Unfortunately motor insurance is often a big expense that can't (or shouldn't) be avoided! Have you ever asked someone what they are paying for their car insurance and their premium is UNBELIEVABLY lower than what yours is?
Why is this? Is it a better insurance company? Should you move to that insurance company? ... Unfortunately the answer isn't that simple. There are quite a few things that affect your insurance premiums, some of which are in your control!
Here are a few things that affect your risk profile which results in a higher or lower insurance premium:
1. Type of Vehicle: Certain vehicles have a higher theft rate than other vehicles and as a result, the risk is higher and the premium will shoot up. The value of your vehicle will of course also affect the premium, the higher the value of the vehicle, the higher the premium will be to insure that vehicle. Insurers also take into account the cost of repairs to that vehicle make or model and adjust the premium accordingly.
2. Security Measures in place: Is your vehicle parked in a locked garage overnight or just on the side of the road? Does the vehicle have a tracking device installed or not? All of these security measures that you have in place will affect your premium, the safer your car is, the lower your insurance premium will be.
3. Location: Where is your vehicle parked overnight and where is it parked during the day? If the vehicle is parked in an area that has a high crime rate, there is a much higher risk that your car might be stolen or damaged, the premium will be affected by this. Similarly, if you live in a very safe area with very little crime (or in a secure estate), your premiums will be lower. If you work in a busy city centre for example, the risk of an accident is higher as the roads which you will be traveling on are much busier during the day which increases the likelihood of an accident, this affects your premium as well!
4. Driver's experience: the longer you have had your driver's license and been driving, the less of a risk you are to the insurer as they believe that you become a better and better driver with more experience. If you have just got your driver's license for the first time, your insurance premium is going to be quite a bit higher!
5. Claim's history: When you claim from the insurance company after an accident (or any damage done to your car), it is recorded and kept for insurance companies to refer back to when working out your risk profile. The more claims you have, the more the insurance company is expecting to pay out to you after incidents. They have to be able to make a financial decision on whether it will be worth it to accept the risk of insuring your car and will adjust the monthly premium in order to make it a viable risk for them to take. The less you claim, the happier the insurance companies are to accept the risk and will offer better premiums!
6. Credit Record: Your insurance policy is a contract whereby you agree to pay the agreed upon premium to the insurance company and in return, they will compensate you for any loss or damage to your car if something happens. They will check your credit record so that they can see if you have been declared insolvent or have any bad debt. They need you to pay your insurance premiums in order to give you cover so they want to make sure that you are able to pay those premiums. If you have been declared insolvent or have a lot of outstanding debts, there is a good possibility that they will decline to insure you.
There are a few things you can do if you want to reduce your monthly insurance premium such as installing a tracking device, always parking in a secure area, spring cleaning your garage so that your car can fit in it again at night, driving cautiously on the roads to avoid any potential incidents which will result in big claims etc.!
If you believe that you are paying too much for your car insurance (or home insurance), contact us today for some expert and professional advice AND a few quotes from SA's leading insurers.