I will admit to being a bit of an addict to Mythbusters myself. I enjoy it when the guys from the show on the Discovery channel investigate some well known myths/ beliefs and then stretch them to the limits. I thought it might be a good idea to challenge a few myths and beliefs from the car insurance industry as well…
Myth 1: It is impossible to find cheaper car insurance
Perhaps we need to analyze this myth a bit closer to avoid it appearing silly. We all know that there are always cheaper insurance providers – and even some operators who might be trying their luck with lesser known products…
But can you find a cheaper car insurance product which provides the exact same coverage you are entitled to at present? We need to compare apples with apples and we can only pride ourselves in finding cheaper car insurance if the product is not “less comprehensive” or weaker than what we have at present!
Recognizing annual increases
We need to acknowledge that there is significant upward pressure on car insurance premiums. This is not only inflationary pressure but also the results of increased motor vehicle accidents and more recently – a significant increase in car insurance fraud. This trend is not limited to South Africa as we see car insurance companies in the UK and USA also warning that premiums will have to increase significantly.
Facts on Finding Cheaper Car Insurance
There are many variables in the process of calculating your car insurance premium. This could be discussed in more detail in several blog posts on the car insurance log, but for now we would like to briefly summarize how some of these could benefit you in the search for cheaper car insurance premiums.
1. Competition in the Car Insurance Industry
Even though there will be car insurance premium increases on account of inflation, accidents and fraud, the industry is a highly competitive industry and insurers might still offer highly affordable and even cheaper car insurance premiums for those clients with safe driving records.
2. Product innovation
One of the benefits of competition in the industry is the innovative products design by providers. You might well benefit from products designed to meet your specific needs – which might be able to exclude some of the thrills and add-on’s you do not need but are paying for under your existing car insurance policy.
3. Specialization to meet specific needs
During recent years we have found significant specialization. Some new car insurers focus only on specific segments of the market – and if you belong to such a segment i.e. – you are a female driver, it might be well worth requesting a quote from an insurer recognizing women as lower risk drivers!
4. Cutting the middleman and going direct
Have you considered what you are paying for with our monthly premium? Do you believe that your premium only goes towards insurance cover for your car – or do you know that a percentage of the premium would also goes towards your broker or financial advisor in commissions? Could you save money by cutting out the middleman by finding car insurance through a direct insurer?
If your needs are not so complicated that you need extensive analysis and financial expertise, it might be worthwhile to find a car insurance product with the exact same cover through a direct insurer!
5. Changes in personal circumstances
Changes in your personal circumstances might allow you to find cheaper car insurance premiums. This might well be possible if you get married, if younger drivers are no more included as drivers on your policy or you could experiences changes in employment. You might also have moved to an area perceived to be of lesser risk or might have gained increased security for your vehicle.
6. Driving habits have changed
There could be many reasons why you might be driving a lot less. In South Africa the World Cup has brought about significant improvements in public transport. Many more vehicle owners are using train and bus rapid transit systems to go to and from work. If you are travelling less – you should consider Pay As You Drive [PAYD] car insurance to reduce your car insurance premium.
Conclusion and Advice
It is a myth that car insurance premiums should always increase and you would not be able to find cheaper car insurance premiums. This myth is totally busted! With the necessary attention and some effort, we are all capable of finding cheaper car insurance.