Insurance for many people is a science, but one which is far from being exact. The large insurance companies not only in South Africa but throughout the World have very large departments whose sole but very important role in the company is calculate insurance premiums. Don’t forget that the large insurance companies of the World don’t just provide insurance cover for cars, houses, life and health; they also insure airplanes, container ships and even large luxury ocean liners.
The equations involved in calculating car insurance premiums are fairly straightforward and are dependent on a person’s driving experience and history or lack of it. Someone who is young, has just passed their driving test will pay a large premium. Someone how has been driving for thirty years and does not have a single blemish on their license will pay a lot less. Most of us will pay somewhere in between these figures.
Car insurance companies will take into account not only the age of the person who is to be insured but also their driving history. If someone who has been involved in accident where they are found to be at fault will find them facing an increase in premiums for several years to come, although the increase in premium will gradually decrease over time, if the driver keeps out of trouble.
Anyone who has points on their license for speeding offences or any form of careless or reckless driving will also have this taken account during taken into account when the time comes to renew their premium. Legally car insurance is a contract, and anyone who status as a driver has changed is obliged to inform their insurance company accordingly. Failure to do so will usually result in the policy being invalidated, especially relevant if the driver is involved in an accident or even if their car is stolen.
Insurance companies understandably frown considerably on drivers who are caught driving under the influence of alcohol or drugs, these drivers are automatically banned for long term periods, sometimes running into years. When the time comes when they wish to re-insure themselves to drive a car, they will find that their insurance premiums have gone through the roof, and will remain there for several years at least.
Thankfully most drivers respect the laws of the road and their insurance premiums reflect that fact. When the time comes to renew a comprehensive car insurance policy, the car driver can have some say in how much their annual premium will be, by taking advantage of their no claims bonus, which can mount up to a considerable sum. For example a driver who has been insured with the same company for five years can expect a no claims bonus of 30% on their gross premium.
Another way to save money on car insurance premiums is to increase the level of the repair costs that a driver is prepared to take in the event of their car being involved in an accident. If a driver makes this declaration, their insurance company will be able to calculate the annual premium accordingly.
In many cases, if their car is involved in an accident the car owner will elect to pay the damages themselves rather than involve the insurance company and decimate their hard earned no claims bonus.
Any driver would prefer to pay as little for their car insurance as possible, and no doubt the way to do this is to keep a perfect driving record. When the time comes for your insurance company to calculate your next year’s premium, you will be a lot better of showing only ticks and no exes.