Deprecation Protection Cover

Depreciation Protection Cover

It is a harsh reality that the value of your car diminishes with each passing minute, every hour, and every day. One often recalls the sobering adage when purchasing a vehicle: the moment you drive it off the dealership lot, its value can plummet by up to 10%.

The crux of the matter lies in the fact that as a used car ages, its financial worth steadily declines. That is where the MUA Executive Policy steps in with its optional Depreciation Protection Cover, available at an additional premium.

The aim of this cover is simple: to insure your car for the amount equivalent to its retail value at the time of opting for the depreciation protection cover, whether it is at the point of purchase or at a later stage of your choosing.

This benefit kicks in when you make a claim for a “total loss,” which typically occurs when the vehicle is written off due to an accident rendering it uneconomical to repair, or in cases of theft or hijacking where the vehicleis not recovered.

Let us illustrate this with an example: Suppose you bought a car for R1,000,000 in 2022. At that juncture, your car would be insured for the same amount—R1,000,000—as its retail value. Opting for the Depreciation Protection Cover at this point would set the “Depreciation Protection Insured Value” on your policy schedule at R1,000,000.

Fast forward to 2024: after two years of ownership and approximately 30,000 kilometers of driving, your car’s retail value has dipped to R750,000—a depreciation of R250,000. Unfortunately, upon returning from a business trip, you discover that your vehicle has been stolen. While most standard motor insurance policies would only cover the reasonable retail value of R750,000 in such a scenario, having selected the Depreciation Protection Cover means MUA will compensate you with an additional R250,000. This sum represents the variance between the retail value at the time of loss and the amount stated on your policy schedule under “Depreciation Protection Insured Value.”

In essence, MUA will pay out R1,000,000 for this claim—equivalent to
the retail value of the vehicle at the time you opted for this benefit.

It’s important to note that this extension is applicable only to vehicles valued
up to R2 million for a maximum duration of five years from when you elect this benefit for any vehicle. Additionally, this cover option extends to motorcyclesvalued up to R500,000 and isn’t available for cars older than 12 years.

Take a closer look at your risks. Contact your broker for more information on
insurance solutions best suited for the discerning individual.