Apart from property or education, buying a car is one of the most expensive purchases you’ll make during your lifetime. Owning a vehicle gives you the freedom to travel wherever you need to, get to or from work and even help friends or family needing a lift.
However, owning a vehicle shouldn’t be considered an investment. Given a vehicle’s value will only depreciate over time – and that it will require regular maintenance over the course of its use – means that ensuring you have adequate financial protection to service these costs is vital.
While some people may prefer to set aside their own fund in the event their car requires maintenance or they are involved in a road accident, a budget-friendly method to prepare for future expenses is to take out a vehicle insurance policy.
Policies differ from insurer to insurer, and finding the plan that’s right for you is important. In this guide, we’ll cover some key considerations when taking out vehicle insurance, and how you can save money when doing so.
Have your car insured according to its value
When you purchase your car new or second-hand, it is common practice to insure your vehicle for the sum you have bought it for in the event you need to replace it. While that is a useful goal, it’s worthwhile to note that your vehicle’s value will depreciate over time – meaning that, as your car’s value diminishes, you would still be insured for the price you bought it for.
Depending on your future needs – for example, whether you plan to downscale or do away with a car entirely in the near future – you may find it useful to lower your insurance coverage as time goes on. In that event, your monthly insurance premium would decrease.
Choose an excess appropriate to your needs
‘Excess’ refers to the amount of an insurance claim that your insurer will not cover. Typically, these amounts range from R1000 to R10 000 – meaning that if your insurer would settle a R100 000 claim, they would only pay R90 000 in the case of a R10 000 excess.
A lower excess (meaning that your insurer would cover more of your submitted claim) would amount to a higher monthly premium.
If you’re able to afford the expense of a sudden emergency, you may find it useful to raise your excess – lowering your monthly premium. Carefully considering your risk, and your ability to fund the difference in the event of an emergency – is vital to ensure you’re financially prepared to maintain, repair, or service your vehicle as needed.
Compare premiums and review insurers
Unless your insurer offers financial incentives to retain your business, you have every right to review other insurers and switch providers if you find a better deal elsewhere. Regularly reviewing other insurers, or exploring new options, can help you save more on your monthly premium.
Report reduced mileage, trips, or travel time
Many insurers may adjust their risk – and hence, your insurance premium – based on your driving habits. If your behaviours change and you no longer travel as much as you used to, reporting this may amount to a reduced premium per month. If your insurer has fitted your vehicle with a telematics device, you should, over time, find some reward for driving less.
If possible, pause your coverage when you’re not driving.
Many insurers also add benefits to drivers who don’t drive regularly – and some even offer their customers the ability to pause their coverage on non-driving days, where they may only pay a reduced premium on such events. If you don’t drive regularly, opting for such a plan may have great benefit to you.
If you can, park your car inside a locked garage to reduce your safety risk.
When applying for an insurance plan, an insurer will evaluate their risk in insuring you and might base your premium on your age, your vehicle, any previous accidents – and most notably, the chances of your vehicle being stolen.
Many insurers will offer lower premiums to clients who can park their vehicle inside a locked garage, as the risk of it being stolen diminishes. Securing your vehicle at night can be a cost-effective way to save money.
See if your policy offers saving options.
Many newer vehicle policies may offer different saving options or benefits such as a reduced premium, cashback, or fuel rewards.
See if you can save by listing multiple cars on the same policy.
Some insurers may offer a discount in the event you can list two vehicles on one policy. If your spouse, child, or family member is with a different insurer, consider seeing if you could reduce both your premiums by consolidating your policies into one.
See if your insurer will reduce your premium if you’ve done, or can do, an advanced driving course
An incredibly useful way to potentially reduce your insurance premium is to do an advance driving course. Many insurers will reduce your premium, based on the fact that you would be a more skilled and hence less risky driver, if you have taken an advanced or defensive driving course.
See if your insurer will reduce your premium if you’ve fitted a vehicle tracking system
While some insurers require that your vehicle is fitted with a tracking system or tracking device, not all do. Consider inquiring with your provider if they will adjust your premium if you have, or can fit, a tracking system or dashboard camera.