurance Options
You know you need insurance by now, but which policy should you choose to secure your car’s coverage? Here are the different types of car insurance policies:
1. Third-party
This insurance type offers the most basic coverage; it covers your legal responsibility should you cause damage to someone else’s property. It’s also typically the most affordable car insurance policy. But, in the event of an accident, you will have to pay for your car’s damage!
2. Third-party fire and theft
Similar to the above, a third-party fire and theft insurance policy provides a middle ground. It covers your liability for damaging another’s vehicle or property and provides protection if your car is stolen, hijacked or damaged by fire. But, it still doesn’t offer coverage against other perils like collision or single-vehicle accidental damage.
3. Comprehensive
It’s the most expensive option, but it provides the best protection—especially when you’re financing a car. Comprehensive car insurance offers a wide range of protection for your new investment: third-party protection, weather-related damages, accidental or malicious damage (vandalism) and more. This policy means an insurance provider will pay a valid claim even if you’re at fault. Banks and other finance houses will almost always require comprehensive coverage to protect their interest in the car.
For the best insurance for you and your car, carefully weigh these different policies against your budget.
Third-party policies might be tempting, given the lower cost, but they can leave you vulnerable to significant financial losses. Comprehensive coverage will give you maximum protection, but it can come at a price.
For comprehensive car insurance that costs as little as R19-ish a day, get a quote with Pineapple.
Conclusion
So, do you need insurance before driving your new car off the dealership lot? The answer is a resounding yes.
The car buying process isn’t complete until you’ve adequately ensured your new possession’s protection. Securing car insurance at the dealership before taking to the streets to show off your ride may be the smartest decision you make. That, and it can save you a world of pain, stress and regret.
Car insurance can protect your financial investment and ensure a smooth start to your new chapter as a car owner.
And with insurance providers like Pineapple rooting for every route you travel, the journey is that much sweeter. Pineapple makes it easy to get a quote and get covered so you can focus on enjoying your new ride.
Ready to insure your ride? Get a quote with Pineapple now and hit the road worry-free.
Related articles:
- Preparing for Your First Car Purchase: Essential Steps to Take Before You Buy
- The True Cost Of Buying A Car: A Detailed Breakdown
- 5 Things To Consider Before Buying Your First Car
- A Beginner’s Guide to Car Financing
Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.
Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply.
