Check your insurance premium

Tiro Ramatlhatse

WHEN last did you engage with your broker or directly with your insurer about the insurance premium on your car?

If your car is no longer new, and you haven’t made that call for a few years, chances are the premium you’re paying is far higher than it could be.

Take Cindy Porter’s Mini Cooper.

She insured it with First for Women Insurance, part of the Telesure group, in September 2007, with an initial premium of R338.

She never queried the premium over the years, that is until recently.

Her husband Brian, who pays the premium via debit order, takes up the story: "I noticed a deposit of R6 900 on my bank statement, and after making enquiries, I discovered it was a no-claim bonus from First for Women – we’d never claimed on the policy since inception."

He also learnt that the policy’s monthly premium had been R1 004 before the company’s decision to drop it to R990.

"This on a seven-year-old car with only 65 000km on the clock, with a book value of R85 000. It has been parked in a garage in our complex which has 24-hour security, electric fencing and a boom gate.

"I drive a Mercedes Benz of the same age, with similar mileage, and my premium, with another insurer, is R380 a month.

"Trying to get a reasonable answer from First for Women was impossible, so I cancelled the policy and took out a policy for the Mini with my insurer, with a new premium of R310 a month, on an insured value of R100 000."

The profile of the driver is an important component of a car’s insurance premium; single men under the age of 25 being statistically highest risk, and mature married women such as Mrs Porter being among the lowest.

In light of that, I asked Telesure’s Robyn Farrell why the premium on Porter’s car had increased fairly drastically over the years, despite the depreciating value of the car, and whether the company considered R990 to be a market-related premium.

She began by saying that all the company’s policies were adjusted annually, with the customer having the choice of insuring the vehicle for its trade, market or retail value.

"These values are then used, as calculated by the Auto Dealers Guide, as one of the factors in determining the premium for the vehicle," she said.

"This revised value may not cause the vehicle’s premium to decline as vehicle value is only one factor taken into account in calculating a premium, repair costs for that vehicle being another and these, unfortunately for all concerned, continue to increase."

As for the Porter premium, she said the company’s records reflected that the premium reduction was due to a change in address, but Porter said the couple had not moved for several years.

"As you know, premiums charged by us are based on our specific underwriting criteria.

"Each underwriter uses its own underwriting rules and criteria and they rate accordingly."

She added that First for Women had many "value-adds" such as roadside assistance, directions assistance and trip monitor.

"We are not in a position to comment on the other insurer’s premium for Mrs Porter, nor as to whether this premium is market-related or not.

"We can, however, say our premiums are based on what we deem to be the correct rate risk for Mrs Porter.

"There will always be premiums in the market that are cheaper and more expensive – based on different cover options, insurers’ costs and risk appetite.

"For this reason you are correct in saying that policyholders should be savvy and certain that they are getting value for money.

"They should always be aware, though, that when they are shopping around, they should compare apples with apples, and make sure that they are not sacrificing cover for cost."

Valid advice.

Early last year, the South African Insurance Association amended its Code of Conduct, formalising the insurance practice of regularly and automatically reassessing the value of motor cars, without any prompting from the customer.

Even so, it’s most definitely worth being proactive about your premium, particularly if you’ve been insured by a company for some time.

Don’t make any assumptions with regard to your cover.

Interrogate what you’re paying, and what cover it’s buying you, and make sure that you take a very close look at a policy’s exclusions and excesses when comparison shopping.



Source Cape Times