Affordable Car Insurance
How to Buy Affordable Car Insurance in South Africa
We do a lot of research when we buy a car, and take great care to maintain it, but how much care do we take when it comes to getting the right insurance for it? How do we get affordable car insurance while getting sufficient cover for the car that we are proud of? For this we need to understand a little about car insurance policies, what they cover, how are they priced, and what the insurance companies are looking for when they decide the insurance premium.
Nobody likes parting with hard cash for covering an eventuality that is not likely to happen. Many of us would regard insurance as payment to buy peace of mind. That is correct but unfortunately calamities do happen in everyone’s life which makes insurance a necessary service.
What is car insurance?
Car insurance covers us against losses and liabilities that could occur due to our ownership and use of the vehicle.
Our car is always at moderate risk because it is parked in public places and there is a risk of theft to the car itself or to our possessions inside it. It can sustain damage in accidents or cause damages to life or property of other people. So car insurance is something that we must take very seriously. It is also a legal requirement. However sparingly we may mean to use our car or however slim the chances of a claim might be, they can cause significant loss or liability when they occur. A good car insurance policy must adequately cover for all such eventualities.
Fortunately for us there are plenty of options available when it comes to buying car insurance and here we are taking a look at what we must keep in mind when we hunt for an affordable car insurance policy.
Types of car insurance policies:
Car insurance policies could be comprehensive, limited, or third party liability only.
A comprehensive policy covers damage to our vehicle due to theft, accident, fire, and weather. Damage to third parties is also covered.
A limited policy does not cover damage to your own vehicle in the event of an accident, but covers against loss due to theft or fire. It also covers liabilities to third parties.
A third party only cover just covers third party liability and does not cover any losses to our vehicle.
Comprehensive policies give complete peace of mind because they cover all eventualities. They also cost more. A limited policy which does not cover for own car damage in an accident may be suitable for older cars which are sparingly used by careful drivers. Third party cover does not cover our vehicle under any circumstances. Such policies are more suitable for very old vehicles which do not have any significant value. Even with a third party policy, in the event of an accident involving another vehicle where we are not at fault, we can still make a claim with the insurance company of the other vehicle if they accept fault for the accident.
Factors which affect car insurance premium:
When determining the insurance premium for a car insurance companies try to access the risk that they are going to cover. The premium rate is usually a percentage of the insured value of the car. Factors that have a bearing on the risk and consequently the premium rate are the owner’s or user’s driving record, the type of car, what the car is used for, the city or area where it is used, where it is parked when not in use, how many people drive it and the type of security or anti theft systems are installed.
The first aspect is the user’s driving record. Most losses happen due to accidents and all insurance companies give a lot of consideration to this. One or more claim free years means a discount on the premium payable.
Insurance companies categorize vehicles as high or low risk. High performance cars such as off road vehicles are usually considered high risk because of the type of use they can be put to. Besides the tougher usage conditions the replacement parts and spares of these cars cost more.
Cars used for commercial or business purposes are on the road for longer time and will usually be charged a higher premium than those meant only for personal use.
Some areas have a very bad record of car theft or rash driving. Cars of owners used in such cities which the insurance companies consider high risk is also charged a higher premium rate.
Some insurance companies take into account where the car is parked when not in use to access the risk of theft or other damage. A car which is parked in a garage or secured parking carries less risk.
Cars which have security systems such as anti theft or tracking systems installed are less likely to be stolen and so they could get lower premiums.
Benefits of affordable car insurance:
The benefits of a car insurance policy end when it expires, irrespective of whether any claim was made or not. The only benefit that we can carry over from an existing policy is a good track record.
With so much choice available, it makes sense to do a little research before we decide on a particular policy. Some insurance companies add on premium for extra benefits they provide like towing services, discounted car servicing, etc. There is no need to choose such a policy if we have no plans to use those benefits.
How to find affordable car insurance:
Based on the above discussion here is what we need to do to get affordable car insurance without compromising on benefits:
1. Take quotes from at least two or three insurance companies. However there is no point in insuring your car with a company that does not have a good customer service track record.
2. If you are a safe driver, offer to pay more excess. Voluntary excess is the amount you agree to bear for the damage in the event of a claim. This reduces the insurance company’s risk and hence gives you a lower premium.
3. Use your car for personal purposes only if you want a low premium. Some companies may not increase premium if you also occasionally use it for business purposes.
4. Be safe on the road to keep your track record good.
5. Buy a low risk car unless you don’t mind paying a higher premium or you intend to use the high performance features of the car.
6. Highlight your parking facilities and security devices installed to the insurance company to get credit for such reductions in risk.
7. If your car is being driven only by people in your family and they are safe drivers then you can mention that to get a premium advantage.
8. Negotiate with the insurance company or your agent for a lower rate. The rates are usually negotiable.
The ideal car insurance should be from a reliable insurance company and have a low premium while covering your car for the required risks at an appropriate value. The things that we must not do while searching for affordable car insurance is insuring our car for less than what it worth or buying our policy from a company which does not have a track record of smooth and fair claim processing.
