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Why is there an annual increase in car insurance premiums, when vehicle values drop each year, asks a Fin24 user.
Christelle Fourie, managing director of MUA Insurance Acceptances, responds:
Many consumers may unknowingly be paying more than they should for their car insurance - often one of their biggest short-term insurance payments - because they fail to assess the value of their vehicle when it's time for annual motor insurance policy renewals.
Unless otherwise instructed, some insurance companies will continue to charge the same premiums for the original value of your car - even though it is a few years older and has far more mileage on the clock.
So if you conduct a yearly valuation of your motor vehicle before renewing your policy, you could in fact save money on your car insurance.
It is a well known fact that the value of a vehicle depreciates every year. For example, the original purchase price of a 2009 model BMW 320i was about R315 500, but in 2012 its value would have dropped to an approximate market value of R245 900.
It does make sense to update the value of your vehicle with your insurer, as this could save you as much as 20% on the premium just three years down the line.
In addition to conducting yearly valuations, there are other ways you can reduce your car insurance premiums.
Higher excess
South Africa is experiencing a consumers' market, which means most insurance companies and their brokers are open to negotiation.
If you are looking for additional ways to reduce your monthly premiums, you should consider asking your insurance provider whether you can pay a higher excess for lower monthly fees.
However, if you opt to do this, speak to your broker first so you can be sure that you will have sufficient funds to pay a higher fee if you are involved in an accident.
Vehicle tracking
Another way for to reduce your car insurance premiums is to incorporate some form of vehicle tracking technology.
Insurers often charge lower premiums for those vehicles with a tracking technology, including Microdot Technology, which puts them into a lower risk bracket as they will be easier to recover in case of theft or hijack.
Other security installations
Similarly, drivers who fit alarms or immobilisers to their vehicles could also benefit from lower premiums.
Advanced driving
Some insurers also offer reduced premiums for drivers who attend advanced driving courses because this improves driving skills and reduces the likelihood of being involved in an accident.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
Christelle Fourie, managing director of MUA Insurance Acceptances, responds:
Many consumers may unknowingly be paying more than they should for their car insurance - often one of their biggest short-term insurance payments - because they fail to assess the value of their vehicle when it's time for annual motor insurance policy renewals.
Unless otherwise instructed, some insurance companies will continue to charge the same premiums for the original value of your car - even though it is a few years older and has far more mileage on the clock.
So if you conduct a yearly valuation of your motor vehicle before renewing your policy, you could in fact save money on your car insurance.
It is a well known fact that the value of a vehicle depreciates every year. For example, the original purchase price of a 2009 model BMW 320i was about R315 500, but in 2012 its value would have dropped to an approximate market value of R245 900.
It does make sense to update the value of your vehicle with your insurer, as this could save you as much as 20% on the premium just three years down the line.
In addition to conducting yearly valuations, there are other ways you can reduce your car insurance premiums.
Higher excess
South Africa is experiencing a consumers' market, which means most insurance companies and their brokers are open to negotiation.
If you are looking for additional ways to reduce your monthly premiums, you should consider asking your insurance provider whether you can pay a higher excess for lower monthly fees.
However, if you opt to do this, speak to your broker first so you can be sure that you will have sufficient funds to pay a higher fee if you are involved in an accident.
Vehicle tracking
Another way for to reduce your car insurance premiums is to incorporate some form of vehicle tracking technology.
Insurers often charge lower premiums for those vehicles with a tracking technology, including Microdot Technology, which puts them into a lower risk bracket as they will be easier to recover in case of theft or hijack.
Other security installations
Similarly, drivers who fit alarms or immobilisers to their vehicles could also benefit from lower premiums.
Advanced driving
Some insurers also offer reduced premiums for drivers who attend advanced driving courses because this improves driving skills and reduces the likelihood of being involved in an accident.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
