What is a car insurance premium?

Several factors influence the cost of your car insurance premium. These factors vary among insurance companies but generally include:

1. Driving record

Your driving history, which includes the duration you’ve had your driver’s licence, plays a significant role in determining your premium. If you have a clean record with no accidents or traffic violations, you’ll likely pay lower premiums than someone with a history of accidents or citations.

2. Age and gender

Younger drivers, particularly those under 25, typically pay higher premiums due to their perceived higher risk. Additionally, statistics show that male drivers tend to be involved in more accidents than female drivers, which may result in higher premiums for men.

3. Type of vehicle

Your vehicle’s make, model, and age can impact your insurance premium. Newer, more expensive cars may cost more to insure due to higher repair or replacement costs. Similarly, vehicles with powerful engines or those more prone to theft may also command higher premiums.

4. Location

Where you live can affect your insurance premium. Urban areas with higher traffic congestion and crime rates may have higher premiums than rural areas with fewer risks.

5. Coverage limits

The extent of coverage you choose influences your premium. Policies with higher coverage limits or additional features like comprehensive and collision coverage generally result in higher premiums.

6. Credit history

In some areas, insurance companies consider your credit score when calculating premiums. A higher credit score may lead to lower premiums, as it is often associated with responsible financial behaviour.

7. Annual mileage

The number of kilometres you drive annually can impact your premium. Drivers who commute long distances or frequently use their vehicles may face higher premiums due to increased exposure to potential accidents.

8. Excess amount

Your excess is the amount you’re responsible for paying out of pocket before your insurance coverage kicks in. Choosing a higher excess could result in lower premiums, while a lower excess means higher premiums.

While certain factors influencing your premium may be beyond your control, there are steps you can take to lower your car insurance costs potentially:

1. Shop around

Don’t settle for the first insurance quote you receive. Compare rates from multiple insurers to find the best coverage at the most competitive price.

2. Bundle policies

Many insurance companies offer discounts for bundling multiple policies, such as car and homeowners insurance. Consolidating your insurance needs with one provider can lead to significant savings.

3. Maintain a clean driving record

Avoid accidents and traffic violations to keep your driving record clean. Safe driving habits reduce the risk of accidents and qualify you for lower insurance premiums.

4. Consider higher excess

If you have the financial means to cover a higher excess in the event of an accident, opting for a higher excess can lower your premium.

5. Take advantage of discounts

Inquire about discounts such as safe driver discounts, good student discounts, or discounts for installing safety features in your vehicle.

6. Review your coverage needs 

Periodically reassess your coverage needs and adjust your policy accordingly. If you no longer require specific types of coverage or if your vehicle’s value has depreciated, consider lowering your coverage limits to reduce your premium.

7. Improve your credit score

Improve your credit score. A higher score may qualify you for lower insurance premiums in areas where credit history is a factor.

Car insurance premiums could be influenced by various factors such as driving record, age, vehicle type, and location. Understanding how premiums are calculated and managing them can help you secure affordable coverage while protecting yourself and your vehicle on the road. By staying informed and exploring different options, you can make informed decisions that benefit your budget and peace of mind.

The article aims to provide South African motorists with everything they need about car insurance premiums.

If you want car insurance, only get professional advice from a certified financial advisor to ensure the product is correct. Make sure you understand all the terms and conditions in your policy.

Contact Prime South Africa for more information regarding affordable, comprehensive car insurance with fixed premiums* and a reduce-to-zero excess*. Ts and Cs apply.