How to save money on auto insurance

DECEMBER holidays and back-toschool expenses can put a massive dent in your finances. If you’re looking for ways to save money as the new year starts, it might be a good time to review your car insurance.

Always stay covered

Many people are tempted to cancel insurance at the start of the year when their budgets come under pressure. That’s especially the case if they don’t expect to be driving much in the foreseeable future. But insurers will regard you as a higher risk client and charge you higher premiums if you have interruptions in your history of insurance coverage.

Think about third-party only cover

If you believe it’s not worth insuring your older vehicle, you should still consider third-party liability cover, which is the most basic and affordable car insurance you can buy. From as little as R50 a month, it offers protection for everything that your car could damage while you are driving it, except for any damage caused to your own car.

Third-party liability will cover the costs when the third party lays a damage claim against you. That could save you a lot of stress and money if you have a crash with an expensive sports car or luxury SUV.

Take tangible steps to reduce risk and inform your insurer about them

While many risks are outside your control, there are ways that you can reduce the risks of being in an accident or your car getting stolen.

Adjust your excess

An insurance excess is the amount of money you contribute towards a claim. You can consider increasing your excess if you want to reduce your monthly premium.

Conversely, you can decrease your excess and increase your premium if you are worried about out-of-pocket costs if you have an accident. Try to get a good balance between what you can afford to pay at the drop of a hat and what you can afford to pay monthly in premiums.

TIP: Read the small print about excesses

Excesses across different insurance providers don’t work in the same way. This makes it difficult to directly compare insurance quotes. Some providers offer a flat excess. This means you’ll pay the same amount, no matter whether the damage costs R100 000 or R10 000 to fix.

A few providers have percentage-based excesses, where you will pay a certain percentage of your claim with a minimum excess.

Most conventional insurers also apply additional excesses.

For example, you might need to pay an additional excess if the accident happened after 10pm, the driver is younger than 25 or your policy is less than a couple of months old. Some insurers charge zero excesses for claims such as hail damage or windscreen replacement.

This is why you need to carefully compare the excess terms and conditions to understand exactly what you are getting for your premium.