Am I Paying Too Much for Car Insurance? 5 Questions to Ask Yourself

Car insurance is an investment that provides you with coverage in the case of accidental damage or loss to your car. However, car insurance quotes can be pricey. You might have asked yourself, ‘am I paying too much for car insurance?’

There’s no one-size-fits-all answer to this question. So, we’ve compiled a guide for you to determine if you’re overpaying for car insurance.

Why Am I Paying So Much for Car Insurance? (3 Reasons)

Insurance premiums increased by 40% from 2014 to 2019. This significant jump has undoubtedly been felt by many. You may have found yourself wondering why exactly you’re paying so much for car insurance.

Below we’ll discuss three reasons for the high costs of your car insurance: your risk profile, your coverage option, and the insurance industry.

Your risk profile

Your car insurance premium is determined by several personal factors that indicate how much of a risk you are to the insurer. The higher your risk profile, the higher your insurance premium will be.

Here are some factors that influence your car insurance rates.

1. Demographics

Your age, gender, and marital status all contribute to your car insurance costs. People younger than 25 are considered a high-risk group because of their inexperience as drivers. As a result, they may pay more for insurance.

Women’s car insurance is generally cheaper than men’s because statistically, men get into serious accidents more frequently. If you’re unmarried, you may also be paying more for car insurance than your married friends.

2. Location / Address

Your address could also be a reason for your high insurance rates. If you live in an area with a high crime, hijacking or accident rate, the likelihood of damage or loss to your car increases. Therefore your risk to the insurer is higher, and so your car insurance premium rates will be higher.

3. Car Make and Model

The make and model of the car you’re insuring influences your monthly premiums. Expensive or modified cars get higher insurance rates because they are more costly to repair or replace when damaged. Similarly, older vintage cars are also more expensive to insure if their parts are not readily available.

4. Driving History

If you have a history of traffic fines and car accidents, an insurer will consider you a high risk, and you’ll be left with increased car insurance rates.

5. Credit Rating

People with poor credit scores are charged higher car insurance premiums. Having a bad debt repayment record indicates a decreased ability to keep up with monthly car insurance premiums.

Car Insurance Coverage Options

Of course, the price of your car insurance depends primarily on your chosen coverage option. There are generally three types of car insurance.

In order from most to least expensive they are:

  1. Comprehensive car insurance
  2. Third-party, fire and theft cover
  3. Third-party only cover

The more coverage and benefits included in your car insurance package, the higher your premium will be.

Pressure on the Insurance Industry

The insurance industry is under a lot of pressure, which is why car insurance premiums are expensive. South Africa has hundreds of thousands of car accidents every year. There’s also a huge number of theft and hijackings in the country. Insurance companies pay billions yearly to cover the damages and losses incurred.

Roughly 70% of South Africans do not have car insurance. This is partly because car insurance is not legally required, and there is no penalty for driving without insurance. If an insured car is involved in an accident with an uninsured car, the person with the car insurance and their insurer are generally responsible for the damages.

However, the government is considering making third-party car insurance compulsory, which could potentially lessen car insurance costs for everyone.

How Much Is Too Much for Car Insurance?

Car insurance not only protects your car, but it also gives you financial protection. Although it is generally more financially beneficial to have car insurance than to go without it, most South Africans do not have car insurance due to the costs.

Those who do have insurance pay for the financial security and protection offered.

Car insurance rates vary depending on the insurer and the nature of the insurance policy. All insurers don’t offer a standard car insurance fee, so it’s hard to say how much is too much for car insurance.

You need to compare quotes from different insurers and weigh the risks and benefits.

What to Do If Your Car Insurance Is Too High

If your car insurance is too high, it’s strongly recommended that you do not cancel your insurance policy. Instead, there are ways to reduce your car insurance costs if you’ve found that you cannot comfortably afford it.

Reduce Your Car Insurance Costs

  • Increase your excess payments to reduce your monthly premiums.
  • Take an advanced or defensive driving course, which can reduce your insurance premium.
  • Insure your car for its market value instead of its retail value, which lessens your monthly premium.

Hidden Auto Insurance Discounts

  • If you have more than one car and cover them all with the same insurer, you could be afforded a discount. King Price Insurance offers up to a 20% discount on your premiums if you insure two or more cars with them.
  • Bundle your car and home insurance together under the same policy for a discounted price.
  • If you don’t make any claims for a specific amount of time, your insurer could lower your premium. The longer you go without making any claims, the greater your discount will be.

Switch Car Insurances

If you have tried to reduce your car insurance premiums, but it’s still too expensive, it could be wise to switch to a more affordable car insurance package.

You may need to switch car insurance companies to get the best value for your money. Make sure that you do this the right way to avoid cancellation penalties.

5 Questions to Ask Yourself About Your Car Insurance Costs

  1. How much can I comfortably afford to spend on monthly car insurance premiums?
  2. What do I want out of my car insurance coverage?
  3. Are there ways to reduce the price of my current car insurance premium?
  4. Are there more affordable car insurance options that suit my needs and budget?
  5. Should I switch car insurance companies?

Whether or not you are paying too much for car insurance depends on what you can afford and what you need coverage for.

We will be happy to hear your thoughts

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