Money-savvy individuals with stable incomes should consider car insurance a basic part of their financial planning. They should also understand that location, safety features and value play a role in how much they will pay for their premiums. But as the world changes, there are several new realities to consider when identifying the best car insurance plan for your needs.
Has your mileage decreased?
As innovation drives evolution, the insurance industry is keeping pace with technology and using big data to establish new products. For consumers this means that there are more coverage options available:
Usage-based insurance
While tracking apps are raising concerns globally about individual privacy, their value in certain contexts is clear. One such space is car insurance. Usage-based insurance works on the principle of managing and rewarding driver behaviour.
In a nutshell, driving behaviour is monitored, and statistics are gathered by measuring how you brake, accelerate, turn, and use your phone while driving. The better your driving behaviour, the more your insurer may discount your premium.
This is a reward-based, incentivised system of insurance and can yield positive returns for your bank balance.
Mileage-based insurance
As organisations embrace a working-from-home culture, for office workers, this means that they are travelling less. There is no daily commute to the office, meetings have been replaced by apps like Zoom and Teams, and even their groceries can be delivered to them. As a result, many are using their vehicles less, which means lower fuel charges and less vehicle maintenance. It also means that their risk of being in an accident declines as fewer trips means less opportunity for disaster to strike. In this case, it may be wise to consider changing your car insurance to one that is based on how much you drive.
Explore different kinds of car insurance
Too often motorists facing short-term cash flow challenges opt to cancel their insurance outright, not realising that they can downgrade to another product until their finances improve.
Third Party Insurance only
While comprehensive insurance is always a good idea, you can opt for third-party insurance. This means that while the vehicle itself is not covered, you are covered in the event that you are liable for damages to another vehicle.
Third-party insurance is useful for less expensive cars – most parents know that university means that their children will want more freedom to go to classes, meet their friends and have greater independence. It makes sense to look for an entry-level, or second-hand car that the youngsters can use. But if you feel the value of the car isn’t worth insuring then rather insure yourself against any third-party claims so you’re not paying those out of pocket.
Fire, Theft and Third Party
You can also opt for a Third Party, Fire, and Theft Insurance which covers only these specific needs. This may prove more cost-effective than comprehensive insurance while still providing you with key insurance coverage.
Fleet Insurance
For many mid-level business owners, having one or more vehicles is important for deliveries, errands and even staff transport. In this case, you shouldn’t be looking at insurance for each vehicle you own as these costs could start to add up. What you need is fleet insurance or business insurance that covers your assets, including your vehicles. Speak to your insurer to see if you qualify and what benefits having fleet insurance may have for you. What you save can be put back into areas of your business, such as marketing and product expansion.
Gap Cover
For new car owners, gap cover is a necessity for the short period during which the value of your car loan exceeds the market value of the car. This happens when your brand-new car is being driven off the showroom floor. The value of the vehicle declines almost immediately while the loan that financed the vehicle remains the same.
Remember value and premium are linked
Keep in mind that the value of your car will decrease as time goes on if you own one. It’s a good idea to verify annually with your insurance provider that they are including depreciation in your premiums to avoid paying for coverage you don’t need. To avoid paying a high premium based on the original price of the car, it is important to make sure that your insurer’s valuation of your vehicle is as accurate as possible.
Online used vehicle value calculator resources in South Africa can help you find out how much your car is worth right now, given its specific characteristics like its make, model, age, and condition. If you know exactly how much your car is worth, your insurance premium will be commensurate with its true market value.
Conclusion
As the world of mobility embraces self-driving cars, electric vehicles, ride-share arrangements and artificial intelligence, the insurance industry will keep evolving new products and services. For car owners, this means that what you pay for car insurance will change and you must stay informed to benefit.
Disclaimer: This content is for informational, educational, or entertainment purposes only. We do not make any warranties about the completeness, reliability, and accuracy of the content.
