Don’t Let an Accident Leave You With Debt and No Car

The real cost of being underinsured isn’t just your car. It’s the debt that follows you home.

You’ve insured your car. You’re up to date with your payments. You’re even driving carefully. But then, without warning — your car is stolen or written off in an accident. You breathe a sigh of relief, thinking insurance will take care of everything.

But then… the call comes in.Your insurer is only paying out the Retail Value of the vehicle.The bank’s settlement figure is higher. You’re on the hook for the difference — a debt for a car you no longer have.

This isn’t a horror story. It’s a common reality.

Many South African motorists don’t realise that their insurance doesn’t cover what they still owe the bank. It only covers what the car is worth at the time of the loss.

If you financed your vehicle — especially with a small or no deposit, or a balloon/residual payment — you’re likely to owe more than the car is worth for a significant portion of your finance term.

This is where Credit Shortfall Insurance becomes essential.

Why This Insurance Matters

Credit Shortfall Insurance (also called Top-Up or Gap Cover) is designed to pay the difference between:

• What your insurer pays (Retail Value), and

• What you still owe the bank (Settlement Amount)

In simple terms, it prevents you from having to pay for a car you can no longer drive.

Let’s break it down:

Without Credit Shortfall Insurance:

You buy a car for R300,00012 months later, your car is written offRetail Value: R250,000Settlement Amount: R280,000You owe R30,000 — and you don’t have the car anymore

With Credit Shortfall Insurance:

Insurance pays R250,000Shortfall cover pays the R30,000 differenceYour debt is cleared — and you can start fresh with a new vehicle

What to Do Right Now:

• Check your finance and insurance policies (see Blog 4 for how to confirm if you’re already covered)

• If you're not covered, speak to your insurer or broker about adding Credit Shortfall Insurance

• Make sure you understand any exclusions — e.g., some policies may not cover residual values

Your Peace of Mind is Worth More Than Your Car

No one wants to think about accidents or theft — but the financial aftermath can be devastating if you’re not prepared. Credit Shortfall Insurance doesn’t just protect your car — it protects your finances, your credit record, and your peace of mind.

Final Word:

If you’ve financed a vehicle and don’t have Credit Shortfall Insurance, you’re taking an unnecessary risk. Don’t wait until something goes wrong to find out what your policy doesn’t cover. Protect your future. Protect your wallet.Protect yourself.

Have questions or need help reviewing your policy? Contact us today — we’ll gladly assist.