October 18, 2022
Car insurance offers motorists good financial protection. If your car gets damaged, stolen, or destroyed, car insurance can pay, or help you pay, to repair or replace your car. Without it, many motorists wouldn’t be able to recover financially after an accident.1 Many South Africans view insurance as costly and are looking for ways to save. Let’s find out if buying an older car will save on car insurance premiums.1
Besides its age, insurers also consider the replacement cost of the car when calculating the insurance premium. This includes the cost of spare parts, their availability, and the car's market value.1 If spare parts are difficult to get because of the car’s age, repairs will be more expensive, which could increase the insurance premium. If your old car is popular and spare parts are easy to find, then the premium would stay low. If you venture into the classic and vintage car categories, you can expect higher premium. 1
If you own a car and you want car insurance, the main factor you would consider is the cost of your car insurance premium. So would an older car cost less to insure? If you consider the premium amount as the percentage of the car’s purchase price the answer would most likely be no. A premium of R1,000 per month for a R100,000 car is 1% of its price. However, a premium of R1,000 per month on a R70,000 car is 1.42% of the purchase price. It’s an interesting way to calculate your premium but many motorists are more concerned about the actual monthly premium cost on an older car.1
Owning a high valued car that is more likely to be hijacked or stolen, could cause the premium to climb. Older cars lacking modern security systems are considerably easier to steal, also resulting in higher premiums. Sports cars, unlike family cars, are designed for acceleration and are often driven at speed. Increased speeds mean greater risk and also higher premiums.1
It’s not so much the age of the car you drive that pushes the premium up, but the way you’ve been driving over many years. Are you a safe, defensive driver or an aggressive one, possibly having been involved in several accidents and claims? Your driver or risk profile will show the insurer what risk you pose. The greater the risk, the higher your premium could be.1
Where you park your car at night, and the security at that location, can greatly affect your premium amount. Security features, such as electric fencing, high walls and having your car parked behind a locked gate or in a locked garage can help decrease your premiums.1
A business person who travels 3,000 km a month in their car has a greater risk of having an accident due to the simple fact that they are on the road more frequently than a person who drives fewer kilometres. Therefore, their car insurance premium could be higher than a person who drives less.
If you drive an older car, generally you could pay lower premiums. This is not a guarantee, so the best way to find out what your premium could be on an older car, call your insurer and ask for a quote. Another way is to get several online quotes from reputable car insurance companies.
The above article is meant to give general information to help you understand the different characteristics of car insurance.
Should you want a quote or would like to buy affordable car insurance for your car, simply contact PMD. We offer affordable, comprehensive car insurance with fixed premiums* and reducing excess*. Find out more about PMD’s uniquely designed products and world-class service. Our comprehensive car insurance and Customised car insurance plans, cover vehicles cars up to 15 years old of age, whilst their our Third-party PLUS car insurance covers vehicles of any age. T’s and C’s apply.
As with all financial services products, first consult a certified financial advisor to make sure the product is right for you.
November 7, 2023
November 7, 2023