What Determines Insurance Rates?

For many people, their cars are their prized possessions, but they often cut corners to save on costs when it comes to taking out insurance – something that could prove vastly more expensive than anticipated in the event of a claim.

During tough economic times, when budgets are stretched by increases in petrol prices, food inflation and even the cost of vehicles themselves, many look for ways to curb their expenses, and cutting on maintenance and insurance are often high on the list.



Car insurance is the easiest place to reduce costs, but should you be involved in an on-road scuffle, it could easily come back to haunt you – to the extent that it could bankrupt you and make future motoring impossible. Statistics show that about one in every five motorists will have an accident at some point in their lives.

Des Fenner, General Manager of Datsun South Africa which only deals in affordable, entry-level cars, says the most risky decision to take is to ratchet up your excess payment in the belief that you will score with lower monthly insurance premiums.

“If you do have an accident, the unscheduled financial cost of the high excess could upset your household budget for months. Ultimately, the cost could be so high that you lose your transport, because you are unable to afford the repairs to your car” he says.



Responsible drivers should consider several options before loading their excesses. This includes:

  • Discuss the various premium and excess options with your insurer to find the best one for you.
  • Shop around for cheaper rates.
  • Reduce your expectations when it comes to your car. It is easier to reduce luxury specifications on your car to buy within a more accessible price range and rather save on costs this way.
  • Understand the “total cost of ownership” when purchasing a car. Do your homework to determine what additional costs you will need to pay, including maintenance, insurance and other costs apart from the purchase price.

Factors that impact on your insurance and excess costs include:

  • Your age. The younger you are and the less driving experience you have, the higher your insurance premium and excess will be.
  • A more expensive car will cause premiums and excesses to be higher.
  • The area in which you live determines the premium you will pay. Living in a quiet rural area and not visiting cities will reduce premiums. Living in a fast-paced city like Johannesburg increases the possibility of accidents and theft and so increases insurance costs.

Many manufacturers (Datsun included) offer purchase packages to younger, first-time owners to make motoring more affordable and insurance is often included as part of the deal. Ask your dealer what your options are.



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