We know that it can get overwhelming when trying to decide which car insurance to go with. With so many options available, it helps to know a bit more about each option to better understand what you’re getting and what premiums to expect from each.
At Auto & General, we have three different Car Insurance options to choose from: Comprehensive, Third Party Fire & Theft, Third Party Only, each with their own set of cover and varying monthly premiums.
If you’re wondering how much your car insurance is going to cost, our online car insurance calculator tool can help. We’ve also answered a few commonly asked questions about how car insurance premiums are calculated below.
How are car insurance premiums calculated?
How your car insurance premium is calculated depends on various factors. Some of the factors will be determined by you, while others unfortunately are out of your immediate control. A car insurance premium calculator factors in the various information about both you, the insurer, and your vehicle when calculating your insurance premium.
A few of the factors that influence your vehicle insurance premium include:
- The market value of your vehicle - this considers the make and model, age, colour, condition of the vehicle and the resale value.
- The risk factor of the vehicle – for example, cars that are regularly targeted for theft will have a higher premium.
- The driver’s demographics – this includes your gender, age, marital status, where you live, occupation and a financial background check.
- The driver’s driving history and experience – if you have a history of previous accidents or claims, your premium may be higher. Your driving experience will also influence your premiums, for example, younger drivers with less experience are statistically more likely to have an accident. Therefore, they will have a higher premium.
- Security measures – this includes how protected your vehicle is. Does it have an approved alarm system or a tracking device? Where is it parked for the majority of time? For example, on the street vs in a locked garage. Different areas also have different risk profiles. Safety and security are key factors that are included in a car insurance calculator in South Africa.
Other factors, that are determined by you, include the type of insurance that you choose (comprehensive vs third party only), your excess amount and additional extras that you’d like added on to your policy.
Is the minimum amount of car insurance enough?
The type of car insurance that you get depends on your personal requirements and available budget. The minimum amount of car insurance that you can get is Third Party Only Vehicle Insurance.
This type of car insurance is usually more attractive if you have an older, low-value vehicle that is already paid off. Or, if you don’t really drive your vehicle very often or very far. For example, if you have a 20-year old car valued at R30,000 and only use your vehicle for a few short trips a week.
For vehicles with a higher value, it is usually not enough to get the minimum amount of car insurance. This is because the financial costs of repairs or replacing the vehicle should it be stolen or written off are extremely high.
Third-Party Only cover will protect you against the potentially financially crippling costs of having to pay for damage against someone else’s vehicle. It won’t, however, cover you for any of the expenses for your own loss in the accident. So, if your car was damaged in an accident caused by you, you will have to pay for the repairs out of your own pocket. If the accident is not your fault, however, you can claim against the other party. With only third-party cover, you will also not be covered for fire or theft.
It’s recommended to use an online car insurance calculator to compare the different options of car insurance and see what options work best within your budget.
With the current tough economic times, many people are looking for ways to reduce their monthly costs. With their car insurance premium being one of them. Instead of cancelling your car insurance altogether, consider the below options for lowering your monthly premiums:
- Check the current market value of your vehicle against the amount it is insured for, it might help to adjust your premium to account for the depreciation of your car.
- Opt for a higher excess amount. However, while this will decrease your monthly premium, you will be liable for paying a higher amount for repairs should your car be in an accident.
- Don’t claim for small incidents. Claiming for minor damages, like scratches or windscreen chips, will increase your premium. If you can, rather pay for these smaller expenses out of pocket.
- Install a tracking device in your car. Adding an additional layer of security onto your car will help lower your monthly premium. However, you also need to consider whether the cost of the tracking device offsets the savings on your car insurance.
- Update your personal details. If you’ve moved to a safer neighbourhood, have higher security in your home, or aren’t traveling as much, it’s important to let your insurer know as these factors can lower your premiums. This also goes for your marital status.
- Combine your car and household insurance. Bundling your vehicle insurance with your household insurance can often result in a more attractive and affordable monthly premium.
- Avoid high-performance cars. Naturally, high-performance cars come with higher premiums due to their increased accident risk and high repair costs. Keep this in mind when considering a new car. Choosing a safer car (that is less likely to be stolen) is a better option if you want to keep your insurance premiums low.
- Always keep your car insured. Gaps in your vehicle insurance history will increase your premiums when you do decide to take out car insurance again.
- Use a car insurance premium calculator to compare different insurance options to see whether there are any other suitable policies that are more in line with your budget.
Is foregoing car insurance illegal?
Car insurance is not a legal requirement in South Africa unless the car was purchased with a loan from a bank or other financial institution. Your bank or other financial institution will require you to take out a minimum car insurance policy, depending on your agreement.
Some South African drivers rely only on the Road Accident Fund cover. However, claims are often processed incredibly slowly, and the cover is limited. Due to the high accident rate on South African roads, it is advisable for all car owners to have a car insurance policy.
Will my premiums change if I move?
The area in which you live will influence your car insurance premium, which is why it’s important to update your address with your insurance provider when you move.
The reason for this is because different areas have different risk factors. For example, some suburbs may have a safer rating than others, which means that your premiums could be lower.
The security within your house will also influence your premiums. Such as whether you live in a secure complex or estate with a security guard or if your car is parked in a locked garage. The more secure your vehicle is, the lower your premiums will be.
Another factor to consider is the distance that you generally drive to and from work. If you move to a new house that is closer to your work, it means that you will be putting less mileage on your vehicle. Which could also lower your monthly premium.
Car Insurance with Auto & General
At Auto & General, we have various car insurance policies available, depending on the type of cover that you require as well as your available budget. Our experience and specialist knowledge have earned us a reliable reputation in the insurance industry, making us a trusted insurance partner.
For more information about our Car Insurance solutions or to get a quote, call us on 0860 11 1280.