On Tuesday morning, I found myself on the phone with an insurance company trying to get a quotation for car insurance. The conversation started out as hopeful and ended in tears.
Let me explain why.
I am a 24-year-old woman who lives in an access-controlled apartment block in a small suburb in Johannesburg. I have had my licence for two years and am in the process of finally getting my own vehicle. My eyes are set on a small 2019 demo model with a 1.2-litre engine and less than 10 000 km on the clock. What could go wrong?
Well, after getting off the phone with an agent from OUTsurance, the only thing I could say to the other person in the room was: “I am never getting a car.”
“What’s wrong?” they asked.
“I’m going to have to pay an insurance premium of R3 800,” I wailed.
On further negotiation with the insurer, I was told that my premium could be brought down to R2 800 for the car alone. The initial amount included household contents cover of R227 and this was stripped out in the second quotation plus I had received an additional discount because insurers are always trying to entice you to stay with them. But R2 800 was still too high.
I had been warned about high premiums because of my age and the short time in which I have been driving, but I didn’t expect them to make my eyes water.
I had to go somewhere else, so I spent my morning calling different insurers trying to get the best deal for someone of my profile.
A call to Santam with the exact same information for comprehensive insurance covering accidents, theft, emergency assistance, third-party liability and so on plus the option of a complimentary car when my car is in for repairs came in at around R1 800. I would also pay a basic excess of R4 500 if I claimed.
Things are looking up and I am back in the game.
“Try King Price!” the other party encourages me after I excitedly inform them that not all is lost and I might be able to afford my little vehicle. “The more you call the lower it gets.”
He is not wrong. The King Price agent sends me a quote and the email reads: “Congratulations Tebogo, it’s with great pleasure that the King and I present this quote to you.”
I can’t help but think ‘Yes, it is a pleasure and congratulations are in order’.
I had just brought my quote down to R1 700.
But before I could celebrate, I learn that I will have to pay basic excess of R15 000 if I ever put in a claim. That is definitely not something I can afford.
Similarly, a lower offer from MiWay of about R1 500 comes with an excess price tag of R12 000.
“It has to do with the experience of the driver, and young drivers are inexperienced and the insurance companies’ rating structures would typically load the insurance premium for [these] drivers because they anticipate they will have more claims,” says Christelle Colman, MD of Old Mutual Insure’s Elite Risk Acceptances.
She adds that many insurers also factor in gender because global actuarial statistics have shown that young male drivers are at a greater risk of having more severe accidents than their female counterparts and older men.
“The good news is that as you get older you pay less and less,” says Colman. “You get to 55 and you will pay less than you have paid in your entire life.”
If you have around five years’ experience the loading is likely to even out and when you are 30, the age-related loading in the car insurance premium falls away. Colman says not all car insurers use the same approach and some may ask for the number of years a potential client has been driving or their age because in South Africa many people get their licences when they are much older.
How to decrease your premium
“Something else that is really important is if you have a good insurance track record. If you are young and have not submitted claims, you also pay less – you can manage your premium by not being reckless,” says Colman.
Increasing your excess is another way to decrease monthly premiums.
Colman says it is important to shop around for lower premiums, or to get a broker who will use their experience to negotiate better rates on your behalf.
It is also crucial to not just go on bottom-line premiums because sometimes low premiums mean less cover. Colman says motorists need to take their time reading their insurance quotes to understand what they are paying for and what is excluded. Unfortunately many only find out about certain exclusions when they have a big problem, and by then it’s too late.
In the end consumers need to be honest with their insurers when taking out cover as this could mean the difference between a successful claim and no claim at all.
As for me, I am calling a broker. A single call to an insurance company for a quote can take up to 30 minutes and, if I am to be honest, I need assistance.