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With the cost of owning and running a car increasing exponentially, it is important for all motor vehicle owners to ensure they fully understand how their insurance premiums are calculated and what they are covered for.
There are a number of misperceptions about how motor insurance works. Unfortunately this can often result in negative consequences for motor vehicle owners, such as claims rejections or underinsurance.
Below are some of the most common myths that currently exist when it comes to motor insurance premiums.
Myth 1 – Colour choice plays a major role in premium costs
Truth: Some motor vehicle owners believe that the colour of a vehicle plays a significant part in calculating insurance premium fees, with red or black cars costing the most to insure.
The truth is, most insurers have little interest in the colour of a car, they are more interested in knowing if the driver has had any previous car accidents, the number of kilometres to be driven annually and where the insured lives - which will impact on the likelihood of a theft.
The type of vehicle is actually more likely to impact premiums, so it is crucial to check the insurance costs ahead of purchasing a new or used car as motor insurance premiums are largely based on the car make, model, body type, engine size, and the age of the vehicle, as well as the age and driving record of the driver.
Premiums can also be based, in part, on the vehicles’ retail value, the cost to repair it and its overall safety record.
Myth 2 – It costs more to be insured as the driver gets older
Truth: Most insurance providers offer drivers over the age of 55 years the opportunity to qualify for a significant reduction in motor insurance premiums and a reduced excess.
Those who are retired or not employed full-time, and therefore drive less but are still under the age of 55, may also be eligible for a discount on their insurance premium.
Myth 3 – If another person drives the insured’s car, the other person’s motor insurance will cover them in the event of an accident
Truth: It is vital for motor vehicle owners to be aware that the motor insurance policy covering the vehicle involved is considered the primary insurance, which means that the vehicle owner’s insurance company must pay for damages caused by an accident.
It is crucial that the insured is familiar with the terms and conditions of their policy when allowing another person to drive their car as there may be specific driver limitations in respect of age and nominated and/or regular drivers noted on the policy schedule.
Myth 4 – Personal motor insurance covers business use of the car
Truth: People who are self-employed and use their vehicle for business purposes may not be fully covered in the event of a claim if they have not declared the fact that the car is used for business purposes.
The exact use of the motor vehicle must be stipulated upfront when taking out insurance cover. If other people, for example employees, also make use of the car it is vital that the owner ensures that the other drivers have good driving records before doing so.
Myth 5 – The insurance will pay out if I was a victim of remote jamming
Truth: Theft with no sign of forcible entry is usually repudiated by insurers and when it comes to remote jamming there is hardly ever a way to prove that the driver was a victim of remote jamming.
There is also no absolute clarity around the truth behind some of these claims relating to remote jamming.
Whether an insurance company will pay out such a claim is highly uncertain and would of course vary greatly between insurers and policies.
However, for a claim to be successful the insurer would likely request some form of proof from the client, which is usually only available when the driver happens to park in view of a security camera and are also able to obtain the footage which supports their version of events.
Myth 6 – The policy will cover damage caused by potholes
Truth: If a motor vehicle is insured on a comprehensive basis then any damage arising from potholes would normally be covered, however, there are some exceptions that motorists should be aware of.
An increasing number of insurance policies have an exclusion which stipulates that damage to tyres, and in some instances damage to rims of car wheels, is not covered if the damage arises from road hazards and potholes, except where the damage is as the result of an accident which also causes damage to other parts of the insured vehicle.
Myth 7 - Males pay more than females for car insurance
Truth: This myth is largely only a reality for males under the ages of 25 to 27 as they do usually pay more for insurance than female drivers of the same age.
For motor owners 27 years of age and older, gender plays a much smaller part in how their insurance premiums are calculated. Hence, men and women over the age of 27, with the same driving history and records, should in theory pay the same premium for the same cover.
Car insurance can seem fairly complicated. However, by remaining informed about the correct car insurance procedures, motor vehicle owners can make better choices and as a result save a substantial amount of money on a yearly basis.
*Christelle Colman is CEO of MUA Insurance Acceptances.
