Car insurance pricing can feel like a mystery… 1 month you’re paying X, and the next, your premium jumps up faster than the petrol price! Here’s what you need to know about how insurers set their prices and how to avoid overpaying.
Your car is losing value… But your car insurance premium isn’t
Most cars start losing value the moment you drive them off the dealership floor. So why do some insurers keep charging you the same premium (or even increase it)? With King Price, your premium drops every month in line with your car’s depreciation. That’s how insurance should work.
For example, if you buy a brand-new car, its value will drop after a year. But if your insurance premium stays the same as when the car was brand-new, you’re overpaying! With King Price, your car insurance premium adjusts accordingly, so you’re not stuck paying for a car that’s worth more than its actual market value.
Beware of bundled nonsense
Some insurers love to ‘bundle’ benefits you don’t need. Adding things like ‘free windscreen cover’ (which you already have) or ‘no-claim bonuses’ that just inflate your price upfront. Compare wisely!
Take, for example, those insurers that offer a ‘cash-back bonus’ if you don’t claim for 3 years. What they don’t tell you is that you’re actually paying a higher premium every month to fund that ‘bonus.’ In contrast, King Price keeps it simple: Lower premiums from day 1, no hidden fees, and no gimmicks.
Cheap car insurance now, expensive later
Some insurers lure you in with super low starting premiums… Only to hike them up after a few months. Always check if your rate is fixed or if there’s an annual increase hidden in the fine print.
Imagine this: You sign up for a super cheap car insurance deal that costs R500 per month. After 6 months, your premium suddenly jumps to R800! Why? Because the insurer had an introductory discount that expired, and now you’re paying the full rate. Always ask if your premium is fixed or if there are any planned increases.
Watch out for risk-based pricing tricks
Many insurers adjust their premiums based on ‘risk factors’ that may not always be transparent. For example, some companies increase your premium simply because of your postal code. If you live in Johannesburg, you might pay more than someone in Bloemfontein, even if you’ve never had an accident. While location-based pricing is normal, some insurers take it too far. That’s why it’s essential to compare policies properly.
The repair cost factor
Your car’s make and model can also affect your premium, especially when it comes to repair costs. While certain cars might cost the same upfront, repairs for specific makes will be significantly pricier, and insurers factor that into your premium. Before buying a car, consider its repair costs and how that may impact your insurance pricing.
Car insurance shouldn’t be a guessing game. Compare properly, check the benefits, and go with an insurer that offers real value, like King Price, where you get all the perks without the crazy price tag. Don’t get caught out by sneaky premium increases or unnecessary add-ons. Make sure you’re paying for what you need, and nothing more.
FAQs
- Why do some insurers increase premiums annually? Many insurers factor in inflation, risk, and claim history to justify premium hikes.
- How can I avoid overpaying? Look for insurers with decreasing premiums, avoid gimmicks, and compare benefits.
- Is it better to pay a high excess for a lower premium? It depends on your risk appetite. A high excess means lower premiums but bigger payouts when claiming.
- Why does my premium increase even if I don’t claim? Some insurers raise prices due to inflation, increased risk, or changes in underwriting policies.
- Which insurer offers decreasing premiums? King Price is the only SA insurer that decreases premiums monthly as your car loses value.
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