Auto Top-Up Insurance

Many of us work hard to save up for a deposit so that we can buy the more expensive things that we want or need, like a car. We understand that you’ve done this and that you want to protect them from loss, damage, or theft.

You do this by taking out the best insurance product to cover them, like car insurance. Great, you’re covered should the worst happen, and your car gets stolen or written off! But, what about the balance of your vehicle’s financing that is not covered by insurance should it be stolen and not recovered, or written off? In most cases, you will have to continue to pay your car instalments. 

This is where Auto & General’s Auto Top-Up product steps in and helps you cover this portion of your loss. This type of cover is commonly referred to as shortfall insurance.

What is Auto Top-Up Insurance?

Auto Top-Up is a finance shortfall policy. It is there to cover the difference between your comprehensive insurance payout and the outstanding amount owed to the finance house on the date of a total loss, i.e. the amount you owe on your vehicle finance agreement. 

You may claim under this policy if the amount paid out under your comprehensive short-term insurance policy is less than the amount you still owe to your financier after the total loss of your vehicle (i.e. your vehicle is stolen and not recovered, or is uneconomical to repair and is written off). Auto Top-Up Insurance will pay the shortfall leaving you with a clean slate.

Is Auto Top-Up Insurance worth getting?

Even if your vehicle insurance is fully comprehensive, you can still lose money if your brand-new car is stolen or written off. This is largely due to depreciation and interest rates. Vehicle financing can be somewhat complicated, with most dealerships offering various different financing structures to get you to sign the deal, including balloon payments. This, however, means that should your car be stolen or written off, you’ll still be required to pay your outstanding car instalments. 

This is where Auto Top-Up Insurance comes into play. Especially if you’ve bought a new car. You need to remember that your car’s value will drop substantially from the moment you drive it off the showroom floor. While the value may drop, the amount that you owe the bank won’t drop. And the last thing you want is to be left paying for a car that you no longer have.

How do I know if I’ll need Auto Top-Up Insurance?

If you’re not sure whether you’ll need Auto Top-Up Insurance, ask yourself the below questions:

• Are you financing your car? If yes, then it’s a good idea to add Auto Top-Up to your policy. This is especially the case if you are paying a lot of interest, are paying off the debt over a few years, or if the structure of your finance arrangement means you’re due a large payment at the end (a balloon payment).

• Are you buying a brand-new car? Note that the value of your new car will depreciate 15-20% in the first year, and up to 50% after five years. This means that you’re likely to face a value gap should your car be stolen or written off.

• Can you afford the shortfall yourself? If no, then it’s a good idea to add Auto Top-Up to your policy. This is understandable as most people don’t have the extra money stashed away.

Shortfall cover insurance is not typically designed to cover older or relatively inexpensive vehicles, as their rate of depreciation is relatively low. Shortfall cover is only applicable if the vehicle is financed. If your vehicle is not financed, you will not be able to take out Auto top Up Insurance.

An example of shortfall cover insurance

Here is a practical example of where shortfall cover insurance is worthwhile:

You bought your new car for R200,000 and have managed to pay off R20,000 on your financing loan. Unfortunately, your car then gets written off and your insurer only pays out R150,000 (which is its current retail value). You still owe R180,000 on your financing loan, which leaves you short of R30,000. Without shortfall cover insurance, you would have to pay this out of your own pocket. With Auto & General’s Auto Top-Up, the shortfall amount will be paid out to your financial institution. 

What does the Auto Top-Up cover?

Auto Top-Up includes cover for:

• The difference between your vehicles’ insured amount and its outstanding finance amount.

• You pay a deposit if you choose to include Deposit Protector. The deposit claim that will be paid out is either the deposit paid or 10% of the insured value of the vehicle, whichever is the smaller amount.

You will only qualify for Auto Top-Up cover if your car insurance is fully comprehensive. The Auto Top-Up cover will payout once you’ve made a successful claim and everything is settled.

What does Auto Top-Up Insurance not cover?

There are certain instances where you won’t be covered with Auto Top-Up Insurance. This includes if your claim against your comprehensive motor insurance policy is rejected for any reason. You will also not be covered if your car has been recovered or in the case where it has not been written off after an accident.

It won’t cover any non-standard extras that you added to the car after you bought it, for example, a sound system. Nor will it cover any finance charges, arrears instalments or interest still outstanding at the time of loss of your vehicle.

Other exclusions will also apply. Please ensure that you are familiar with the inclusions and exclusions noted on your policy schedule.

Can I upgrade my Auto Top-Up cover?

You can upgrade your Auto Top-Up policy with Deposit Protector. With this upgrade, we will pay either the deposit paid (at the time of purchasing the vehicle) or 10% of the insured value of the vehicle at the time of the claim, whichever is lesser. Remember that you can only claim if your vehicle is stolen and not recovered or is uneconomical to repair and is written off.

The following qualifying criteria apply:

• The vehicle is comprehensively insured.

• The vehicle is financed.

• The deposit has been paid on the vehicle.

What is the excess on Auto Top-Up policies?

No first amount or excess is payable on either Auto Top-Up or Deposit Protector claims.

Auto Top-Up Insurance quotes

Do you have an outstanding balance on your vehicle’s finance? If so, it’s a good idea to consider taking out Auto Top-Up Insurance. Be protected against unexpected debts in the event of the total loss of your vehicle. Contact Auto & General today to talk to one of our helpful consultants on the products available. Call us on 0860 10 47 89 or download our Auto Top-Up brochure for more information.