I have come across an interesting Blog Post titled “Life changes can affect your car insurance”. There are indeed many life changes that could affect your risk profile and car insurance premium – and we would like to share a few thoughts on just one of these changes – Your marital status!
Basics of the Car Insurance contract
To understand why your marital status is important for car insurance, we need to briefly reflect on the basics of how your car insurance premium is calculated. The actuaries at insurance companies have developed mathematical/ statistical models to establish specific risk categories.
This will determine the risk that a specific group of insured clients will present to the insurer – or in simple terms – the chances of receiving accident claims from these clients. These risks are covered by the car insurance company at the payment of a car insurance premium.
It is important to recognize that these risks vary from time to time – and this could be explained with reference to a few of the following variables:
Changes in the insured vehicle
The cost of the insured vehicle might depreciate – or a more expensive vehicle might be purchased and might need to be insured, additional vehicles added etc
Changes to the regular/ designated driver
- The regular driver might change or a new regular driver might be added etc
- The regular driver will get older or a child might be added as a regular driver
Changes in usage of the vehicle
- The vehicle might be driven in a new “risk area”, i.e. new town or city.
- The purpose of use might change from business to private use or vice versa
Change in vehicle security considerations
- The vehicle might have security systems/ tracking devices removed or added.
- The safekeeping of the vehicle might change from an enclosed garage to an open bay parking etc.
Marital Status and Car Insurance
The above variables are closely related to the marital status of the vehicle owners. We can discuss this with reference to the following scenarios:
Shortly after the fairy tale wedding a couple will need to consider their financial and insurance needs. Most couples will cancel individual policies and initiate new ones as a married couple. There might well be significant savings by insuring your home as a married couple and by having two drivers on one car insurance policy.
Moving into a house together might also provide evidence to better vehicle security in an enclosed security complex, enclosed garage etc, depending on the unique circumstances of the couple. The couple might purchase a new vehicle or both might become regular drivers of both their vehicles.
Divorce can also affect the price you pay for car insurance. After the divorce you and your former spouse will both need to get your own car insurance policies. Depending on your circumstances, you may need more or less coverage. The parent who has custody of a teen driver, for example, may need to pay more.
It is of the utmost importance to carefully consider the terms of a court order or agreement between the parties. Such an agreement would stipulate who is responsible for the payment of a vehicle, car insurance premiums and whether the monthly payment for a vehicle tracking system is catered for etc.
It might well be that one of the parties relocate to another town or “risk area”, change employment or move in with another party who might also become a regular driver of such an insured vehicle.
Advice to people changing their marital status
It is important to remember that these facts are only known by the insured vehicle owner and not the car insurance company. The car insurance company has no way of guessing what is going on in the personal lives of their clients – and only provide cover under the terms of the insurance contract based on the material facts disclosed by the vehicle owner.
If these material facts change, the insured vehicle owner is contractually obliged to disclose this to the car insurer. Failure to do so could result in an car insurance claim being dismissed on account of breach of the car insurance contract.
When last have you checked your car insurance contract?
We would like to advise all vehicle owners to ensure that the information on their car insurance policies is indeed correct. Life changes and shit happens – avoid tears and frustration by communicating with your car insurance company to secure your financial well-being!!