Advice on budgeting for Car Insurance
Financial times are not easy for many people. Rising living costs, unstable interest rates and fuel prices force everyone to have a closer look at their budgets. The temptation during difficult financial times are to cancel a comprehensive car insurance policy. ‘After all, how does it help me?,’ reason some, ‘I have been paying expensive premiums for years, and have never claimed. Perhaps it’s money wasted.’ The problem with this kind of reasoning is that it can place you at great risk. Sometimes, events are beyond your control – imagine crashing into a brand-new Mercedes having no cover?
Why not continue to be covered, but at affordable premiums? Let’s find out how premiums can be reduced, especially for young drivers, where premiums tend to be higher than those of older drivers.
Please note that there are many aspects to car insurance. The following information should not be taken as advice, but only as information. To obtain professional advice on various car insurance products available in the marketplace, please consult a certified, financial advisor.
Fin241 collected information from the car insurance industry on how to reduce monthly premiums, so that cover may continue.
WHAT ABOUT INCREASING YOUR EXCESS?
An excess is the amount a motorist will have to pay out of his own pocket whenever making a claim on a car insurance policy. For instance, you may have a R2000 excess for a comprehensive cover on your car. Should you have an accident that costs R30 000, the car insurance company will only pay out R28 000 to the panel beater. Upon collecting your car, you will have to pay the extra R2000. One way to reduce the car insurance premium is to increase the excess, to say R4000. Just remember that when it comes to claim time, you will need to have enough cash saved to collect your car from the panel beater.1
MAKE YOU RISK PROFILE LESS ‘RISKY’
In general, providing a car insurance company with your driving history will allow them to establish your risk profile, which, in turn, establishes what premium you should pay. A good risk profile will save you paying higher premiums. Below are some ways to improve your risk profile.1
DRIVING SAFER MEANS LESS ACCIDENTS AND FEWER CLAIMS
By changing from an aggressive driving attitude to a defensive one, means that a motorist is less likely to be involved in an accident. This will lead to fewer claims.
DO YOU LIVE IN A ‘RISKY’ AREA?
Traditional insurance companies will load the car insurance premium should you live and park your car in a high-crime area. In addition, parking your car without security measures such as walls, gates and electric fences, may also increase your risk profile.1,2
IS YOUR CAR PROTECTED WITH GOOD SECURITY?
Finally, some cars are riskier than others to drive. Fitting alarm systems, tracking devices or immobilisers in a car will improve its security, thus affecting premiums.1,2
Disclaimer:
This article was prepared by Eric Sandmann in his personal capacity. The views and opinions expressed in this article are the author’s own and do not reflect the views and opinions of Prime Meridian Direct (Pty) Ltd, FSP41040 (car insurance and life cover products). The views and opinions in the article should not be attributed to anyone but the author unless expressly stated. Nothing in this article should be relied upon as advice, this publication is presented for informational purposes only. No person should act or refrain from acting in reliance on any information found in this article, without first obtaining proper financial advice from the appropriate professional. The author makes no claims, promises or guarantees about the accuracy, or completeness, of any information linked from, referred to, or contained in this article. The author reserves the right, to edit and change the content of this article.
Sources:
1 https://www.fin24.com/Money/Insurance/how-to-reduce-your-insurance-premiums-20161106-2
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