Cheap Car Insurance Guide
Car insurance is one of those grudge purchases that just about everyone will experience at least once in a lifetime.
Yet, when things go wrong, it protects consumers from large financial losses.
A necessary evil.
The car insurance industry is unique in that the sheer scale of competition within itself can actually be leveraged by consumers if done correctly.
With quote comparison websites, consumers can get a better idea of the range of offers out there. Growth of artificial intelligence and technology in the short term industry is also rapidly changing how insurance is marketed, sold and priced.
With this guide we aim to help you get the cheapest car insurance possible whilst still making sure that you get the cover you need for most emergencies. We also cover commonly used terms used within the insurance industry that you will encounter during the sign up and claims process.
So take a few minutes and read our guide, it might just save you some cash.
Buy the right vehicle.
The risk tied to insuring a vehicle is largely linked to the crime statistics related to that particular model. Hence if you purchase a car that gets stolen often it would only make sense for insurance companies to charge higher premiums and or excesses. Traditionally its been noted that bakkies, sport utility vehicles (suv’s) and high volume favourites like the VW Citi Golf are targeted extensively.
Another slightly less important factor is vehicle colour. According to numerous studies globally, darker coloured vehicles have a higher tendency to be involved in accidents especially at night or poor light conditions. Hence a safer choice would be white, silver and bright colours that stand out.
All the theory behind model and colour selection is purely there as a starting point. Getting car insurance quotes on different models will help narrow down your selection and even though nobody wants to select a vehicle based off lower insurance costs, it still is a good exercise before you commit to a car.
Sum of money paid out if your vehicle is stolen or completely written off.
The highest value possible. The sum paid would equal the amount required to purchase an equivalent make and model from a dealership.
Less than retail but more than trade-in. The sum paid would be the equivalent of selling your car in the current market considering factors like accident history, mileage, service history, appearance and other factors.
Potentially the least value possible. The sum paid would be the equivalent value offered by a dealership to trade-in your vehicle, this sum is usually under the market value.
Use a dedicated broker.
Before the growth of the internet, consumers would generally use brokers for insurance, investment and other policies. Even though this may seem outdated, the benefits of going through a registered broker that you can trust can sometimes outweigh the quick convenience of getting a quote online or over telephone.
The biggest benefit of a ‘good’ broker is their industry knowledge and experience. New car insurance companies pop up all the time with attractive offers for consumers. Vetting these for an ordinary person is simply impossible but brokers can easily see warning signs just by looking at their cover features.
Brokers can also assist with add-on features that you might specifically need, helping with the claims process and keeping you up to speed on changes with your cover.
Combine your policies.
A common practice among large car insurance companies is the option to add-on other forms of cover. Now these options usually get offered after 90 minute sign up telephone call and most consumers just opt out of these.
Combining policies such as life, household and car insurance can save you tons of money each year by reduced premiums and possibly bigger loyalty payouts. So next time get a quote and compare to what you already have, you might just win back some of your hard earned money.
Car repairs and replacement parts can be deceptively expensive. That’s why its important to ensure that you have sufficient cover to deal with any damage.
Check your credit score.
Ever pay a few bills late or simply ignore them? Then there is a good chance that your credit record might be down scored. The importance of this stems from the fact that insurers would rather not spend additional money on chasing late premiums where that time and money can be invested in finding new clients.
Their way of dealing with this issue is to alter your risk profile which ultimately leads to bigger premiums and excesses. So double your rating just in case there might be issues that you are unaware of that can be solved. This helps in many areas beyond getting the cheapest car insurance in South Africa.
Three Common Types of Car Insurance Cover
As its name suggests, this is the most complete type of insurance cover available. Comprehensive will typically cover you for accident damage, theft, fire, floods, hail, hijacking and other acts of God. It also bundles in third party protection, so any damaged sustained by another driver in an accident caused by you will be covered to a certain rand value.
Its important to note that not all comprehensive cover packages are the same as some insurance companies might leave out certain aspects. Hence highlighting the importance of getting multiple quotations.
The mid-range option costs considerably less than comprehensive but comes with limited cover in certain areas. You are covered if your vehicle is stolen or damaged by fire generally. It also generally covers third parties, so if you damage another car, your insurer will cover that on your behalf to a set amount (Usually in the 2 to 5 million rand range). Plans from different insurers differ in terms of coverage.
The big disadvantage of this option is the lack of accident damage cover. Hence any damages to your vehicle will have to be paid by yourself.
Third Party Cover
The cheapest car insurance offer available only covers third parties. This means that any accidental damage to a third party car caused by you, will be covered to a set amount stipulated in your policy.
This cover offers you no support, hence all damages and loss incurred by your vehicle will have to be paid from your own pocket.
Opt for decreasing premium plans.
Some car insurers have the option to lower your premiums over time to compensate for the depreciation of your vehicle’s market value over time. Others even have the option to pause cover at will allowing you to manage the premium that you pay.
These plans are great if you really want to save money on your premiums but just remember that the risk tolerances governing insurers don’t go away. Meaning that these plans might not offer you the full cover that you actually require.
Top Three Provinces for Car Theft
Statistics provided by Stats SA’s “Victims of Crime” Report released October 2019.
Only claim when absolutely necessary.
Car insurance companies will always ask you about your claims history during the quote phase. This is to accurately determine your risk profile and then subsequently work out what you need to pay.
People that claim on a frequent basis as you can imagine are not very sought after by insurance firms. Hence they need to adjust your premiums and or excess upward to compensate for your high risk profile.
So try and only claim when damages are material as the accumulation of claims might have you paying more than necessary.
Adding certain safety measures to your vehicle may reduce your risk profile. These typically include car alarms, immobiliser, steering locks and gear locks just to name a few. All these extras work in your favour to help you save a decent sum each year.
Another way to pay lower premiums is to install a tracker device on your car. Even though privacy concerns remain an issue around these units they still allow the best way for insurers to recover your vehicle should it be stolen. Incentive programs around these systems are also common whereby good driving habits can lower insurance costs or grant you special bonuses.
No Claims Bonus
Some insurers offer this incentive to stop people making unnecessary claims by offering to pay back a small portion (in some cases up to 10%) of their previously paid premiums for a specified time period. It should be noted that this incentive will have a cost component hence your premium will be higher.
The Ombudsman for Short Term Insurance is available for free and fair resolution of car insurance disputes in South Africa. So if you ever have the feeling that you’ve been dealt with unfairly by your insurer then contact them for help.
Keep your info updated.
If you’ve ever had to claim, then you understand the high level of scrutiny placed on the information you hurriedly provided by telephone to a call center agent over your lunch break. Insurance companies will confirm as much information as required to process your claim and if anything doesn’t tally up then you might have a fight on your hands.
Beyond the issue above, the act of making sure that your data is accurate at all times could also save you some cash. Say for instance that you’ve recently moved to a more safer part of town. That will immediately play in your favour as your risk profile will be lower.
Thus reporting changes becomes vitally important to making claims easier and potentially cutting your insurance fees.
Adjust your excess.
The premium you pay and the excess linked to it form a kind of seesaw effect whereby you can reduce the one by increasing the other. Now what generally occurs is that vehicle insurance companies will lower your premiums but up your excess to make it appear like a good deal.
This is simply not the case as your cover needs might be different to their estimation. If the excess amount exceeds what you have readily available then its probably a better idea to reduce your excess and live with the higher premium.
This option does however still exist and if your’e brave enough then you could substantially reduce your monthly premium by increasing your excess.
Bonus Tips for Cheap Car Insurance
These lower your risk profile as it may deter thieves from stealing your car. Result: Lower Premium
Performance gains might be fun but are ultimately viewed as a risk factor: Result: Higher Premiums
More relevant for separate devices (not built-in), these increase the risk of theft (smash & grabs). Result: Higher Premiums
Short term insurance policies can never be left unattended unless money is not an issue for you. Insurance companies easily increase premiums above inflation rates as most consumers won’t query the increase.
The car insurance industry is very competitive which actually tilts the advantage in favour of consumers. Hence learn to negotiate hard but fairly to get the best cover possible at the best price point.
Sound practice would be to look at your policy yearly, get competitor quotes and definitely question increases.
Best South African Car Insurance Companies
Based off South African Reserve Bank Analysis of Market Share in 2017
Santam is currently South Africa’s largest short term insurer.
Speak to anyone regarding a new car insurance policy and Santam is sure to feature in that discussion. Santam is considered by many to be the market leader in car insurance and a fail safe option for anyone undecided on insurers. With more than a century in the short term insurance industry, Santam has grown its client base over years by providing class leading service to extremely loyal clients. Santam was also at the forefront of many regulatory changes in the insurance industry that shaped the short term insurance landscape into what we see currently.
Santam was the first South African insurer to implement computer systems in their operating procedure. Another major contribution was their input in establishing multi layer short term insurance policies allowing consumers to group different forms of insurance under one policy.
Santam has received numerous local and international awards for their services, community development programs, climate initiatives and workplace culture. Key marker award for insurers is the South African Customer Satisfaction Index award for best short term insurer has been won by Santam on numerous occasions. Santam today, has well over one million clients in the short term insurance industry spread over a few African countries. With a mission to bring affordable insurance to many individuals and business entities. The company and its thousands of staff members and intermediaries just keep getting better at providing world class car insurance.
OUTsurance was founded in early 1998 and has since become one of South Africa’s leading car insurers.
Launched as a subsidiary RMB Holdings the insurance firm was thrust into the hyper competitive world of short term insurance. This challenge was met full on by their ethos that consumers would always get something out, and so the OUTbonus was introduced to the market. The OUTbonus concept rewards consumers with a small portion of previously paid premiums after a fixed duration of claim free years. The current OUTbonus payouts are 10% of previously paid car insurance premiums at three years, then two years and then every year the consumer remains claim free thereafter.
The success of the OUTbonus program is evident in the rapid rise of OUTsurance in the car insurance market. Too date OUTsurance has paid out R3 Billion in OUTbonuses averaging approximately R1 Million each day. Their aggressive marketing is another factor in their growth with amounts of up to R800 being offered if they can’t beat consumers current insurance premiums from competing insurers. With marketing efforts based around this, OUTsurance is acquiring more and more customers from older car insurance firms.
OUTsurance offers class leading benefits which include, roadside assistance, optional car hire, standard low rate excess fee, twelve month guarantee on premiums, accident medical benefits, accident car key cover, third party liability cover. The insurance firm also has numerous integrations with firms that offer Panic Assistance for breakdowns in dangerous areas just being one of these.
Hollard is South Africa’s largest privately owned car insurance company.
Operating in the “Hollard Way”, a unique set of beliefs adopted by their employees, which aims to provide a harmonious relationship between all their stakeholders. Their approach hinges around transactions that leave all parties happy, which for the car insurance industry is a tough task. Hollard was founded in 1980 and has been privately owned since its inception. This has given them the platform to tailor their insurance product offerings for long term growth and sustainability. Vehicle insurance for low income consumers is one area in which Hollard has excelled, currently providing short term insurance policies to well over two million low income policy holders.
Hollard’s comprehensive car insurance offering is one of the most complete options available on the market. With cover for third party claims, accidents, theft, glass repair, fire and other disasters. Optional extras include cover for tyres, dents, scratches and even special add on features for offroad and classic car enthusiasts. The insurer also has a solid no claims cash back bonus on par with leading insurers.
Other vehicle related optional features include their Motor Xtender plan aimed at vehicles that are out of warranty. The plan covers major parts, car hire and roadside assistance to name a few. Hollard also offers car insurance for vehicles held in long term storage at a cheaper fee than full comprehensive. Hollard’s EnRoute Personal Accident insurance cover is another standout offering, providing disability cover, death cover, medical expenses cover and trauma counselling. Just another way that Hollard aims to provide holistic insurance options for consumers.
Old Mutual is one of South Africa’s most diverse and established car insurance companies.
The Old Mutual Group has been around since 1845, offering insurance and financial services in Cape Town at first. The business has since gone through numerous changes and has a large scope over the sector as a whole. Old Mutual Insure was officially re-branded from Mutual & Federal in 2017 with a view of simplifying their product offering. Old Mutual currently has well over thirty thousand employees spread over Africa, Europe and Asia.
Old Mutual’s comprehensive vehicle insurance plan covers loss or damages due to theft, natural disasters, accidents and third party claims as per industry standard. Old Mutual have flexible pricing structures and generally offer affordable premiums for an insurer with such a large footprint. Insurance optional extras include car hire, credit shortfall cover, a 10% cash back bonus after three claim free years and bundle pricing savings for grouping your car insurance with their other short and long term insurance products.
Old Mutual also provides a host of other benefits to policy holders such as emergency medical expenses, trauma counselling, car key and lock replacement or repair, emergency accommodation and road emergency services. Old Mutual’s road emergency services aim to help in those unforeseen instances such as running out of fuel, mechanical breakdowns, flat tyres, flat batteries and more. Although terms and conditions apply to many of these perks, Old Mutual still has one of the best car insurance offerings in the market at the moment.
Auto & General over the last twenty years has been one of South Africa’s faster growing car insurance companies.
Established in 1985, Auto & General has leveraged their strategic partners and brokers to become one of the largest short term insurers. The insurer’s growth rates remain some of the largest for a business that does not over exert itself in marketing and branding. Auto & General’s success is underpinned by their investment in corporate social investment in community projects and by empowering previously disadvantaged workers. Auto & General’s groundbreaking service charter ensures that clients get a level of service well beyond vehicle insurance industry standards. This level of innovation is normal for a company that introduced telephonic insurance call centers and online capabilities for capturing clients and claims. Auto & General also invested heavily in the introduction of the first anti-hijacking device in South Africa.
Auto & General’s comprehensive insurance plans cover accidental damage, theft, natural disasters, third party claims and cover for smaller items such as car radio and windows. The insurer also provides free towing and storage for your vehicle. Auto & General also offer cheaper insurance plans for individuals that need less cover. Their third party only cover is commonly used for when the individual has a low value car that probably has been paid off fully. Their third party, fire and theft policy is a step up as you would be covered when your car is damaged by fire or is stolen. Another innovation is their BetterCar insurance add on that removes the market, retail and trade value conundrum by replacing your written car with an equivalent but newer model.