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Posts Tagged ‘how to get cheap car insurance’

Cheap Car insurance

We all want cheaper insurance. Though it is a necessity, most people tend to view their monthly premium as a grudge payment. Insurance companies across the board use the lure of cheaper premiums very effectively in marketing campaigns; in certain cases even offering to pay out an agreed sum of money should they not be able to provide you with a cheaper quote.

But what exactly is cheaper insurance? A cheap monthly premium is not the only consideration to keep in mind. An insurance policy is, in essence, a legal document, and the document in its entirety has to be reviewed thoroughly in order to ascertain the cost effectiveness of your insurance.

A starting point would be to confirm that the policy you select is fit for purpose and covers your insurable interest (for instance, if you are the only person driving your car, there is no reason to have a policy permitting more than one driver).

In addition, the following can be considered:

 

Excess

This is where most people lose with their vehicle insurance. The amount of excess you will pay in the eventuality of a claim is directly proportionate to the cost of your monthly premium. As an example (using very simplified figures):

Sandra pays a monthly premium of R100 towards comprehensively insuring her car, a late model sedan. She is covered for the full retail value of her vehicle should it be stolen. Her excess is 15% of the claim with a minimum payment of R5, 000.

Dan pays a monthly premium of R150 for the exact same vehicle. He is also covered for the full retail value of the vehicle, but his excess in such an eventuality is only 5% of the claim, minimum R2, 500.00.

Assuming that the model of car in question has a retail value of R100, 000.00, Sandra will only get a settlement of R85, 000.00, whilst Dan will get a payout of R95, 000.00.

In addition to the basic excess explained above, additional excesses should also be taken into consideration. The full description of excesses will always appear in your policy. You can use this schedule of excesses to help you determine whether your cheap car insurance is really as cheap as claimed.

 

Policy Wording and Inclusions/Exclusions

The way in which your policy is worded along with the specific inclusions, exclusions and conditions pertaining to your insured vehicle also plays a huge part in ascertaining how affordable your car insurance is.

Let’s continue with Sandra as an example and assume that she has lodged a claim for a stolen vehicle. Sandra bought her car with a factory-fitted alarm, but never installed a VESA-approved gear lock, which her policy stipulates as a security requirement. Because of this policy condition, her claim might be repudiated. This means that her “cheap insurance” potentially ended up amounting to “no insurance”.

Dan, for instance, might have installed an expensive sound system in his car, never realizing that additions such as those are excluded in his policy. He might have his claim settled for the retail amount of the vehicle minus the excess, but he will incur a loss with the sound system.

On the other hand, specific inclusions might make the insurance policy more worth-while.

 

Enticers (or Policy Sweeteners)

Policy sweeteners are terms and conditions in your policy with the specific purpose of making it more attractive.

An example of a policy sweetener might be that you will pay no excess (or greatly reduced excess) should you lodge a windscreen claim. Or that an extra driver can be added to your car insurance policy without affecting the monthly premium.

These are always worthwhile  to consider when looking at getting the cheapest car insurance.

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