Should You Cancel Insurance on an Old Car? (South Africa Guide)

By / September 18, 2025

Owning an older car can feel like balancing sentiment, practicality, and the monthly cost of keeping it on the road. […]

Should You Cancel Insurance on an Old Car (South Africa Guide)

Owning an older car can feel like balancing sentiment, practicality, and the monthly cost of keeping it on the road. Insurance is often one of the biggest ongoing expenses after fuel and maintenance, so it is natural to ask: should you cancel insurance on an old car? The short answer is sometimes, but there are important legal, financial, and risk considerations in South Africa that you should weigh before you make the call.

This guide explains how motor insurance works for older vehicles in South Africa, how to run the numbers for your situation, when cancelling comprehensive cover may be sensible, when it is risky, and the smart alternatives that keep you protected without overpaying.

Quick take (TL;DR)

  • There is no law that forces private motorists in South Africa to have car insurance. If your car is financed, your credit agreement almost certainly requires comprehensive cover until the loan is settled.
  • The Road Accident Fund (RAF) covers injury and death, not property damage. If you hit another car and you have no insurance, you personally pay for their repairs.
  • If your older car’s annual premium plus excess is a large slice of, or close to, the car’s realistic market value, dropping comprehensive and switching to a cheaper third-party (or third-party, fire and theft) policy can make sense — provided you can absorb a total loss of your own car.
  • Never go completely uninsured if you drive on public roads. Third-party liability cover is inexpensive compared with the potential million-rand claims you could face if you are at fault.
  • Before cancelling, look at smart alternatives: increase excess, switch to limited-use/parked-only cover, choose older-vehicle products, or move to an insurer that reduces premiums as your car depreciates.

What the law and lenders actually require

  • South African law does not mandate private motor insurance. You can legally drive a paid-up car without an insurance policy.
  • However, if your car is bought on finance, your bank or finance house typically requires comprehensive insurance as a contractual condition. Cancelling could put you in breach of your finance agreement and may result in default consequences or the bank arranging cover at your cost.
  • The Road Accident Fund (RAF) is often misunderstood. It provides compensation for injuries and fatalities from road accidents, funded by a fuel levy. It does not pay for damage to vehicles, walls, gates, or other property. That risk sits with you or your insurer.

Bottom line: If the vehicle is still financed, cancelling comprehensive cover is not an option. If it is paid off, you may choose your cover level — but you still carry full responsibility for property damage you cause.

The financial question: should you self-insure your own vehicle?

Think of insurance as a trade-off: you pay a certain, predictable premium to avoid uncertain, potentially large costs. For older cars, the maximum payout is capped by the car’s value, and insurers may write off the car when repairs exceed a percentage of that value. That is why premiums sometimes feel disproportionate on older vehicles.

Use this simple decision framework:

  1. Determine a realistic value
    Look up retail or market value from a reliable source (dealership valuation, trusted online valuations, or insurer schedule). Example: your 2009 hatchback might have a retail value around R45,000–R70,000, depending on condition and mileage.
  2. Add up your annual insurance cost
    Monthly premium × 12 = annual premium. Add the excess you would pay on a typical accident claim (for many policies excesses can be R3,000–R8,000+, and higher for windscreen or theft).
    • Example: Premium R650/month → R7,800/year + likely accident excess R5,000 = R12,800 of your own money in a bad-year claim scenario.
  3. Compare against the vehicle value and your risk exposure
    • If your car’s value is R50,000 and you pay R7,800/year with a R5,000 excess, you could be spending over 25% of the car’s value each year just to protect it — and you would still pay the excess on a claim.
    • Factor in your actual risk: daily mileage, where you park (street vs. secure parking), crime exposure (theft/hijacking), and your driving pattern.
  4. Consider the insurer’s likely write-off decision
    Insurers may declare a total loss when the repair cost approaches a threshold (often cited in the 45%–70% of value range, depending on the insurer, model, and salvage data). On a low-value car, fairly modest repairs can cross that line, so comprehensive cover can act more like a replacement cheque rather than a repair promise. If the payout would be close to what you would reasonably expect to get for the car, decide if that is worth a year or two of premiums.
  5. Assess your emergency fund
    Could you replace or live without the car if it is stolen or written off tomorrow? If yes, you are a better candidate for self-insuring your own car while keeping third-party cover for liability to others.

Real-world risk: older cars, crime, and parts

South Africa’s risk environment remains challenging:

  • Hijackings and theft affect the cost of insurance. Risk varies by province and model type, and it is relevant even for older cars — some models remain sought after for parts.
  • Parts and labour inflation can make even routine smash-and-grab or bumper repairs expensive relative to an old car’s value, increasing the chance of a write-off.
  • Parts availability for older imports may be poor, increasing repair times and costs.

For a low-value car that is parked in a secure area and used sparingly, the probability-weighted benefit of comprehensive cover can be small compared with the premium.

When cancelling comprehensive cover might make sense

If your vehicle is paid off and you can answer “yes” to most of the below, switching from comprehensive to third-party only (or third-party, fire and theft) may be a rational choice:

  1. Low market value: Your car’s retail/market value is modest (for instance under ±R80,000), and annual premiums + excess are eating a large chunk of that value.
  2. Low usage: You drive infrequently, avoid peak-traffic hotspots, and park in secure areas (garage, estate, workplace parking).
  3. Emergency fund: You can replace or repair the car yourself if it is stolen or written off, without jeopardising your finances.
  4. No finance: You own the car outright, with no contractual insurance requirement.
  5. Rational risk appetite: You accept that your own vehicle would not be covered for accidental damage under third-party only, and you are comfortable with that trade-off.

If the above does not describe you, keep reading — there are safer ways to reduce costs without going fully bare.

When you should not cancel comprehensive cover

  • The car is financed. Your agreement almost certainly requires comprehensive cover.
  • High reliance on the car. If you need the car daily for work, family transport, or medical reasons and cannot replace it easily, comprehensive cover remains valuable.
  • You park on the street or in high-risk areas or your commute goes through known hijacking hotspots.
  • Your personal finances are tight and a total loss would be catastrophic. Ironically, those who can least afford a loss often most need comprehensive cover.
  • Rare/collectable vehicles where replacement cost far exceeds “book” value. Seek classic or agreed-value cover rather than cancelling.

Smart alternatives to cancelling (cost-cutting options)

If comprehensive cover still makes sense but is stretching the budget, consider these tactics before you cancel:

  1. Switch to third-party, fire and theft (TPFT)
    TPFT is cheaper than comprehensive and still covers liability to others, plus theft and fire of your own car. It will not cover accidental damage to your car from a crash you cause, but the theft component is valuable for high-risk areas and popular-for-parts models.
  2. Third-party only (TPO)
    The bare minimum every driver should keep if they drive on public roads. It protects you against claims by other people when you are at fault. Think of it as catastrophe insurance for your liability, not for your car.
  3. Increase your excess
    Voluntarily taking a higher excess can materially reduce the monthly premium. This is sensible if you would only claim for a major loss (e.g., theft or write-off) and can self-fund small bumps.
  4. Low-mileage or usage-based cover
    If you drive infrequently, a pay-as-you-drive or telematics-based policy can reward your low usage and safer driving with lower premiums or cashback.
  5. Parked-only / stationary cover options
    Some digital insurers allow you to pause accident cover when your car is parked (while keeping theft, fire, and weather cover). This can create meaningful savings for weekend cars or work-from-home lifestyles.
  6. Older-vehicle products
    Certain insurers offer streamlined cover aimed at older, lower-value cars, often with set excesses and capped benefits. These can provide a middle ground between full comprehensive and TPFT.
  7. Decreasing-premium insurers
    A few brands reduce your premium as your car depreciates, which can be particularly attractive for ageing vehicles.
  8. Classic/collectable insurance
    If your “old car” is actually a classic or collectable, seek agreed-value cover with limited-mileage terms and specialist repairer networks rather than cancelling. Standard retail/market value policies seldom reflect true collector value.
  9. Security upgrades
    Add a tracking device, steering-lock, or immobiliser and ask for the premium discount. Park under cover where possible.
  10. Annual shop-around
    Get competing quotes at renewal. Insurers price risk differently and your premium should drift down as your car’s value falls (some do this automatically, others not).

Claims reality on older vehicles: write-offs, values, and salvage

  • Write-off thresholds vary. Many insurers consider a car uneconomical to repair when estimated repairs fall somewhere around 45%–70% of the insured value, but the exact method depends on historical salvage data, safety factors, and policy wording.
  • Value basis matters. Check whether your policy pays out on retail, market, or trade value. On older cars, that difference can be material.
  • Salvage and “buy-back”. If a vehicle is declared a total loss, insurers typically retain the salvage. Sometimes you can retain the wreck in exchange for a reduced cash settlement, but it is subject to the insurer’s and salvage partner’s rules and the vehicle’s Code status.
  • Code 3 implications. Rebuilt write-offs (Code 3) may be harder to insure and often carry lower resale values. If you are offered a salvage buy-back, consider future insurability and safety very carefully.

A simple worksheet to decide

Work through these questions and score Yes/No:

  1. My car is paid off (not financed).
  2. My annual premium + likely excess equals more than 20% of my car’s market/retail value.
  3. I drive under 600 km/month and mostly park in secure areas.
  4. I have at least three months’ living expenses saved, and could afford to replace the car if it were stolen or written off.
  5. I am primarily insuring to protect others (liability) rather than to repair my own car.
  • If you answered “Yes” to 4–5: strongly consider downgrading from comprehensive to TPFT or third-party only.
  • If you answered “Yes” to 2–3 but No to 4: explore higher excess, usage-based or older-vehicle products first.
  • If you answered “No” to most: keep comprehensive and shop around for a better premium.

Example scenarios

Scenario A: City runabout, paid off

  • 2008 hatchback, retail value R55,000.
  • Premium R720/month (R8,640/year), excess R5,000.
  • Street-parked some nights, 1,000 km/month.
  • Finances tight; replacing the car would be difficult.
    Recommendation: Keep comprehensive or TPFT if budget pressure is high. Consider higher excess to reduce premium and invest in tracking/security to lower risk.

Scenario B: Weekend toy, garaged

  • 2005 sedan, retail value R40,000.
  • Premium R600/month (R7,200/year), excess R5,000.
  • Drives 200 km/month; parked in a locked garage.
  • Owner can afford replacement if total loss.
    Recommendation: Switch to third-party only or TPFT, or use parked-only days on a flexible policy to cut costs.

Scenario C: Appreciating classic

  • 1990s collectable with upgrades; market price exceeds book.
  • Owner wants proper repair and agreed payout on total loss.
    Recommendation: Move to classic/collectable agreed-value cover rather than cancelling. Standard policies may underpay relative to real value.

Frequently asked South African questions

1) Is third-party insurance compulsory in South Africa?
No, there is no legal requirement for any private motor insurance. However, third-party is strongly recommended because it protects you against claims from others that could run into hundreds of thousands or millions of rand.

2) Will cancelling insurance affect my vehicle licence renewal?
No. Licensing and insurance are separate.

3) If I cause an accident and have no insurance, what happens?
You can be sued for the other party’s damages (vehicle, walls, property) and for other legal costs. The RAF does not cover those property losses.

4) My car is old. Will an insurer still offer comprehensive cover?
Often yes, but it depends on the insurer and vehicle. Some insurers have age-based product rules, while others specialise in older cars or offer “essential” cover tiers for older, lower-value vehicles. For genuine classics, seek agreed-value policies.

5) Will my premium always go down as the car gets older?
Not necessarily. Premiums reflect risk, not only value. Crime trends, parts pricing, and your claims history also affect premiums. A few brands do decrease premiums monthly in line with depreciation.

6) What excess should I choose on an old car?
Pick an excess you can comfortably pay tomorrow. Higher excesses lower premiums, which is sensible if you would only claim for theft or write-off.

Practical checklist before you cancel

  • Confirm whether the car is financed (if yes, do not cancel comprehensive).
  • Obtain a current retail/market value.
  • Calculate premium × 12 and note your excess.
  • Price alternatives: TPFT, TPO, older-vehicle products, usage-based or parked-only options.
  • Ask about security device discounts and driving-behaviour rewards.
  • Read policy wording for write-off rules, value basis (retail/market/trade), and exclusions.
  • Consider the impact on your life if the car is stolen tomorrow.
  • If you still decide to cancel comprehensive, keep at least third-party cover.

Conclusion

Cancelling comprehensive insurance on an old car can be sensible when the car is paid off, the premium-to-value equation is unfavourable, and you have the cash buffer to self-insure your own car. However, driving with no insurance at all is a high-stakes gamble: one at-fault crash can saddle you with a life-altering liability. For most South Africans with ageing vehicles, the sweet spot is usually stepping down to a leaner cover type (TPFT or third-party only), optimising your policy (higher excess, usage-based, or older-car products), or switching insurers to one that prices your risk more fairly.

Make the decision deliberately: run the numbers, be honest about your risk tolerance, and never compromise on third-party liability protection.

Sources

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