Myths versus facts about vehicle insurance premiums

If you own a car, it’s wise to take out vehicle insurance so that you’re covered for accidents, theft, injuries or natural damage like hailstorms or flooding. In fact, when you finance a car in South Africa, you’re legally obliged to have comprehensive insurance before your vehicle can even leave the showroom. The unthinkable is always a possibility.

Before buying a car, it’s important to assess affordability. In addition to the finance instalment, have you worked out how much you will you pay towards insurance every month? Insurance premiums are part of your running costs, just like the fuel you need to drive your car. You can’t avoid these costs, so they should be part of your monthly car budget.


Your risk profile

Different drivers will pay different insurance premiums, even those driving the same model car, as insurers calculate premiums according to each client’s individual risk profile. The different factors affecting risk profile have led to a lot of misconceptions about insurance rates, so it’s time to sort out the facts from the myths


Never mislead your insurer about your risk profile in the hope of receiving a lower premium


Separating fact from myth

Some beliefs about how premiums are calculated have become folklore among motorists, but is there any truth in them? Here’s our verdict on a few common beliefs:

Fact: Your credit profile matters

When you apply for vehicle insurance, your history of handling credit affects the premium you get offered. If you’ve been paying your accounts in full and on time, you should have a good credit score that ultimately helps to lower your premium.

Fact: Your risk profile matters

A prospective insurer will assess your risk profile according to your age, driving experience, where you live, where the car will be parked (in a locked garage versus on the street), prior accidents, your insurance claims history and whether you will be the regular driver. All these and other factors will affect your premium.

Myth: Vehicle colour affects premiums

Although a white car will certainly be more visible on the road, and therefore less likely to be involved in accidents, insurers don’t care much about colour. However, the type of paint used and the finish on the vehicle may be relevant. Insurers prefer standard colours that are reasonably priced and easy to source, should the car be involved in an accident and need repainting. Unusual colours or metallic effects, on the other hand, could make repairs more expensive, so they might result in a higher premium.

Fact: The model affects the premium

Models that are more expensive, in high demand, or prone to theft often attract a higher premium, as they might be more expensive to repair or replace.

Myth: Premiums on new cars are always higher than those on used cars

Insurers determine premiums according to the value of the vehicle and the other factors mentioned above. The higher the risk and the costs to repair or replace the car, the greater the premium, no matter whether it’s new or used.


Always tell the truth

Knowing the myths and truths will help you choose vehicle insurance that covers your needs. Never mislead your insurer about your risk profile in the hope of receiving a lower premium. That may come back to haunt you when it’s time to claim.

For more information on vehicle insurance call us on 0800 333 111 or send us an email.