A premium is an amount you pay an insurer for insurance coverage. Your insurance premium will change each time your policy is renewed, even if your personal circumstances have not changed.
Premiums are affected by various factors including the cost of parts and labour, inflation, global warming causing extreme weather conditions and loadshedding. Premium increases on buildings, contents and all risk items are technically not premium increases but rather influenced by inflation. Due to inflation, these items will most likely cost more to replace or repair and that’s why insurers increase these sums insured.
Your car’s value decreases every year, meaning that if your car gets written off or stolen in the next 12 months, you will be paid less than the car’s current value. As a result, you should pay less for your insurance, however, less than 10% of all motor claims fall into this category. For this reason, your vehicle’s depreciation would not lower your anniversary premium by much. If your car value depreciates by 15% in a year, then your motor premium will decrease only by more or less 1.5% (15% x 10%).
Consider the following tips to manage the cost of insurance:
• Increase your excess in exchange for a lower premium.
• Lower your risk – certain additional security measures such as an alarm or tracker in your vehicle might lower your premium.
• Reduce cover on older vehicles and consider third-party-only cover.
• Avoid claiming for smaller damage as this can result in a higher than usual increase.
• Look after your credit score – having a good credit rating positively affects your premium.
• There may be benefits in your insurance cover that you do not need – by cutting certain benefits, you can pay less. Just remember that cutting benefits and reducing premiums means your cover will be limited.
It is important to regularly review and renew your insurance and although we all want the cheapest option available, it is important that when you are shopping for insurance you compare cover limits, excesses, driver restrictions and extensions. You should never take the cheapest option available unless you have made an informed decision. When in doubt, it is always a good idea to ask your broker for help.
We understand that premium increases can be frustrating, but it is important to understand that various factors affect the cost of insurance. Our team aims to provide you with the best possible insurance solutions that suit your individual needs. Speak to us today to discuss reliable insurance.
Although all possible care was taken in the drafting of this document, the factual correctness of the information contained herein cannot be guaranteed. This document does not constitute advice and anyone planning on taking any financial action based on this document, is strongly advised to first consult with their personal financial advisor. ProVérte Risk Management is an authorised financial service provider with FSP no. 51584.
