The more you claim, the higher your premium will be – this is
why it makes sense not to claim for those small bumps and scratches.
Many factors go into calculating your car
insurance premium, some of them within your control and some not. These range
from the areas where and how much you drive, and what you use your car for,
through to the type and cost of your car, your claims history, how long you
have had your licence, your age, and the security features in your vehicle.
Once you better understand how car insurance is priced, you can take steps to
minimise the premium you pay.
Some useful tips about how you can reduce your
insurance premiums.
1. ABC (always be covered)
Even if you’re going through a long stretch
where you won’t be driving and even if you think your old skadonk isn’t worth
insuring, it’s a good idea to maintain constant car insurance. The longer
you’ve had uninterrupted car insurance with any provider, the better your
premium will be. If you have regular breaks in your cover, your insurer might
think that you only get insurance when you have a higher probability of
claiming, for example when you are going on a road trip. Continuous cover also
gives the insurer a clearer picture of your risk over a longer, ongoing period.
TIP: If you think it is not worth insuring
your car because it’s too old or not valuable enough, you should still consider
third-party liability, which is the most basic and affordable car insurance you
can buy. From as little a R50 a month, it offers basic protection for
everything that your car might damage while you are driving it, except for the
car itself. Third party liability will cover the costs when the third party
lays a damage claim against you.
2. Be wary of cashbacks and other bonuses
Many providers offer cashback rewards or
no-claims bonuses for not claiming. But someone will need to cover the costs of
those incentives and that someone is usually you. In most cases, they will be
loading your premium to build up a fund to ultimately cover the payout they
expect to make. In most cases removing this product feature results in a lower
premium. Waiting for the “cash back” also limits your options to shop around
each year when your annual increase is announced to ensure you’re getting the
best deal.
3. Fix minor damage yourself
The more you claim, the higher your premium
will be — as simple as that. This is why it makes sense not to claim for
those small bumps and scratches. Not only will it not be worthwhile after
your excess is taken into account, it will also go into your claims record and
set you up for higher premiums in the future. If the damage is small enough
that you can cover it yourself easily, it might make more sense in the long run
not to file the claim with your insurer.
4. Drive well and obey the law
Your insurance company will usually ask if you
have ever been convicted of drunken driving or if an insurer has ever cancelled
your insurance for reasons other than nonpayment. This information gives them
insight into your driving behaviour and your likelihood of claiming. If the
answer is yes, you may end up paying more for cover, or even not be able to get
anyone to agree to insure you at all.
5. Choose your excess
In the past, the excess was usually a given
when you received a quote and it would take some back and forth to adjust it.
With a digital platform, you can easily adjust factors like your excess in
real time to see how it affects your premium when getting a quote. A
higher excess means a lower premium, and vice versa.
6. Shop around
If you’re with a traditional insurance
company, shop around and get more quotes before accepting their initial premium
or their annual increase. Many insurers will offer you a discounted price to
bring you on board, then hit you with above-inflation premium increases in the
years that follow. Because you must phone to cancel the policy if you are
unhappy with the pricing, the insurer knows it will have the opportunity to
offer you a lower premium to entice you to stay.
Photo’s by pixabay
Content provided by Ernest
North, co-founder of Naked
Article featured in Timeslive.co.za