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6 Car Insurance myths busted
December 14, 201510 key insurance definitions every insurer should know and understand
December 14, 2015Factors determining your car insurance rate
What determines my car insurance rates?
Some may describe motor vehicle insurance as a necessary evil but the matter of the fact is that even if you are the most cautious of motorists, you put yourself in great financial risk if you drive an uninsured vehicle.
This is according to the Arrive Alive website, article on “Car Insurance and Road Safety”.
Various factors can contribute to the set amount one has to pay to insure your vehicle. Arrive Alive looks at some of the factors that can influence your monthly payments in South Africa.
- Comprehensive cover: The more extensive the insurance cover is that you choose, the more expensive the policy will be. Comprehensive cover is more expensive than third party insurance.
- Type of vehicle: The type of vehicle you choose to drive whether it is a 4×4, sporty car, family car or bakkie will influence your insurance premiums. This may be due to the fact that some vehicles cost more to repair than others whilst some cars are more at risk of being stolen or hijacked. Safety features of your vehicle such as airbags may push up your premiums due to the cost involved in replacing them.
- How old is your vehicle? The age of the vehicle will have a definite influence on your premium. “This is because an older vehicle may cost less to replace, but it may be difficult to get parts for the vehicle and in general it will be more at risk of burning out or failing in one or other way,” the article states. To ensure lower rates on pre-owned cars, get an AA test certificate.
- Sport cars: Sporty vehicles will be more costly than a family car because of its power and speed. Sport car drivers are more likely to be younger and less responsible than drivers with family cars.
- Your address: Your address and whether or not your car is kept in a locked garage at night will affect the cost of the insurance policy.
- Do you have a tracking device in your car? Your insurance premium may be reduced if you have a tracking device in your car.
- Are you over 25? Human factors influence your premium such as your age. If you are over 25, you will get a slight discount on your car insurance since you would have gained experience. Other human factors include your gender, driving record and when you obtained a driver’s licence.
- Nominated drivers: Make sure your insurance knows who the nominated drivers are of a specific vehicle. Future claims may be rejected if the drivers are restricted.
- Include your car with your household insurance: It generally costs more to insure your car separately (in a “stand-alone” policy) than it does to include it in your household contents insurance policy.
- Cash back options: You may qualify for a no-claim bonus after a specific period if you did not submit a claim. This can mean money in your pocket.
- Negotiate your excess: All insurance companies will require the policy holder to pay a certain amount of excess in the case of a claim. Even if the incident was not your fault. Try to negotiate the amount of excess that you have to pay in case of a claim. Remember, the higher the excess, the lower the premiums and vice versa.
