I still remember the first time I tried to insure my old Toyota Tazz. The car was worth maybe R30,000 at the time, but the quote I got back from the insurer was based on what felt like a showroom price tag. I didn’t know any better then—I just signed the policy because I thought that’s what everyone did. Only later did I learn that the value you insure your car for makes a massive difference in how much you pay every month and, more importantly, what happens if something goes wrong. That’s the tricky space Old Mutual is trying to help South African drivers navigate: making sure your insurance actually matches your car’s real value.
On the surface, this sounds simple. But anyone who has compared quotes from different companies knows it can feel like trying to make sense of a language you don’t quite speak. You’ll see words like “market value,” “retail value,” “trade value,” and suddenly your brain starts calculating whether your R200-a-month premium is secretly hiding a nasty surprise later. Old Mutual’s guide steps in here, attempting to demystify these terms and help drivers avoid common mistakes.
But before we get too neat and tidy about it, let’s admit something: there isn’t one perfect answer. What’s “right” depends on the age of your car, how you use it, and even your appetite for risk. Still, knowing the differences could save you thousands of rands—and more than a little heartache—when life throws you the kind of curveball only South African roads seem to deliver.
The Three Values That Actually Matter
Let’s break it down the way Old Mutual does, though with a bit of plain talk.
Retail value is the price you’d probably see on a dealership’s windscreen if you were buying the exact same model. It’s usually the highest number, which makes it tempting to insure at retail. After all, if you crash, wouldn’t you want the most back? The catch is, you’ll also pay more in premiums every month. Insuring for retail may make sense if your car is nearly new, or if you’re still paying it off and the bank wants that extra cushion.
Trade value is the opposite end of the scale. Think of it as the “what a dealer would give you if you sold today” number. It’s lower—sometimes dramatically so. If you’re insuring on trade value, you’ll probably pay less each month, but when it comes time to claim, the payout might not even cover replacing the car with something similar.
Market value is somewhere in between. It’s what insurers often suggest, and it reflects what your car is worth in the open market at that moment. Market value shifts over time, which is both its strength and its annoyance. One year your car may be worth R120,000, and the next year it could drop to R95,000.
Now, Old Mutual positions itself as a partner in figuring out which of these makes sense for you. They highlight the nuances rather than pushing a single “best” option. And frankly, that makes sense, because anyone promising you there’s one magic formula isn’t being realistic.
Why This Actually Matters More Than You Think
Let’s use a real-world example. A friend of mine, Siya, drives a 2018 Ford Fiesta. When he first insured it, he went with retail value because that’s what the bank insisted on for his loan. Fast forward four years: he’d nearly paid off the car, but he never bothered to change the policy. One rainy night in Joburg, he lost control on the highway and the car was written off. The payout covered retail value at the time—which sounded good—except his premiums had been hundreds of rands more per month for years. If he had switched to market value once the bank released him, he would’ve saved enough to probably pay for half of his next car.
That’s the hidden lesson: the decision about how you insure your car isn’t one-and-done. It should change as your car’s situation changes. Old Mutual seems to emphasize this flexibility, reminding drivers to review their cover annually.
But here’s where I’d add a bit of critique: even though insurers like Old Mutual suggest regular reviews, how many of us actually do it? We’re busy, distracted, and sometimes intimidated by the paperwork. Unless the insurer nudges you (and let’s be honest, they don’t always), your policy quietly rolls along while your car loses value.
The Psychological Trap of “Over-Insuring”
There’s also a psychological side to all this. Many people, myself included at times, have thought: if I insure my car for more, I’ll get more back. It feels logical, right? But insurance doesn’t work that way. If your car is worth R100,000 in the real world and you’ve insured it for R150,000, you won’t magically get R150,000 if it’s written off. The assessor is going to check current market conditions and base the payout on that. So all that happens is you spend more every month for no extra benefit.
Old Mutual tries to counter this misconception, but it’s such a sticky idea that I’ve seen people cling to it, almost like a superstition. It appears comforting to think you’ve padded your safety net, when really, you’re just throwing away money.
The Under-Insurance Risk
The flip side, of course, is under-insuring. I had a cousin who proudly told me he always picked the lowest cover option because “chances are, nothing will happen.” Until it did. His bakkie was stolen outside a shopping centre in Pretoria, and the payout barely covered half the cost of a replacement. He ended up taking out another loan just to get back on the road.
That’s the gamble with under-insuring: yes, you save money month to month, but when life blindsides you (and in South Africa, it often does), you could be left in a worse position than you expected. Old Mutual’s guide stresses this point, though with a softer touch, suggesting that the “peace of mind” often outweighs the short-term savings.
Where Old Mutual’s Advice Fits In
One thing I do appreciate about Old Mutual’s approach is that they don’t seem to assume everyone wants the same thing. A young professional buying a first car might prioritise lower premiums to keep monthly expenses manageable. A parent driving kids around might be more focused on security and less willing to take risks. And someone with a fully paid-off older car might be better off lowering cover to match what they could realistically replace it with.
They even suggest considering factors like how often you drive, whether your car spends nights in a garage or on the street, and your appetite for risk. It’s less about a “right answer” and more about balancing your financial reality with your tolerance for uncertainty.
Some Alternative Perspectives
That said, I do think there’s a bigger conversation worth having: how much should car insurance really track value in a country where so many people are under financial pressure? Some may argue that South African insurers, Old Mutual included, could explore more radical flexibility, like allowing partial payouts to cover public transport or ride-hailing for a year instead of just cash for replacement.
There’s also the question of transparency. While Old Mutual does offer guides and explanations, the average driver may still struggle with jargon. Perhaps insurers could do more by offering plain-language comparisons or even digital tools where you plug in your car model and immediately see the differences between retail, market, and trade cover. Some of these tools exist, but they’re often buried in websites rather than front and centre.
My Own Takeaway
If I’m honest, I learned the hard way that ignoring your car’s value while your insurance policy keeps ticking along is a bit like letting your gym membership run for a year while you only go twice. The money’s going out, but the benefit isn’t really matching your reality.
Now, I make it a small ritual: once a year, usually around the time my car license renewal is due, I call my insurer and check whether my car’s insured value still makes sense. It takes fifteen minutes, tops, and it’s saved me more than I can count.
Old Mutual’s guide, while not perfect, nudges drivers in this direction. It’s about awareness as much as action. Because in the end, car insurance isn’t just about having cover—it’s about having the right cover at the right value. And that can make the difference between an inconvenience and a financial disaster.
Final Thoughts
At the end of the day, matching your insurance to your car’s value isn’t glamorous. It doesn’t give you that shiny new-car smell or the thrill of cruising down the N1 on a Sunday morning. But it does give you something quieter and, arguably, more valuable: the confidence that you’re not paying too much, and you’re not exposing yourself to too much risk.
Old Mutual’s guide may not answer every question or solve every pain point, but it does remind South African drivers of a truth that’s easy to forget: cars lose value every day, and your insurance should keep up with that reality. If you take nothing else from it, maybe take this—review your policy, understand the type of value you’ve chosen, and don’t fall into the traps of over- or under-insuring.
Because as I learned with my old Tazz, ignorance is expensive. And in South Africa, where we juggle potholes, theft risks, and unpredictable accidents, the last thing any of us can afford is an insurance policy that doesn’t match the car we’re actually driving.