Why Car Insurance Premiums Aren't Getting Cheaper

Car Insurance Premiums Don’t Decrease as Vehicles Age

Car Insurance can be incredibly helpful in times of need, especially when you’ve got the right type of cover in place. However, most drivers aren’t aware that their insurance premiums stay the same, even as their car ages. This is where it can get confusing, new doesn’t always mean ‘expensive’ and older doesn’t always mean ‘cheaper’. 

It seems pretty logical that if something like an ageing car becomes less valuable over time, insurers don’t have to pay as much to keep it covered. On the contrary, older cars might need more protection, not less. 

Understanding how it works and how premiums are calculated will give you a better idea of what type of cover you need, like Comprehensive, Third-Party, and Fire and Theft. This will help you avoid any surprises when you decide to review or renew your policy.  

What is an Insurance Premium?

If you own a car, paying a monthly fee to an insurance provider for cover is exactly what counts as an insurance premium. It’s the cost that covers the maintenance of your policy, keeping it active for a period of time. 

Depending on the provider, this monthly fee may also include coverage of policy benefits like roadside assistance and towing.

The question is, especially if you’re a first-time car owner or want to review policies, then knowing what to budget for each month plays a role. Even if the most exclusive policy (such as Comprehensive Insurance) seems appealing, this mindset doesn’t work for everyone. It’s about knowing what you can afford versus what you need covered. 

We’ve also covered tips on how to find the most affordable Insurance Cover and how to save money on your Car Insurance. 

Myths and Facts Behind Car Insurance Premiums

How much truth and fiction goes on behind insurance premiums? Here’s what we’ve discovered:

Fact & Myth:  Car colour affects premiums

Believe it or not, your car colour can affect insurance premiums, but not in the way you think. Anneli Retief, head of product at Dialdirect, spoke to Business Tech and said that car colour does play a role, especially in safety and replacement costs. She said, “The main reasons why the colour of your car can impact your insurance premiums pertain to the visibility of the car at night and paint costs.” 

Plus, any additions or modifications to the original paintwork will also likely affect premiums, depending on the provider. 

Myth: Premiums cost less as the car ages

While we think that if our car gets older and we decide to find a new insurance quote, we’d find something cheaper. You can, in a sense, but only if you’re downgrading your policy. In general, you’re more likely to pay more based on factors like condition, vehicle repairs, spare parts, inflation, etc. 

It’s the goods and services (spare parts, repairs and replacements, as well as labour fees) that are likely to increase the cost more than the actual cover. 

Fact: Risk profile counts

Your risk profile considers factors such as:

• Your age
• Driving record and experience
• Type of vehicle
• Location
• Insurance claims history
• Prior accidents
• Mileage
• Credit history

Myth: Anyone can drive an insured vehicle

While anyone can drive your vehicle at your own expense, most South African insurers, including car rental companies, require someone to be listed as the regular driver. If another driver gets into an accident, you might be expected to pay a higher excess, or a claim can be rejected if you didn’t disclose the additional driver or go against the policy’s terms and conditions. 

Calculating Car Insurance

This is where you’ll want to shop around for car insurance quotes. You might find one provider offers more benefits, or another offers better deals. 

These are critical factors that are taken into consideration to calculate your car insurance premium: 

1. Your car’s make and model: High-risk vehicles targeted for hijacking and theft often push up the cost of premiums. 
2. Type of car Insurance Cover and excess: There are three types of insurance policies, from the most basic to comprehensive. Excess and premiums act like a pendulum swing; the higher your excess, the lower your premium and vice versa.
3. Age and demographics: Drivers younger than 25 often get hit with a higher insurance premium due to a lack of experience on the road. Additionally, stats have also shown that male drivers incur higher premiums compared to females based on statistical driving patterns. 
4. Location: Location for insurers is like real estate – where you park your car and keep it protected overnight influences premiums in a big way. 
5. Driving history: Multiple accidents or collisions will negatively affect your risk profile.
6. Claim history: Claiming often from insurance tells the provider that you’re an expensive client and aren’t being as responsible as you can be. 

How to Lower Your Premiums

Now, how can you lessen your premiums without jumping ship? We’ve rounded up a few popular tricks: 

• Choose a higher excess (only if it is relevant to you and your lifestyle). It should still be affordable for you when faced with the unexpected.
• Consolidate policies:  Combining insurance policies that include household, car, and contents under one policy might give you the deal you need, provided that it’s agreed on in your contract.
• Downgrade your cover: Shop for better quotes, as well as look for the right cover you actually need.  For example, if you don’t travel very much and work from home, then comprehensive cover wouldn’t be the best policy for you. 

The Bottom Line: Car Insurance Quotes

From the types of car insurance policies to separating fact from fiction, understand that premiums do come with a lot of baggage. Whether you drive a newer vehicle or wheels that have kept you going for 10+ years, look for new quotes at least every 12 months and ensure you’re covered for what you need.

Find affordable car insurance quotes here.