What is Shortfall insurance?
Vehicle Insurance is a necessity nowadays, especially driving on South African roads. In addition to your Comprehensive Insurance coverage, you may, however, need to purchase Shortfall Insurance. In the unfortunate event that your vehicle is written-off, stolen or hi-jacked, Shortfall Insurance will cover the difference between your vehicle’s retail value and the outstanding balance you owe to your finance house.
How does Shortfall Insurance work?
Here’s a real world example of how Shortfall Insurance can be a lifesaver:
Say you bought your vehicle for R200,000 and you’ve paid R20,000 off on your vehicle finance loan.
You are in an accident and your vehicle gets written off. Your insurer then only pays out your vehicle’s current retail value which is R150,000. You still, however, owe R180,000 to your finance provider, which means you have a shortfall of R30 000.
If you had taken out Shortfall Insurance, that R30,000 shortfall would be paid out to your finance provider to settle your outstanding loan. You won’t be left searching for an extra R30,000 when you least expect it.
Who should get Shortfall Insurance?
Owning a vehicle is essential for most people’s everyday lives. Without our vehicle, we wouldn’t be able to function properly. How would you get to and from work? How would you get your kids to school? And let’s not forget about those grocery shopping trips!
Are you buying a second-hand vehicle and financing it through a financial institution? Then it’s worth considering Shortfall Insurance on top of your comprehensive cover. The current accident and crime rates in South Africa are incredibly high, so it makes sense to rather be safe than sorry. The last thing you want to have to do is keep paying for a vehicle that you don’t own anymore.
Are you buying a brand-new vehicle? A brand new vehicle will depreciate by around 15 – 20% in the first year of purchase and by approximately 40% after you’ve owned it for 5 years. You are, therefore, guaranteed to have a shortfall should your vehicle be written-off, stolen or hi-jacked.
Can you afford to cover the shortfall yourself? If you have some money stashed away to cover a shortfall in the event your vehicle is written-off, stolen or hi-jacked, then you could always make up the shortfall yourself. This, however, is not the case for most people.
You’ve taken out Comprehensive Insurance for your vehicle. Why would you need extra cover?
You’ve been doing research on your dream vehicle for months while diligently saving for the deposit. You choose the right vehicle, make your decision, and get your finance approved. Finally, you’re driving your new ride home. Of course, you’ve also thought ahead and taken out Comprehensive vehicle Insurance to protect yourself and your investment. Your monthly repayments are always made on time and you’re confident that you’ve taken all steps possible to be a smart, savvy vehicle owner.
You’ve spent plenty of time, energy, and money on making all the right choices. What could go wrong?
Imagine your vehicle gets written off or stolen, leaving you to discover all the extra costs that your vehicle insurance doesn’t cover. Now not only are you left dealing with the trauma of the situation but also the admin and huge financial losses that you simply weren’t prepared for.
This is where your Shortfall Insurance steps in and saves the day. We’ve thought about all the extra surprise costs so that you don’t have to. Thanks to Shortfall Insurance, you’ll be covered for the money still owed to the bank on a financed vehicle, the loss of extra fitted items like expensive rims or sound systems, and even a portion of your excess. Consider it to be a welcome relief in your time of need.
Shortfall Insurance is a lifesaver in situations when your entire claim is rejected by your vehicle insurance company due to you unintentionally violating a policy condition. In this event, we will cover the claim.
How much does Shortfall Insurance cost?
The amount you pay for Shortfall Insurance is unique to your circumstances. Your premium depends on a number of things including how much your vehicle is worth and the deposit you paid when you initially purchased the vehicle.
What does Shortfall Insurance cover?
Paying out your shortfall may be the main benefit of a Shortfall Cover with Bidvest Insurance. There are, however, more benefits to ensure that you are always covered.
Excess Protection: Bidvest Insurance protects you with up to R20 000 cover towards your underlying excess, as outlined in your insurance policy.
Additional Accessories: Your vehicle should be exactly the condition you want it to be. Shortfall cover gives you up to R10 000 cover towards any accessories fitted on the vehicle that have not been specified on your underlying insurance policy.
Loyalty Bonus: We are all for grand gestures. That’s why we give you R15 000 Loyalty Bonus towards replacing your vehicle.
Unintentional Violation Cover: Sometimes things happen without us intending for them to. Should your underlying insurer not pay for your stolen or written off vehicle, due to an unintentional violation, we’ve got you covered.
Instalment Protection: If your claim for a stolen or written off vehicle with your underlying insurer takes more than 60 days, we will pay your monthly vehicle instalments, up to R5 000, for up to 3 months.
Why do I need this cover?
With a Comprehensive Vehicle Insurance, you’ll be fully covered in the event of your vehicle being written off, hi-jacked or stolen, right? Unfortunately, no.
In most cases, should your vehicle be stolen or worse, written off in an accident, your insurance pay-out is not likely to cover what you still owe to the bank that financed your vehicle, leaving you in a worse off position financially and without a vehicle. It’s for this very reason that Shortfall Cover is essential when purchasing a vehicle, to ensure you are never left out of pocket should the unexpected happen.
In the event of a claim, this policy will pay towards your vehicle instalment for up to three months (up to a maximum of R5 000 per month), should your comprehensive claim be delayed. In addition, a loyalty bonus of R15 000 will be paid towards a replacement vehicle when purchased from a Bidvest Insurance approved dealership within 3 months of the original loss of your vehicle. And lastly, should your insurance company reject a claim due to you unintentionally violating a condition of your Comprehensive Insurance Policy, we will then pay the claim.
At Bidvest Insurance, our goal is to design products that consider every angle of the problem, helping minimise any extra out-of-pocket costs. We believe it’s always best to be safe, rather than finding yourself in a world of regret later. You never know when or if your vehicle will ever be in an accident, hi-jacked or stolen. But what we do know is that it’s always best to plan ahead for these types of situations. Our Shortfall Protection plan has you covered, making sure that your wallet is protected.
For more information or to take out Shortfall Insurance, click here.