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Have you ever thought, “Why is my car insurance so expensive? How is my premium calculated?”. Honestly, you are not alone. There are reasons why some people pay more than others.

Your car insurance premium in South Africa is calculated using a number of risk factors. It basically means that the riskier the insurance company sees you the higher your premium will be.

Use our online car insurance calculator to see what different insurance companies would charge you, you will see quotes immediately:

Your premium will also increase or decrease depending on the type of insurance cover that you are looking for. Third-party car insurance will always be the cheapest car insurance cover, followed by Third-party, fire and theft cover and lastly, the most expensive cover is comprehensive car insurance.

These products are different prices because the first two don’t actually protect your car if you are in a car accident, but comprehensive car cover will.

Let’s get personal:

There are 3 factors that matter the most in your personal life when your car insurance is calculated, your age, your marital status, and your gender. The insurance companies view men under the age of 25 that are single to be the riskiest. This is because statistically, people that fall into this profile have caused the most accidents.

Men and women under the age of 25 will pay higher premiums but as soon as they turn 26 their insurance premiums will drastically decrease. Insurance companies view men and women who are married and/or have children as less risky which will also lower your insurance premium (vice versa).

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Location affects your insurance premium calculation

Why are your whereabouts so important to your insurance company? Well, think about it just like any country South Africa has areas that are let’s say “dodgier” than other areas. And if your car is parked or is being driven around a more high-risk area the chances of you being in an accident or being robbed are higher.

The location of your home and where you work are important because that’s where your car will be parked the majority of the time. These locations will have a major impact on your car insurance premium calculation. The other thing insurers look at is the security of the parking and this is why the insurer will always ask you where exactly is your car parked. Because parking your car in a garage is obviously less risky than parking your car on the side of the road.

Use of your car affects your car insurance calculation

So, you may not understand why insurance companies always ask if your car is being used for personal or company use and what your profession is.

The reason that this is important is because the more time you spend in your car the higher the chances are that you can get into an accident. If your car is used a lot for business it means that you are on the road often for work which increases your risk factor and your car insurance premium calculations.

It certainly means that you are in a higher risk bracket than Karen that only drives to and from work and will cause your insurance premium to increase.

Your Car Matters

Insurance companies combine risk factors from both your personal life and your “car’s personal life”, if you know what I mean, when doing your premium calculation. This is where the infamous colour of your car comes in, this does matter but not as much as the below factors. Check out the following car factors that make a difference to your car insurance premium:

  • The age/model of your car: this will affect the repairs, cost of parts and more. It becomes expensive when your car’s parts aren’t readily available hence the increased cost of your insurance premium.
  • Targets for theft: if your car is a common target for theft, easy to break into, or is valued very high your insurance premium will increase.
  • The speed of your car; high-performance cars are riskier to insure as they are driven faster and have more power.
  • Safety feature; the better your safety features are in the car the cheaper your car insurance will be, such as central locking or smash and grab windows, better brakes etc.
  • Enhancements to your car: this may be cool to you but insurance companies hate this because the better your custom-built sound system is the better it looks to a thief.

Your record & your car’s record matter for car insurance calculations

Believe it or not, you have a record even if you have never been to prison, a different kind of record that is. Your history of car accidents and claims are all kept on record and this matters because the insurance company will use this to determine how likely it is for you to get into another accident, algorithms, and whatnot.

Your credit score also makes a difference to your car insurance premium calculation as insurance companies see credit score as a mark of responsibility, do you pay your bills on time, etc.

If your car has common faults such as faulty breaks or has a bad track record of bursting into flames, then your car insurance company won’t be too happy and will penalize you with a more expensive car insurance premium calculation.

Always update your insurer

It may seem like you have a third person in your marriage…your insurance company. This is unfortunately the way it has to be. You need to make sure that you notify your insurance company of all major life events or changes.

If you change jobs, they need to know, if you get a divorce they need to know, if you move houses, they need to know. It could be the difference between getting your claim paid our or not. If you have moved and your car got broken into, your insurance company has grounds to refuse to pay your claim out. Why? Because the policy document that you signed states certain factors about you and if this no longer applies the contract can be void.

On the other hand, it can be a positive to update your insurance company of events like getting married because this will generally lower your insurance premium calculation. They will also suggest that you combine your policies which will cause you to have even cheaper car insurance calculation.

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