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WHY SOUTH AFRICAN CAR INSURANCE IS SO HIGH AND WHAT YOU CAN DO TO REDUCE IT

It’s sad but true that South African car insurance premiums are amongst the highest in the world. Because of the higher levels of crime in the country than when contrasted to other regions, many insurers bump up premiums to preserve profits and to reduce the dent in their profits that addressing claims provides. For some, the situation is so bad that vehicle-tracking devices are a necessity in some policies in the event of the car being stolen.

All of this cost can be off-putting to youthful drivers who are beginning to find their way on the roads of South Africa. Insurance premiums can be crippling and unfortunately, many insurers have the policy of ‘guilty until proven innocent’, that meaning that you are deemed as a liability to claim until your no-claims period accumulates some time.

There are some insurance companies that have tried to deviate from the conventional method of providing a monthly or an annual premium based on the policyholder’s circumstances. Akin to ‘pay as you go’ mobile phones, some insurers in South Africa have launched a ‘pay as you drive’ initiative that sees drivers pay insurance based on the distance that they drive in a pre-determined space of time.

In short, you are given a proportionate premium based on the amount of miles that you drove in the previous month. This can be great if you use your car infrequently, but may not be the most economical of options for those who use their cars for long-distance journeys. Some ‘pay as you drive’ policies have gone to addressing this problem by capping the amount that policyholders can pay in their monthly premiums (i.e. those who travel more than 32,000 kilometres per year will not pay any more if they continue to exceed the limit significantly).

Despite the promising variable rates of ‘paying as you drive’ insurance, there are still the usual factors of age range, car and claims made in the past that are taken into account. This could mean that those who are looking towards this option as an escape from the previous expenses of conventional insurance could be disappointed.

However, all of that said, because of technology that needs to be used with pay as you drive (a tracking device to see how many miles you do per month), there are some security advantages to this system which means that your overall premiums are less. Your car is more likely to get traced if there is a GPS router in the fascia of the car, and you are also likelier to be protected against dangerous situations if you have a panic button which is offered alongside some trackers in the car.

For some, the lack of privacy can be a bit of a put-off. But if you do ‘pay as you drive’ right and remain comparing insurance companies in South Africa to see what the best deal is for you by chopping and changing combinations of various factors, you will invariably find that you can shave a significant amount of money from an original quote.

 
 

 

This article contributed by www.InsuranceExplained.co.za

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