CONSUMERS often make the mistake of considering the premium only and overlooking the excess and policy restrictions that become important when they lodge a claim. Pixabay
With the latest statistics from the SAPS showing that a hijacking occurs every 32 minutes, motor insurance is no longer a nice-to-have for vehicle owners - it’s a must-have, says Christelle Colman, the managing director of Elite Risk Acceptances, a subsidiary of Old Mutual Insure.

Colman says insurers consider a wide range of factors when it comes to motor insurance, from the value and age of the vehicle being insured to its engine size - the bigger the engine, the higher the premiums.

Then there are statistics-based factors, such as the crime rate of the area and the risk profile of the driver - men, statistically speaking, are deemed to be riskier drivers than women, for example.

Even the colour of the car will impact the level of premiums charged. Black cars are more expensive to insure than white cars, because black cars tend to be driven faster and by “riskier” drivers, says Colman.

Although many of the above factors are somewhat fixed, she says there are others that are in the control of the insured. Considering that July is National Savings Month, Colman says there are six simple ways that South African drivers can save on their motor insurance premiums.

1. Don’t default on your credit payments. A credit score is a global rating factor used to predict how much risk a driver presents as a policyholder. So it’s important to remember that if you default on your credit payments, this is likely to have a negative impact on your motor insurance premiums.

2. Avoid claiming for negligible incidents. Your motor premiums increase based on your accident history, so the more accidents you have claimed for in the past, the higher your premiums will be. In today’s digital age, all insurers share their claims data, so it's in your best interests to keep your claims to a minimum. A scratch or dent on a car door, for example, is often not worth claiming for, because the increase in premium you will get on renewal will likely be as high, if not higher, than the cost to repair the minor damage, which is compounded by being a monthly instalment.

3. Shop around. People underestimate the power of being a consumer in a consumer-driven market, and make the inaccurate assumption that direct insurance is always cheaper than going through an intermediary. The reality is that, to get the best premium, you have to shop around both direct and via a broker.

4. Do your due diligence. A major mistake that motor insurance clients make is to look only at bottom-line premiums and fail to consider the level of excess and the restrictions that are written into the policy. These important details become apparent only at the claim stage, and the insured will find themselves out of pocket.

5. Adjust your excesses instead of cancelling your policy. If you find yourself in financial difficulty, the worst thing you can do is to cancel your insurance policy altogether. Instead, consider increasing your level of excess to decrease your monthly premium. This is a great option for people with a good claims history. If comprehensive insurance cover is simply too expensive, rather opt for third-party, fire and theft cover - that way you still have some cover even if it is less comprehensive.

6. Combine your policies. Motor insurance is substantially loaded as a standalone policy, so it makes financial sense to combine this policy with your contents and building insurance if possible. Every year, insurers do cross-subsidisations and offer discounts for full-service clients, so combining your policies is a sure way to save on premiums. 

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