Mail & Guardian
Mail & Guardian

Kids, cars and insurance — what you need to know

3 min read

You may think you’re a doing your child a favour buying him a R500 000 car and putting him on your insurance, right? After all, with the best wheels and your insurance cover to protect him, you’re doing the best for him, plus saving him money, because new drivers can be forced to pay up to three times more than an experienced driver for their car insurance.

But this may not, in fact, be the best thing to do at all.

What may well happen is that your child will have an accident, your own claims record will be tarnished, and your child will come away with little sense of the real cost of an accident. Remember, too, that the younger someone starts out with a good claims record, the sooner they can erase extra loading charged when one is older.

Here are some tips I picked up from Christelle Fourie, managing director of MUA Insurance Acceptances, who says she sees a lot of claims involving parents, children and cars:

  • Because younger drivers are more like to have an accident, insurance companies often insist on higher premiums. Although this may seem like an unnecessary expense — one you can avoid by putting your child on your insurance — rather think about a policy for your child that combines motor and home insurance. The majority of insurance companies offer reduced car insurance premiums if you combine them with household contents insurance.

  • Rather pay for your child’s own insurance cover than pay a premium for them on your insurance. Fourie has seen children in their 30s on their parents’ insurance and she believes they have not developed a sense of the real costs of owning and running a car. Similarly, they tend to drive less cautiously, as “someone else” picks up the pieces if there’s a claim.

  • Some insurers offer a premium discount if the insured chooses an additional voluntary excess. As a parent, if you want to assist your child, do so by funding this voluntary excess during the early years of insurance.

  • Be upfront about risk. Don’t lie to your insurance company and say you’re buying a “third ca”‘ that will just “stand around” at home — if you’re planning to have your child drive the car to university every day, say so. That way, you can’t be accused of withholding information in the event of an accident, which might lead to a claim being repudiated.

  • You can now install a tracking device that will monitor where your car is being driven and parked, and at what speed it’s being driven. MiWay actually offers discounts if your tracking device shows a good driver, so you child can save on premiums sensibly.

  • A tracking device will also alert you to risky driving, which you might be able to do something about — if your child is driving at 160km/h at 3am, you can consider taking the car away until he or she learns what’s risky on the road and what isn’t.
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