Posts Tagged ‘Cheaper car insurance’

We have referred on this Blog to the benefits of Pay As You Drive car insurance. To summarize briefly, this car insurance product is based on the principle “Drive a lot, pay more. Drive less and save!”

There are also environmental benefits as well as expectations that drivers will drive with more caution whilst aware that a Big Brother is monitoring their driving. In this Blog we would like to focus on a specific group that might benefit from a Pay As You Drive car insurance product – The High Risk Driver!

Who are the high risk drivers?

I would like to refer to the Blog post titled “Why do young and elderly drivers pay so much more for car insurance?”. In this Blog post we have identified the younger drivers [ 18-25 years] and the elderly drivers [65 years+] as the highest risk to car insurance. It is important to recognize that this is based on actual accident statistics.

If any driver in these age groups requests a car insurance quote, he/she will automatically fall into a higher pricing category before other variables such as the driving/ accident record, the area that they reside or the vehicle that they drive etc will be considered.

How can these young and elderly drivers reduce the risks of accidents?

We have offered some advice to these high risk drivers:

Advice to Younger drivers:

• Shop around for your car insurance – make your increasing years of driving experience and age count as you get older
• Try to maintain a safe, accident free driving record
• Find an accredited advanced driving course recognized by your car insurance company
• Be alert to the effect that the car you are driving might have on your premium
• Pay close attention to vehicle security systems and safety features that could reduce your premium

Advice to older drivers

• Try to maintain your safe, accident free record
• Ensure that your lifestyle counts in your favour and you get recognized for the safe area you stay, your closed garage, vehicle security systems etc.
• If you drive less – this should be recognized in your premium – enquire about Pay as You Drive Car Insurance

How can Pay As You Drive car insurance and data recorders help our High Risk Drivers?

Some of these high risk drivers might pose less of a risk when they drive much less than the average driver in this age group. Less exposure to other road users and roads risks should result in them paying reduced premiums for car insurance.

This reduced exposure to risk can be measured by odometer readings, or more advanced data recording devices. Some insurers now provide insurance products called “Pay As You Drive”, recognizing that reduced distance travelled should be rewarded with cheaper car insurance premiums.

We can illustrate how these higher risk drivers can be saved from financial hardship with a Pay As You Drive Car Insurance product:

Elderly Road Users:
Mr and Mrs Jones have retired at age 65. They have left the hectic city life and reside at their holiday home at the coast. They only travel short distances to the supermarket and only occasionally travel longer distances to visit their children. A Pay As You Drive car insurance product will recognize that they travel much less and provide cover for the reduced exposure to road risks!

Young Drivers
Not all young drivers are exposed to the same risks. Jane is a 23 year old student who travels to University about 500km’s away from her home in a rural area. Whilst attending to her studies she resides in a hostel on campus. She walks to classes and only travels long distances when returning home for the holidays. She travels short distances now and then when going shopping in the city. She is much less exposed to road risks than her friend who, at the same age is working as a sales rep for a pharmaceutical company. Her Pay As You Drive insurance product calculates her insurance premium on the distance driven each month.

It is also possible that when the young driver is not the owner of the vehicle, but described as the regular driver in the insurance policy, that driver would be more cautious knowing that the vehicle owner/ parent has access to a report on her driving as provided by the data recorded in the vehicle.

These data recorders or black boxes measure how fast the car is going and how long it is being driven for. It sends this information back to the insurer, which will use it to work out people’s premiums. New technology can even assess people’s driving styles by recording how fast they take corners and how aggressively they accelerate, meaning insurers can take this into account when working out the amount people should pay.

We would like to urge all “High Risk” drivers to shop around for their car insurance and consider the benefits of Pay As You Drive Car Insurance.

We have discusses in quite some detail the nature of Pay as You Drive Car Insurance – and how “Driving” can be measured and monitored. We would also like to focus on the “You” part of this description. Who are YOU and which of YOUR personal characteristics would be most important?

We have made reference to AGE of the driver – but would like to argue that this requires closer investigation and a more detailed description.

Age less important than driving experience!

We need to recognize that age has always been regarded as one of the important factors used in the formula to calculate car insurance problems. This is done so across the globe. We have made reference to the fact that Young drivers are perceived to be a higher accident risk and are faced with much higher car insurance premiums. We have also commented on the elderly road users and how the insurance premiums of elderly female drivers tend to increase significantly after the age of 60.

Is your birth date always that important for car insurance premiums?

In South Africa car insurance companies are faced with a number of unique factors to consider. There has been a rather unique shift in vehicle ownership in a country that has experienced significant political changes since 1994.

No-one will deny that a large group of the population which could be described as “previously disadvantaged” have been given greater access to economic participation, wealth and vehicle ownership. Many of these vehicle owners have only now, in their 40’s and 50”s been able to acquire a license, own a vehicle and drive a vehicle!

These older vehicle owners are also now purchasing car insurance policies for the first time – and car insurers need to consider that they are – although more mature – still novice drivers!

Age should be considered as Driving Age

We would argue that Car insurers will not look at the age of the driver – but rather the Driving Age!
Driving Age would be:

• The years since date on the drivers license of the driver
• The years that the person has been driving
• The experience of the driver/policy applicant behind the wheel.

This driving age should be considered with factors such as the distance driven by the driver, his accident record, traffic violations/ convictions etc. This would provide a far better measure to establish the risk of accidents than only the age of the applicant!

Many have asked about how to find cheaper car insurance premiums. We have discussed this with reference to suggestions such as going online, using comparison websites, focusing on your specific needs etc.

Technology and more specifically the internet has changed the way the consumer finds car insurance. It has offered solutions to find insurance swiftly and with ease – but nowhere would you find reference to car insurance for the “lazy consumer”.

We need to focus on the title and the specific reference to “correct” car insurance. Even before the internet and the birth of direct insurers and aggregators, the lazy vehicle owner could pick up his telephone, call a broker and ask for him to arrange for car insurance for a specific car. The lazy consumer could just wait for the policy document and sign – but this does not guarantee that he will find the correct car insurance!

What effort is required to find the correct car insurance?

We would like to provide a brief summary of the actions required to guarantee finding the correct car insurance:

Knowing your needs and what you are searching for
You will not find the correct solution if you do not know what you need. Do your homework to be an informed consumer and understand the basics about insurance and products available.

Knowing the providers and variety of car insurers
You need to put some effort into finding more information about car insurers. Ask questions to colleagues, family and friends and use the internet to find which insurers provide the products you are looking for, whether they are reputable and have a good track record.

Decide on the method to use to find quotes
You will have to decide whether you wish to use a broker or whether you will find the quotes yourself via the direct insurers. You may decide to contact the direct insurers either online or by making a few calls. You may also decide to request a quote through insurance aggregators – an easy way to find several quotes from different insurers.

No matter what you decide to do, you will need to put in some efforts to supply insurers with information on your vehicle, your driving and insurance record etc.

Comparing these car insurance quotes
Once you have received a few insurance quotes, you will need to study them and compare them with one another. The correct quote for you might not be as simple as being the cheapest and the first to land on your desk. You will need to ask questions and spent a bit of time in gaining clarity and confirmation from the insurer that you are fully covered for your specific needs.

Care once you are insured
Not only is it important to avoid laziness in the process of acquiring insurance quotes, but also once you are insured. You need to keep documents in a safe and accessible place and remain alert to communications from the insurer. Be alert to policy requirements and do not, through your laziness fail to meet the policy requirements!

Finding car insurance quotes have become easier and less time consuming. To find the correct product to meet your needs will however require some effort – effort that may save you much stress and financial harm later!

Who would be the person presenting the least risk to any car insurer? Is it possible to draw a profile of the candidate who should qualify for the cheapest car insurance premiums?

We have decided to put our efforts and investigative talents into designing such a profile – purely by making use of the content and guidance to be found on the car insurance blog. We will provide such a profile, and then discuss why we believe that this person is the perfect candidate!

Profile

Title: Mrs X
Gender: Female
Marital Status: Married
Age: 37
Occupation: Teacher /Administration etc
Location: Oudtshoorn [or similar smaller town]
Vehicle: VW Polo, Toyota Corolla or similar mid- size car
Summary: Mrs X, a 37 year old happily married female driver and mother of 2 smaller children is our candidate for the cheapest car insurance premium. She is a teacher with a sober lifestyle and owner of a small / mid –sized vehicle. She has an accident free driving record and lives in a secure safety complex around the corner from the school where she teaches in the small town of Oudtshoorn in the Little Karoo. She is very safety conscious and parks her vehicle [custom fitted with the manufacturers alarm system] in a locked garage. She also had data dot technology etched into car components and are very alert to looking after the safe keeping of her keys. She has undergone advanced driver training at an accredited driving academy and has 17 years driving experience.

Process of Analysis and Identification

• Gender – The client is female as females are generally considered to be safer drivers and less of an insurance risk.
• Marital Status – The client is happily married and not the primary breadwinner. She appears not to be too stressed and does not carry any unnecessary frustrations with her on the road. She is a loving and caring mom for her 2 children and very considerate when transporting these children. They are always safely buckled in and she drives with special caution when they are in the vehicle. When the family goes on vacation traveling longer distances they travel in the bigger vehicle of Mr X and he does the driving.
• Age – The client is approximately 37 years old and has more than 17 years driving experience. Young drivers are at a greater risk of causing accidents. The client became a licensed driver in matric and whilst studying in the city she completed an advanced driving course at an accredited driving academy. This was a present from her dad who thought it might protect her and enhance safe driving whilst studying and driving in the city.She is also young enough to have experienced the internet boom. She is very comfortable with the online environment and often performs online banking and other transactions. She has gone online to compare insurances quotes and found an affordable premium with a well-known direct insurer.
• Occupation – The client is in an occupation that does not require much driving and only requires her to travel to and from work. She is not a medical representative exposed to long distance driving and sharing the road with many other road users. Her occupation does not require 24/7 availability and she does not need to communicate from within her vehicle for business purposes. She is not distracted by cellular conversations or the need to send text messages and can turn off her cellular phone when climbing behind the steering wheel.
• Lifestyle – The client has a sober lifestyle. She will only have the occasional drink and do not drive drunk. She does not smoke, which is not only good for the health of the children –but also reduced the risk of a burning cigarette becoming a driver distraction.
• Vehicle – The client is the owner of a small to midsized vehicle. The vehicle is big enough to comfortably transport the 2 children and new enough to be custom fitted with the manufacturer’s alarm system. She does not need a bigger vehicle as they do have the luxury of another family vehicle when going on vacation. The vehicle is not expensive to maintain and the vehicle parts are affordable and easy to find when the vehicle goes for the regular maintenance to the local dealer.
  As an extra the family has decided to have data dot technology etched into the vehicle components as another safety measure against vehicle theft and they have informed the insurance company of this added safety measure.

  The vehicle is parked in a locked garage in their home at the secure estate where they live. When at work the vehicle is parked in a secured parking bay/ garage.

• Location – The client lives in a smaller town away from the heavily congested traffic and hectic city life. Mr X and Mrs X decided that this is a good place for the kids to grow up with less risk to be exposed to criminal activity. The town is relatively crime free and hijackings and smash and grab crimes are unheard of! The town is regarded as being in a low risk area for accidents, yet not so remote that vehicle repairs have to be done elsewhere. The town is also far away from any South African borders and the risk that vehicles would be stolen for the purpose of cross-border transfer of vehicles.
• Insurance record – Mrs X is fortunate to have an accident and claim free record. She has only been with one insurance company and has been with this company for more than 10 years. She has never had the need to migrate between different companies.

Conclusion / References

What does this profile tell us about finding cheaper and affordable car insurance premiums? Can this help those of us who do not fit this profile to find cheaper car insurance as well?

The profile of the above person has been designed with special attention to factors such as:

• Driver Age and Experience
• Gender
• Occupation
• Location and home address
• Crime statistics

Even though we might not be able to do much in changing these factors, we might well attend to other factors we do have control over such as:

• The way we drive
• What we drive
• Vehicle security systems
• Where we park
• How we search for car insurance premiums

We would like to invite vehicle owners to find the correct can insurance cover to meet their needs in 2010! Feel free to send your suggestions and comments or request information about specific aspects of car insurance!