Car Insurance

How to Reduce your Car Insurance Premium

The chances are good that you can reduce your car insurance premium. This article aims to give South Africans several practical tips on how to go about it.

Shop Online

By comparing car insurance costs on the internet and buying online, you are putting yourself in line for hefty discounts. This is because the insurance firms save money when you use the internet for your transactions. The company does not have to cover the costs of personnel, phone calls and physical administration when you buy online and the savings are passed on to the insured.

In addition, by shopping around for car insurance and comparing the cover and premiums offered by the various Insurance companies, you are getting a bird’s eye view of the entire industry. The price differences can be significant. This is because every company has its own ideas of what constitutes a risk. With the power of the internet at your disposal for insurance shopping, this is a sure fire way you can reduce your car insurance premium.

Don’t Overvalue Your Car

South Africans are inclined to set too high a value on their vehicles. This is natural. It is not pleasant to think that with every passing day your car is worth less. Bear in mind that what you will be paid out in the event of a claim will be based on the amount that you could have received had you sold the car on the open market that day. All insurance companies have this philosophy in common.

When asked the market value of your car when filling in an insurance quotation form, be brutally honest with yourself about the value of the car. Ask your local used car dealer the value of the car if you are unsure. It is possible to reduce your car insurance premium radically by following this advice.

Consider Third Party Only Car Insurance

If you are serious about reducing your car insurance premium, you need to consider this option. This is the minimum amount of cover you can give your vehicle, making it the cheapest there is. Especially those whose cars have low values might want to consider this option. Having third party only cover means you then have the security of knowing that if you have an accident, any damage incurred by a third party vehicle will be covered, even if your own car is damaged or even written off. You should way up the total market value of your vehicle against the annual premium for comprehensive cover to check the wisdom of this advice. You might be astonished to find that you annual premium for comprehensive cover is a high percentage of the total value of the car.

Install Security Devices in Your Car

Due to high crime levels in South Africa, this is an absolute must. Some insurance companies even insist on it when it comes to high value cars. Insurance firms penalize city dwellers in particular if their cars don’t have immobilizers and alarms in their vehicles. This penalty comes in the form of higher premiums. Install good security device in your vehicle before getting quotations. If you get a tracking device, you reduce the risk for the insurance company even further and you will be rewarded with price reductions.

Take an Advanced Driving Test

This is not compulsory but insurance companies take a favourable view of car owners who take an advanced driver’s test as it shows seriousness about safety. Most companies reward this with a reduced premium.

Increase Your Voluntary Excess

In the course of the quotation process you may be asked to select the amount of voluntary excess you will be prepared to pay in the event of a claim. There is generally a compulsory excess amount that applies, but you can increase this if you wish. The greater your excess is, the lower the premium should be. Admittedly this means that in the event of a claim you will have to pay the amount out of your pocket. Estimate what you could afford in such an event, increase your excess amount and reduce your car insurance premium further this way.

Pay Your Premium Annually

By paying your premium annually you will avoid the interest costs associated with paying monthly installments.

Reduce the Number of Drivers

Don’t unnecessarily add the names of drivers to your policy. Instead list only the names of those who will definitely drive the car regularly. You can always ask the insurance firm to add the name of a driver temporarily for a small fee if someone needs to drive the car for a period of time.

Check the Annual Mileage

During the car insurance application process, you will be asked how many kilometers you travel in a year. Many people have no idea how far they drive each year and leave it to the insurance company to make an estimate. The higher the mileage, the higher the premium is. Make sure that an unrealistically high mileage is not pushing up your installments.

Buy a Cheaper Car

It’s common sense. If you have more expensive car, you will have to pay higher car insurance. Insurance companies divide cars into about 20 different groups and work out quotations according to which group the vehicle falls into. Bear in mind that younger drivers are considered higher risk drivers, so a young person should have a lower group vehicles to offset the higher premium associated with the higher risk.

Stay Claim Free

Insurance claims prefer to insure car owners who have had no car insurance claims for the past five years or more. They reward this with large discounts, sometimes as much as 75%. If you are claim free year after year, make sure your premiums are reflected. If it seems your premiums are rising anyway, consider changing your insurance firm.

Care for Your Credit Rating

Insurance firms are starting to take credit ratings into account when calculating car insurance premiums. If you have a flawless credit history, your insurance company will look upon this favourably when calculating your premium.


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