JOHANNESBURG - If you're like most people, you probably accept the annual inflation-plus increase your car insurer makes to your monthly premium with a fatalistic shrug of your shoulders.

After all, the cost of living is constantly rising and challenging the increase or moving to a new insurer is likely to involve a lot of tedious paperwork and phone calls, and who has time for that?

If you take this approach towards your car premium, there is a good chance you will be overpaying by your third or fourth year. Many insurers offer a discounted price when you sign, but apply increases for the next two to three years.

The longer you stay with one insurer, the wider the gap will become between what you should and do pay and the bigger the insurer's profit margin will be. As an experiment, phone your insurer after getting a quote from a competitor - there's a good chance they will offer to reduce your premium.

Customers with similar addresses, financial history, vehicle usage and other risk factors can get widely differing premiums (in some cases, 50percent or more) from the same company. Here are some reasons for the gap between what you should be paying and what you are paying:

Your insurer has not adjusted your premiums enough to cater for changes in your risk profile. If you signed up with your insurer several years ago, your risk profile may have changed significantly. For example, you may have had a recent accident or been younger than 25. Rather than taking this into account, your insurer may have applied a steady increase to your premium each year.

Most customers do not know what the fair price is for car insurance, especially when taking changing circumstances into account. Many people will assume that the annual premium increase is inevitable because it is linked to factors such as inflation or the foreign exchange rate. And although some of these arguments are valid, the depreciation in your car's value offsets some of the effects of inflation.

Insurers know they will always have an opportunity to try and change your mind before you switch. After several years with an insurer, and several rounds of annual premium increases, the price you are getting from your car insurer is almost certainly not the best price they can offer. Not only does the insurer know that most people will delay switching, they also know that there is an opportunity to change your mind when you resolve to move. When you phone in to say you are leaving, you'll often be offered a "special discount" to stay - which is the price you should have been paying all along.

The factors above are good reasons to get insurance cover from a provider that allows you to get quotes online, sign up online, and cancel instantly. Some next-generation insurance providers use smart technology and automated artificial intelligence processes to quote you and then apply a consistent approach when it's time for the annual increase.

If there is no opportunity for negotiation with a broker or a call centre agent, the insurer will be forced to offer you its best price when you join and throughout your relationship with the company. It will know that cancelling is as easy as pressing a button.

Sumarie Greybe is a co-founder of Naked, a next-generation insurance business.

- PERSONAL FINANCE