There are some very specific factors that determine the cost of your
individual car insurance, and hence the size of your premiums. The insurance
companies use the information you supply in your application form to determine
your risk profile, which is the conglomeration of all of the factors below.
The value of your car
Obviously the more valuable your car, the more you will insure it for, and the
higher your premiums will be. Insurance companies categorise cars by bands of
value and allocate policy costs and premiums accordingly. If you own a 3-year
old Daihatsu Charade you'll obviously pay a lot less than if you own a Ferrari
Modena. So they will check which value category your car falls into and use that
as the baseline for the premium - combined with the rest of the factors.
The area that you live in
Different areas have different risk profiles as far as insurance companies are
concerned. Some areas are deemed more risky in terms of the incidence of car
theft than others. These assessments can change over time, as security measures
in areas improve or crime moves to a different area.
What your vehicle will be used for
Your premium can also be influenced by what you use your car for. If you only
use it for social or personal purposes, like shopping and visiting friends, your
premium is likely to be lower than if you drive 250km per day as a sales rep.
Your security measures
The more security features you have in your car, the lower your premiums will
be, generally speaking. In fact these days it is becoming compulsory to have at
least an immobiliser or gear lock in order to get insurance in the first place.
Having a tracking device installed in addition to these will reduce your
premiums.
Where you car is kept
The circumstances of where you keep your car will influence your insurance costs
as well - once again for security risk reasons. If your car is kept in a lock-up
garage, on a property that has automated security gates, you'll pay less than if
you park it on the street outside your house, for example.
Your age
It is taken as a given in the insurance industry that younger drivers are more
likely to have accidents. They are seen as more prone to driving irresponsibly
or taking risks. For this reason you'll find that the older you get the less
your car insurance will cost you, as older drivers are deemed to be more
responsible and less likely to have accidents.
Your driving experience
You'll notice that you will be asked how long you have had your license for on
the car insurance application form. This is so that the insurer can know how
much driving experience you have. The thinking is obviously that the more
experience you have, the better a driver you are, and the less likely to have
accidents. You can further reduce your premiums by taking an advanced driving
course - there is usually a question on the application form asking if you have
taken one of these. If you own a certain class of more powerful car, like a
sports car or a high performance car, the insurer may make it compulsory for you
to pass an advanced driving course before giving you any form of insurance.
Your insurance and driving history
This is an important factor that is taken into account. In order to get a
picture of your past claiming habits (and thus how likely you are to claim on
your next policy), you need to provide the insurer with details of your previous
insurance policies, and whether or not you have made claims (usually within the
past 5 years). You will also be asked if you have ever written a car off. The
"cleaner" your history, the lower your premium.
The size of your excess
Many insurers will discount your premiums if you are prepared to accept a higher
excess. Excess is the mandatory minimum that you agree to pay on any claim you
make. So, if your claim is for R10 000, and your excess is R2 000, you will be
paid R8 000 - you foot the bill for the rest yourself. A higher excess
effectively means that the insurance company will pay you out less, hence the
lower premiums.
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