Calculating Car Insurance

Insurers have a secret formula for calculating car insurance premiums, and it's more closely guarded than the recipe for those 11 herbs and spices. But we're going to give you a sneak peek into how it works...

We've all had the cold calls: "Sir/Madam, did you know that you're paying too much for your Car Insurance premium?" Then they say something like: "We can help you pay less, guaranteed!" But if they can offer you a better price, surely that means you're paying too much – and why? And how do insurance companies go about working out your Car Insurance premiums? Here's a guide to understanding how your premium is calculated.

Premium calculations and how they work

When calculating premiums, your insurer will consider personal details like age, sex and marital status. In fact, they'll analyse your risk profile with the intensity of a crime-solving detective – but instead of looking for fingerprints they're collecting data on your driving history (yes, that time you connected with a pole probably will affect what you're going to have to pay – sorry!), credit score and where you live and park at night.

To get a better idea of how your risk profile is calculated, and how it affects your premiums, take a look at our detailed guide: How insurers calculate your risk profile.


What else affects Car Insurance premiums in South Africa?

There are a couple of things that can add even more to your Car Insurance premium, such as:

- The level of coverage

you've chosen, like comprehensive insurance or third-party insurance. You'll find a little explainer here if you're unclear about the difference between these two types of insurance.

- The age of the car being insured

Do you have a shiny new toy or a skedonk? Older cars are generally cheaper to insure while newer cars have higher replacement costs, but it's heavily dependent on the cost of repairs and availability of spare parts.

- Security features

If your car doesn't have an immobiliser, car tracking system or alarm, it might raise your monthly premiums.


The importance of regularly reviewing your Car Insurance

So how do you know if your insurer has given you a fair premium, or if they're 'taking you for a ride'? The only way to be sure you're not overpaying is to regularly review your Car Insurance. Think about it: over the past year, a lot could have changed – maybe you got married, moved to a different area or landed a new job that's a lot closer to home. Any one of these could affect your insurance needs (and premiums!) in a good way.

By regularly comparing what you're paying to what else is out there, you can make sure that you have the right protection and policy for the lifestyle you're living now. And just like you might have changed over the past 12 months, you can be sure that the insurance market has too – there might be new products available at more competitive prices. And if you're not regularly comparing, that means you could be getting a better deal, but just... aren't.


The Benefits of Using

Remember those call centre agents we mentioned earlier? They're all competing for your business, so why wouldn't you shop around to find the best deal? And you can forget 40-minute phone calls and requesting quotes from different insurers — who has the time (or the energy!)? makes getting and calculating Car Insurance quotes easier than ever by offering you quotes from 10 leading insurers all in one place. And it will literally only take you two minutes. Easy, right?


Ok, so how else can I lower my Car Insurance premium?

We've given you all the bad news about what might affect your premiums, but the good news (yes, there actually is some good news!) is that there are a couple of things you can do to reduce your monthly Car Insurance payments:

- Buy a car with an alarm system or have one fitted. Then get a tracking device installed and subscribe to the tracking service for a small fee every month.

- You can opt for a higher excess or deductible amount if you know you can afford a higher payment when you need to claim for repairs or a nasty accident.

- Having multiple policies like your car, home contents and Cellphone Insurance all covered by one insurer, rather than a few different ones could mean that you get a better deal.


Find the best deal on Car Insurance

There are so many factors that go into calculating your Car Insurance premiums, but the most important thing you can do is to regularly review your cover to make sure you're getting the best deal. Finding cheaper Car Insurance is as easy as comparing quotes on Hippo so you can keep more of that hard-earned cash in your pocket, which is exactly where it belongs! So do it now, okay?  


This article is for informational purposes only and should not be construed as financial, legal or medical advice. 

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