Car insurance premiums are not one-size-fits-all. Have you ever wondered why your monthly premium differs from a friend’s, even if you drive similar cars? It’s because insurance companies assess risk on an individual basis. From your driving habits to where you live, a wide range of factors influence what you pay for cover.
Let’s unpack what affects car insurance premiums in South Africa – and what you can do to manage your costs more effectively.
Key Factors That Impact Your Premium in South Africa
Understanding how insurers calculate your premium can help you take control of your costs. From where you live to how you drive, every detail matters. Here are the key factors that insurers look at when setting your car insurance premium.
Your Risk Profile
Your risk profile gives insurers a picture of how likely you are to make a claim. This directly affects your monthly premiums. Several key factors feed into this.
Age and experience
Younger drivers with limited driving history are seen as higher risk and generally pay more. With no track record to go on, insurers take a cautious approach.
Claims history
Insurance providers will check your insurance history. If you’ve claimed often in the past, insurers may assume you’re more likely to do so again. This can lead to increased premiums.
Driving record
If you’ve been involved in accidents or received traffic fines, you could pay a higher premium. However, a clean record with no fines or previous incidents can lower your costs.
Credit score
In South Africa, your credit behaviour can influence your insurance premium. A poor credit history may result in higher premiums, as it’s viewed as an indicator of financial risk. Consistently paying your bills and settling debt can help lower this risk over time.
While some of these factors are beyond your control, many aren’t. Safe, responsible driving and avoiding unnecessary claims can help improve your profile over time.
Type of Cover
Your choice of car insurance cover has a direct impact on your premium amount.
- Comprehensive insurance offers full protection for theft, damage to your own car, and third-party liability. It’s the most inclusive option and typically comes at a higher cost.
- Third-party, fire and theft insurance will cover damages you cause to others and protect your own car if it’s stolen or damaged by fire.
- Third-party-only cover is the most basic and affordable. It only covers damage you cause to other vehicles.
Not sure which type of cover suits your needs? Here’s a breakdown of the different types of car insurance to help you choose wisely.
Your Car’s Make, Model, and Value
Not all cars cost the same to insure. Your car’s make, model, and value can all influence your premium. High-performance or luxury vehicles usually come with higher premiums. That’s because they’re more powerful, more expensive to repair or replace, and more likely to be targeted for theft.
Cars built locally often have more affordable parts and labour. Imported vehicles, on the other hand, may need specialised services – which can push your premium up.
Safety and theft risks matter, too. Cars fitted with safety features like tracking devices, immobilisers, or anti-theft systems are usually seen as lower risk.
On the other hand, cars that are frequently targeted for theft may come with steeper premiums. While you don’t need to change your car to save on insurance, adding security upgrades can make a noticeable difference.
Where You Live and Park
Your premium will likely be higher if you live in an area with high crime rates or limited access to secure parking. However, parking your car in a locked garage or behind secure gates can help lower your costs.
How Often and How Far You Drive
The more time you spend on the road, the more opportunities there are for accidents, which raises your perceived risk. Daily long-distance commuting will generally result in a higher premium than occasional, short-distance travel.
Similarly, how you use your car also plays a role. Vehicles used for commercial or business purposes are typically more expensive to insure than those used for personal errands or school runs.
How Excess Impacts Your Premium
Your excess is the amount you agree to pay out of pocket before your insurer contributes to an insurance claim. For example, if your excess is R2,000 and you’re claiming for R10,000 in repairs, the insurer will cover R8,000. A higher excess usually means a lower monthly premium – but make sure it’s an amount you can comfortably afford in an emergency.
Before agreeing to this, learn how excess affects your car insurance premium and how to choose the right balance for your budget.
What Leads to Higher Premiums?
Several factors can drive up your premium over time, including:
- Filing frequent claims – While car insurance is there to protect you, frequent claims can increase your risk profile in the eyes of insurers.
- Adding a high-risk driver – Including a young or inexperienced driver on your policy can raise your premium significantly.
- Inflation and VAT adjustments – Increases in the cost of car parts, repairs, and labour can lead to higher premiums year on year.
- Annual reviews – Most insurers reassess your risk profile at renewal and adjust your premium accordingly, especially if you’ve had incidents.
Regularly Review Your Policy
As life changes, so do your insurance needs. Moving to a new area, changing jobs, buying a different car, or adding a driver to your policy can all affect your premium – often in ways you might not realise.
Reviewing your policy regularly can help ensure you’re not overpaying or underinsured. It’s also a good opportunity to compare what different insurers offer. Unique benefits like fixed premiums, reduced excess, and flexible cover can make a long-term difference to your budget and peace of mind.
Drive with Confidence Knowing You’re Covered
Understanding the factors that affect your car insurance premium gives you more control over what you pay – and the confidence that your cover suits your needs.
Always choose a car insurer who values transparency and affordability. Whether you’re reassessing your current policy or exploring new options, being informed is the first step towards better value.
Disclaimer:
The article aims to provide South African motorists with information on what affects their car insurance premiums. However, always do your independent research.
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