What value do car insurance companies give your car?

Insurers mostly provide cover based on the car’s ‘market value’.1 The market value is the average of the trade-in value, which is the lowest, and the retail price, which is the highest.

What does retail, market, and trade-in value mean?

Retail Value: The price at which a dealer sells a car to a consumer.

• Higher than trade-in value.
• Includes dealer mark-up, reconditioning costs, and profit margin.
• Reflects the price a buyer would pay to purchase the car from a dealership.

Market Value: The price a car would potentially sell for in a private sale between individuals.

• Represents a fair price based on current market conditions.
• Influenced by factors such as the car’s age, condition, mileage, and demand.
• Often used by insurance companies to determine the payout in case of a total loss.

Trade-In Value: The amount a dealer is willing to offer you for your car when you trade it in for another vehicle.

• Typically, lower than both retail and market value.
• This reflects the dealer’s need to resell the car at a profit.
• Often used as a down payment towards a new car purchase.

How Prime Car Insurance Evaluates Your Car Value

• Comprehensive Car Insurance: Prime pays the current retail value of your car (at the time of the loss) less any excess amounts that you might pay.
• Customised Car Insurance: Prime pays the current market value of your car (at the time of the loss) less any excess amounts that you might pay.
• Third-Party PLUS Car Insurance: Prime pays the current trade value of your car (at the time of the loss) less any excess amounts that you might pay.

What common questions do car insurance companies ask you?

When seeking car insurance, there are several common questions that insurers, including Prime, might ask to determine your premium and coverage needs. Here are some typical questions based on the knowledge base:

1. Personal Information:
• Age
• Gender
• Marital status
• Driving experience
2. Vehicle Information:
• Make and model of the car
• Year of manufacture
• Vehicle identification number (VIN)
• Current mileage
• Usage (e.g., personal, business)
3. Driving History:
• Any previous accidents or claims
• Traffic violations or tickets
• Whether you have a valid driver’s license
4. Insurance History:
• Previous insurance providers
• Any lapses in coverage
• Current insurance status
5. Coverage Preferences:
• Desired coverage type (e.g., comprehensive, third-party)
• Preferred deductible/excess amounts
• Additional coverages (e.g., car hire, credit shortfall protection, tyre and rim protection)
6. Risk Factors:
• Where the car is parked (e.g., garage, street)
• Security features of the car (e.g., alarm system, tracking device)
• How far you drive annually.

These questions help insurers assess the risk and determine the appropriate premium for your car insurance policy.

How are car insurance premiums calculated?

The make and model of your car affect the premium.

It’s a no-brainer that the value of the make and model of your car will greatly influence the premium. A premium to insure an expensive, luxury SUV will be a lot more than one used for insuring a small city car. Some cars are expensive to maintain, due to expensive spare parts.1 Other cars are more sought-after by thieves and hijackers. The insurer bases premiums on data from claim histories of all the various makes and models.

What about the age of your car?

Usually, the older your car, the less its market value, and the lower will be the premium.1 Your driver profile is most important to the insurer. You can do nothing about calculations based on the following parameters because they represent who you are.1

Why is your age important?

It all comes down to risk. Young drivers, especially those below 30, are considerably less experienced, making them riskier on the roads so they pay higher premiums than older, more experienced drivers. Always provide accurate and complete information about the regular driver to ensure a smooth claims process and avoid any potential complications in the future.1

Are you single or married?

Insurers have found that, statistically, married drivers are less risky compared to single drivers and thus are offered discounts.1

Your driving and claim profile

Drivers who hardly claimed anything over several years are considered low-risk and thus qualify for lower premiums and no-claim bonuses. Drivers who start off with no driving history are initially charged higher premiums.1

Where do you live and work?

Some insurance companies raise premiums if policyholders live and work in risky and maybe dangerous areas.1 Making your car more secure helps.

Are you using your car for business purposes?

Using your car most of the time for business means you travel more and are thus exposed to greater risk. This means the premium will go up.1

What is your excess?

The higher the excess, the lower the premiums are likely to be.1,2.

Why do car insurance premiums sometimes not go down as the car depreciates?

1. Personal “Risk” Factors:
• Age, Gender, Marital Status, and Driving Experience: These personal factors play a significant role in determining premiums. Changes in these factors can impact your premium more than the depreciation of the car itself.
• Mileage: The amount you drive can affect your premium. Higher mileage increases the risk of accidents, which can keep premiums high.
2. Insurance Premium Calculation:
• Risk Assessment: Insurance premiums are calculated based on the overall risk profile of the driver, not just the car’s value. This includes factors like driving history, location, and even credit score in some cases.
• Excess Amounts: A lower premium might come with a higher excess, which is an important factor to consider when evaluating the cost of insurance.
3. Policy Terms and Stability:
• Fixed Premiums: At Prime, comprehensive insurance premiums are fixed for 24 months. This stability allows you to plan your finances with certainty, but it also means that premiums may not decrease immediately as the car depreciates.
4. Coverage and Benefits:
• Comprehensive Coverage: Comprehensive car insurance provides full retail value cover for your car in case of a write-off or accident, as well as incidents like natural disasters, theft, and hijacking. The extensive coverage and optional benefits (e.g., car hire, credit shortfall protection, tyre and rim protection) can maintain higher premiums despite depreciation.

While the value of your car is a factor in determining insurance premiums, it is not the only consideration. Personal risk factors, the overall risk profile, policy terms, and the extent of coverage all play crucial roles in determining the cost of your car insurance.

Legal liability – what does it mean and how does it affect me?

If you damage another person’s car or property in a motor car accident, you can potentially be held legally responsible to cover that other person’s damages if you are at fault. This is called third-party liability.

• Responsibility: If you are at fault in an accident, you are legally liable for the damages caused to the other party.
• Compensation: Your insurance policy will cover the costs associated with the damages to the third party, up to the limits specified in your policy.
• Peace of Mind: Having this coverage means you can drive with the assurance that you are protected against significant financial loss in the event of an accident where you are at fault.

How is fault determined after a car accident and why it matters

1. Police Reports:
• Immediate Reporting: Notify the police right away and obtain a case number within 48 hours.
• Documentation: Police reports often include details about the accident, witness statements, and any traffic violations that occurred.
2. Evidence Collection:
• Photos: Take clear photos of your car, any other cars involved, and the entire accident scene.
• Witnesses: Gather contact details for all third parties and witnesses.
3. Insurance Investigation:
• Claims Registration: Call the Prime claims centre at 011 745 7800 or email claims@prime.co.za with your police case number to register your claim within 48 hours.
• Assessment: Prime will assess the damage and circumstances based on the evidence provided.
4. Traffic Laws:
• Violations: If you break traffic laws, like running a red light, and cause an accident, your policy might not cover the damage.
• Driving Under Influence: If there’s a good reason to think the driver was under the influence of alcohol, drugs, or any substance that could affect their ability to make good decisions, the policy won’t cover the damage.

Why Fault Matters:

1. Insurance Claims:
• Coverage: Your policy might not cover damage if you were at fault due to traffic violations or driving under the influence.
• Claim Rejection: Claims can be turned down if the rules in your insurance policy aren’t followed or if there’s proof that the claim isn’t honest.
2. Legal Implications:
• Liability: Being at fault can make you liable for damages to other parties involved in the accident.
• Third-Party Claims: If you are at fault, third parties can claim compensation for damages from your insurance.
3. Policy Terms:
• Exclusions: Your policy won’t cover damage that happens because you kept driving your car after an accident or if your car was parked where it shouldn’t be, putting it in danger.
• Driver’s License: If your driver’s license has expired or is not valid, or if you’re driving drunk or on drugs, your policy won’t cover the damage.

How do South Africans feel about Buying Car Insurance Online?

Online shopping continues to grow in popularity in South Africa. An ‘Online Retail in South Africa’ research study was carried out by Worldwide Worx, which revealed that there was a 25% year-on-year growth in online shopping in 2018.

Car insurance companies embrace online shopping trend.

Most leading insurers have embraced the online shopping trend and now promote and sell car insurance online. It is true that insurers are catering for the digitally savvy population. However, some South Africans still prefer to make purchases the traditional way, whether it is in-store or via a telesales person.

Purchasing car insurance online from Prime offers several advantages:

1. Convenience:
• You can get a quote anytime, anywhere, without needing to visit an office or make a phone call.
2. Speed:
• An online quote can be generated within minutes, making it the quickest way to get insurance for your car.
3. Ease of Use:
• The process is straightforward. Simply visit the Prime website (prime.co.za) and look for the option to get an online quote. You’ll be directed to a form where you can enter details about your car and insurance needs.
4. Personalized Assistance:
If you prefer speaking to someone or have specific questions, you can call Prime directly at 011 745 7800. Their New Business Professionals will assist you in getting the right plan and provide a personalized quote based on your specific requirements.
5. Request a Call Back:
• On the Prime website, you can request a ‘Call Me Back’. By completing the relevant form, you can request a call from one of Prime’s friendly New Business Professionals who will discuss your needs and provide a quote.
6. Preparation:
• When requesting a quote, have details about your car (make, model, year), your driving history, and any specific insurance needs ready. This will ensure a more accurate quote tailored to you.

By choosing to buy car insurance online, you can enjoy a seamless, efficient, and personalized experience tailored to your specific needs.

Get affordable car insurance online with Prime.

Buying products online is convenient and generally secure. Online stores and insurers usually make every effort to provide excellent customer care too. Are you looking for affordable car insurance? Why not get an online quote or buy car insurance online with Prime?

Common car insurance myths

Here are some common car insurance myths, clarified with accurate information based on the knowledge base:

1. Myth: Comprehensive insurance covers everything.
• Reality: Comprehensive insurance provides extensive coverage, but it doesn’t cover everything. There are specific exclusions such as:
• Big disasters like wars or riots (covered separately under the SASRIA section).
• Driving under the influence of alcohol or drugs.
• Driving with an expired or invalid driver’s license.
• Breaking traffic laws and causing an accident.
• Intentionally lying on insurance claims or withholding important information.
2. Myth: Your car insurance will cover any driver.
• Reality: Coverage often depends on who is driving the car. If the car is driven by someone not nominated as a regular driver, claims may not be considered.
3. Myth: Lower premiums always mean better deals.
• Reality: While lower premiums might seem appealing, they can come with higher excess amounts. It’s essential to consider both the premium and the excess when comparing insurance quotes.
4. Myth: You don’t need to inform your insurer if you switch providers.
• Reality: It’s important to inform your insurer if you decide to switch to avoid dual insurance and unnecessary premium payments.
5. Myth: Insurance covers all personal items in the car.
• Reality: Insurance typically does not cover personal items left in the car, such as laptops, tablets, cell phones, clothing, sports equipment, wallets, handbags, or money.
6. Myth: You can claim for any damage to your car.
• Reality: Claims can be rejected for several reasons, including:
• The insurance wasn’t active when the incident happened.
• The incident isn’t covered by the policy.
• The policy rules weren’t followed.
• The claim isn’t honest.
• The insurance payment was missed.

Understanding these myths can help you make more informed decisions about your car insurance and avoid unexpected surprises.

Disclaimer

Buying car insurance is an important step in protecting yourself. So, we recommend that you seek qualified financial advice before you buy car insurance regardless of how you decide to buy car insurance. Always read the terms and conditions and spend your time comparing every facet of insurers’ products before you make your final choice.