Why premium increases protect you as the customer

As a valued Auto & General client we like to keep you updated and give you the peace of mind which you expect from us as an insurance company. So we have prepared some questions and answers to help you understand how the premiums are applied.  

Why does my premium increase when I have not claimed?

We insure our clients against the risk (potential) of making a claim, and as the costs associated with making a claim have increased so the premium has to keep with that potential risk.

The risks that we take into account are:

• the increased number of vehicles on the road
• road infrastructure that has not been expanded or upgraded to deal with extra traffic
• inexperience of many new vehicle owners
• increasing crime levels
• increased likelihood of storms, lightning or hail damage.

So, even though you may not have claimed, the cost of your claims will be higher than a similar claim would have cost in the past.  Obviously if you have submitted a claim, your premium will naturally increase.

Why does my premium increase when my car’s value has depreciated?

The value of a vehicle is only a factor when:

• your vehicle is stolen
• your vehicle is written off

These claims account for less than 10% of all our motor claims.

The majority of vehicle claims are for repairs which are not influenced by the vehicle’s depreciation. 

However we update the value of your car on a monthly basis and at premium review stage, you receive the full benefit of the depreciation in value of your vehicle in terms of your premium calculation. The effect of this benefit is offset against the factors mentioned above as well as others and without this adjustment in value, the increase you receive would be higher.

Why does my No-Claims discount reduce after an accident claim when I was not at fault?

When it comes to submitting a claim, who is at fault is not the issue.  When you submit a claim there are various associated costs such as the cost of replacing or repairing the damaged part and the cost of administering the claim.

Some may argue that they pay a premium to cover these costs, but by reducing the No-Claims discount following a claim, we ensure that those who have not claimed, do not cross subsidise those who have.

Even if the client was not at fault, we may not be successful in recovering the cost of the repairs and even if we are successful, we are not able to recover the costs of claims administration, the costs for recovering the repair costs from the guilty party or the full amount for the repairs.

The law allows for both parties to be accountable for an accident, as it states that all road users have a duty to be on the look-out for, and to take necessary steps to prevent collisions with other, possibly negligent drivers.

We hope that these questions and answers will provide you peace of mind in understanding the increase in our premiums a bit better!