Car insurance: how does the pricing work

[Tigerman]

The premium on my car's insurance - personal, no business use - is 15% MORE than when I took it, but in the same period the car's insured value has depreciated 45%. Every year I adjust the insured value accordingly (they automatically increase the premium - they supposed to inform customers to check the insured value, but don't). My risk profile is EXACTLY the same. How do they work that out?
I thought of moving to outsurance for a better premium - their big ad campaign makes me think they could be good. (They come if for a fair amount of stick on hellopeter.) Anyway, I call for quotation. I give my name but can't understand how providing my second name helps in "developing a profile" for me. Why is he asking irrelevant questions? A previous company i called got straight down to business. I almost plead for him to get onto the usual questions: where you live, car, etc. When i hear him mutter under his breath (i think), i end the call. Do they want to turn away potential customers?

 

[Mike Hoxbig]

Contact a broker and have them handle all this for you. Don't fall for Outsurance's (and similar) "cut out the middle man" marketing hype.

 

[Hayat3]

Contact Aon S.A for a quote.

[email protected]

 

[Hayat3]

double post

 

[Cicero]

Contact a broker and have them handle all this for you. Don't fall for Outsurance's (and similar) "cut out the middle man" marketing hype.

Brokers FTW!
Honestly, its worth the extra R30 -> R100 or so. Really!

 

[Ry4n]

markface +1 Its way worth it to have a broker - it’s much better calling in knowing you’re going to speak to someone who has their head screwed on oppose to a useless call centre agent that says I think so...

 

[satanboy]

Yes work via a reputable brokerage. eg. Alexander Forbes or Aon...etc

Premiums increase just like everything else in life.

 

[NiTeD]

Yes work via a reputable brokerage. eg. Alexander Forbes or Aon...etc

Premiums increase just like everything else in life.

Not quite, I'm with Old Mutual's Iwyze. Premiums decrease annually as the value of the vehicle decreases.

 

[Tigerman]

Premiums decrease annually as the value of the vehicle decreases.

Exactly what I thought! My car is almost half its value now, and lets say premiums increase 10% a year, I should be paying net 30-40% less than I am, with the same risk profile. In fact i hardly use the thing, anyway.
Thanks for the aon tip - never heard of them before but looked at their website. Old mutual, i don't know. They screwed me once on other cover, with dreadful service, and i swore never to go near them again.

 

[zippy]

Insurance premiums are calculated by taking a base rate which is determined by the replacement value of the car.

The premium is then loaded depending on various risk factors such as :
- driver age,
- claims made
- post code risk(i.e. risk of getting stolen)
- risk of car breaking down(if that is relevant to the cover)
- age of any additional drivers

One of the main reasons for premiums going up is the post code risk changing dramatically from year to year.

Note, its also possible for the base rate of certain vehicles to increase because a certain model shows an increase in risk.

Some insurers suffer more claims than others and have no choice to increase premiums to cover this. Most people wont change insurance if premiums increase, so although some do, it still pays insurers to increase premiums rather than absorb losses.

 

[Tigerman]

Thanks, zippy, your comments are helpful. My risk factors are constant, and no claims. It could be post code and vehicle factors have changed; i assumed they are constant.
I only thought of it now: the underwriters changed a couple of years ago, which, all things being equal, may account for steadily increasing premiums.
Anyway, perhaps many short-term insurers count on client inertia NOT to change companies even though premiums increase but their ad campaigns invite us to move to them:"You can save Rxx with us".

 

[Magandroid]

Used to be with Outsurance and while car value drops, premium keeps increasing. Moved to RBS Insurance Brokers. Premiums are now half of what i used to pay and for an extra R30 or so i now have excess-waiver and will not pay any excess should I need to claim. They deal with a few big insurance companies and Hollard gave me the best pricing. Check out their website.

 

[Paul_S]

I also had a raw deal with Outsurance.

I asked Outsurance to re-evaluate by premium twice, earlier this year and they quoted me an even higher figure so I switched to Santam.
Outsurance were nailing me R926 per month while Santam now charge me R502.
After asking Outsurance to cancel my policy they came back with a sob story and offered me R598. That's R328 less than what I was paying so it just proves that they were ripping me off in the first place.

 

[the eskimo]

Another important thing to consider is that insurance covers the risks specified, and not the vehicle itself.

For example in a motor policy:

If you just compare Third Party Fire and Theft (TPFAT) and Comprehensive cover, there is a massive difference in premium. Sometimes comprehensive premiums are more than double TPFAT premiums. This difference in premium relates to Own Damage only.

If you consider newer vehicles, a total write off is unlikely to occur. Vehicles are far more likely to be repaired than declared total losses. While the value of your vehicle decreases, typical repair costs will increase (Labour, Spares etc). Often this alone can cause your motor premium to increase while the value of your vehicle is decreasing.