Getting the most out of your motor insurance

With the latest South African Police Service (SAPS) statistics revealing that a hijacking occurs every 32 minutes in South Africa, motor insurance is no longer a nice-to-have for vehicle owners – it’s a must-have. In the high-net-worth space, however, wealthy individuals can find themselves paying 20-30% more in motor insurance premiums by failing to do a few simple things.

This is according to Christelle Colman, Managing Director of Elite Risk Acceptances – a subsidiary of Old Mutual Insure which provides bespoke short-term insurance solutions to high-net-worth individuals – who was speaking to Wealthwoke about the various criteria that South African insurers take into account when calculating individual premiums.

“Local 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 statistic-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.”

Colman adds that even the colour of the car will impact the level of premiums charged. “In South Africa, black cars are more expensive to insure than white cars because black cars tend to be driven faster and by ‘riskier’ drivers.”

While many of the above factors are somewhat fixed, there are others that are very much in the control of the insured. Considering that July is savings month, Colman provides 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 very important to remember that if you default on your credit payments, this will likely have a negative impact on your motor insurance premiums.
   
   
2. Avoid claiming for negligible incidents
   A driver’s motor premiums increase based on their 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 interest to keep your claims down to a minimum. A minor 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 when getting covered and failing to consider the level of excess and the restrictions that are written into the policy. These important details then unfortunately only become apparent at the claims stage, and the insured will find themselves out of pocket.
   
   
5. Adjust your excesses instead of cancelling your policy
   Times are tough, but if you find yourself in financial difficulty, the worst thing you can do is 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.

“There is always a way to save and tailor your insurance cover to suit your pocket, because at the end of the day if life throws a curveball and you are not covered, the cost could financially cripple you. Speak to your broker or insurer to see how you can optimise your cover to suit your needs better,” concludes Colman.