What is driving vehicle insurance costs + tips on how to reduce your premiums
Life may be a highway, but it's getting more expensive to get there, as insurers hike vehicle insurance costs to cover increasing risk. Surely we cant all be road hogs so what are some of the causes that are leading to the higher costs.
According to Lion of Africa Insurance Company CEO, Adam Samie, the first cause is the evolving realities of South Africa's driving environment.
"Traditionally, we have viewed younger drivers, from the age of 18 and in their early 20s, as having the greatest chance of being involved in an accident," says Samie. Normally, these risks tend to diminish by the age of 30 as most drivers obtain stable employment, and a relatively safer and more familiar routine.
"Claims patterns tend to climb again as people hit their 40s and 50s, with children growing up and "mom's taxi" frequently used to transport them to school and other calendar events, with a commensurate number of visits to the local panel beater."
However, Samie says that as South Africa's demography has changed and moved into an era of economic entitlement, so to have traditional age patterns. "Today we find a lot of older, less experienced drivers on the road, a factor which must be factored into premium calculations."
Samie says that outside of these shifts in driving patterns, the style and technology of cars has also served as an influencer, with an increasing focus on 'cosmetic' issues and safety hiking the price-tag of vehicles.
"Air-conditioning, leather seats, and on-board computers and sensors can be absurdly expensive, and are often easily damaged. Outside of the higher cost of all the new technology, older vehicles are often stolen for their parts, so it becomes increasingly expensive to insure them."
He adds that given also that the bulk of insurance payouts are incurred on less serious "fender benders", and that a factory standard R120 000 car is likely to come with airbags, with a replacement value of about R25 000, a small prang could end up costing as much as 20% of the value of the vehicle.
According to Samie, there are also a high number of uninsured vehicles on the road, which by some estimates account for more than 60% of all vehicles. "So, in the event of a two-car incident, the insurers chance of recouping payouts from third parties is slim. There is also the problem of an ageing transport infrastructure, which, allied with the increasing number of vehicles on the road, has certainly resulted in more accidents."
Tips on how to reduce your vehicle insurance premiums
* Name the designated drivers on your policy. However, it is then important that you don't allow anyone else to drive the car as there will be no cover in the event of a claim that resulted from a driver that was not named on the policy.
* Increase your voluntary excess.
* Attend recognised defensive driving courses.
* It's obvious that your premium is based on the value of your vehicle so the premium goes up as the value of the vehicle rises. You can restrict premiums however, by insisting on an agreed value for the vehicle. This is easier to do with older cars but even with a newer car, the value drops 20% the minute you drive off the showroom floor so if you dont owe a finance house money for the car, agree the sum insured with the insurer.
* Fit a tracking device. Most insurers will give a discount
* Park the car in a locked up garage at night. You can get the premium reduced as opposed to parking it in the street.
* Believe it or not, the colour of cars affects claims. Some colours, like red and black are higher collision risk. Buy other colours to get lower premiums. White is a higher theft risk as it's easier to respray quickly.
* Premiums are based on the claims history of both the insurers and the insured. If you can at least control your own as an individual, you should be able to control the level of premium to a large extent. It is also useful to provide a claims history from previous insurers - don't just expect the insurer to take your word for it.
