Tips to reduce motor insurance premiums in light of petrol price increase

With the price of petrol set to increase to a record high on Wednesday, many South African motor vehicle owners may be considering cancelling their motor insurance policies as a way to save money.

August 6, 2013

With the price of petrol set to increase to a record high on Wednesday, many South African motor vehicle owners may be considering cancelling their motor insurance policies as a way to save money. However, this places them at risk of even greater financial strain in the event of an accident or theft and as such, they should rather look for ways to reduce their premiums.

This is according to Christelle Fourie, Managing Director of MUA Insurance Acceptances, who says policyholders have the ability to influence some of the factors which are taken into consideration when determining motor insurance premiums.

1. Telematics
The type of data that can be collected by a telematics unit includes, but is not limited to: excessive speed throughout the journey; swerving and sudden manoeuvres; distance travelled; time and date of travel; and the vehicle’s actual speed versus the average speed of all other vehicles. This technology now allows for premiums to be determined by actual driver performance, resulting in a far more accurate depiction of driver behaviour and ultimately will result in fairer rates being charged for law abiding, fuel-conscious drivers.

2. Keeping the motor vehicle secure
By locking the motor vehicle in a garage overnight, policyholders are able to reduce their insurance premium as the vehicle is less likely to be damaged or stolen, thus reducing the risk of insurer liability. It’s simple; the lower the policy holder’s risk, the lower the premium is likely to be.

3. Enhance your driving skills
Some insurers offer a reduced premium for policyholders who complete an advanced driving course because the course enables motorists to handle challenging driving situations better. This means not only are they safer drivers, but they also have a lower risk of being involved in an accident.

4. Install a theft deterrent device
Installing a theft deterrent device can result in lower insurance premiums. However, this is dependent on the insurer and therefore motorists would need to ask whether they qualify for a premium reduction should a theft device be installed. Some examples of theft deterrent devices include; visible wheel locks, an alarm system, VIN chemical etching, wheel locks, and electronic keys.

5. Increase your excess
Increasing the excess amount on a car insurance policy will result in lower insurance premiums. Excess is the amount of money paid toward a loss before an insurance company pays a claim, according to the terms of a policy. The higher the excess, the more money can be saved on insurance premiums. However, it is important for the policyholder to ensure they are able to afford the excess amount should the need arise.

6. Stick to one insurance company
If an insurance policy is held with a company for several years and no motor or other insurance claims are submitted, the policyholder is usually eligible for a premium saving. Each insurance provider has its own rebate agreement so it is a good idea to ask the provider about this before taking out a policy.

7. Conduct an annual valuation
Conducting a yearly valuation of the motor vehicle at the time of renewal of the motor insurance policy can result in reduced premiums due to the fact that the value of a motor vehicle typically depreciates on a yearly basis.

8. Keep a clean insurance claims record
Submitting a claim for every minor scratch or dent should be avoided. Rather pay for repairs if the damages amount to less than the insurance policy’s excess. By doing this, the risk profile of a policyholder will remain the same while keeping insurance premiums down.

9. Improve credit record
By keeping a good credit record, policy holders are able to reduce their insurance premiums should their insurers use a credit-based insurance score as a factor to calculate premiums. This method takes the insured’s credit score and other financial information into account – such as other details provided on the insurance application form – and is ultimately a measure of how well the insured manages their financial affairs, not their financial assets.

10. Combine car and household insurance policies into one
Most South African personal lines insurance companies that offer household, personal liability and car insurance policies will offer reduced insurance premiums if two or more of its insurance policy products are used. When searching for an insurance provider, it is a good idea to check whether a combination insurance policy costs less than purchasing individual policies.