TL;DR - Our version of "I'm not reading all that, *SparkNotes pls."
- Premium Factors: Your car insurance premium is like a recipe—ingredients like your age, driving history, car model, and location all mix together to determine the final cost.
- Excess and Premiums: Think of excess as a seesaw—raising your excess lowers your premium, but it also means more out-of-pocket expenses if you claim.
- Vehicle Type Matters: Driving a flashy sports car? Expect to pay more than if you’re cruising in a practical hatchback—safety features and repair costs play a big role.
- Discounts and No-Claim Bonuses: Safe driving pays off, literally! You can score lower premiums with a clean record or by bundling policies.
- Shop Around: Don’t settle—compare quotes from different providers to ensure you’re getting the best deal.
We’ve been going on about how Pineapple’s “not like the other girls” of the insurance industry. It’s time we finally walk the walk.
How? By showing you the way, no other insurer has before.
We’re here to help you understand the true cost of car insurance, knowledge that’s crucial for vehicle owners across South Africa.
Factors like the type of vehicle you drive, its age and value, your driving and insurance history. Even your geographical location can determine how much you pay for insurance premiums!
Additionally, the type of coverage you choose (comprehensive, third-party, fire and theft, or third-party only) directly impacts the cost.
But these are just the tip of the iceberg. Wanna know more?
Section 1: Factors Influencing Car Insurance Costs
In an industry as diverse as insurance, the factors influencing the pricing of policies are many and varied. And in case you suffer from amnesia, here’s a quick rewind of the factors influencing your insurance fees—vehicle details, driver's profile and coverage options.
1.1 Vehicle Details
The only person nosier than that one neighbour is probably an insurance provider.
They want to know your car’s colour, where it parks, and other factors that might leave you raising an eyebrow at the over-familiarity.
However, there’s a good reason for being all up in your business: two words – Risk. Profile.
Your car’s make, model, age, and retail value significantly influence how much you pay for your policy due. For example, vehicles designed for performance, like sports cars, attract higher insurance costs because they're more likely to be involved in accidents.
Similarly, varying risks like the potential for theft or damage, plus repair costs, add to the cost.
The more luxurious a car, the higher its price tag, premiums included. This is due to the expensive parts and specialised labour needed for repairs, as opposed to more economical or entry-level vehicles.
Similarly, costs will also depend on the vehicle manufacturer, and how easily accessible the parts are would influence cost. For example, Toyota has abundant parts, meaning there’s no need to import them into the country, whereas Peugeot’s car parts were once hard to find and had to be imported.
As for the vehicle’s age, newer vehicles are more expensive to insure because of their higher value (due to their retail value), more dramatic depreciation rates and replacement costs.
Lastly, cars that attract thieves, like the VW Polo, Toyota Hilux and the Ford Ranger, can have higher insurance costs.
1.2 Driver's Profile
Your car is just the tip of the iceberg; your personal information as a driver also affects your risk profile.
In case you didn’t know, car insurance premiums are significantly influenced by your age, gender, driving experience, whether you’ve had insurance before, and for how long, plus your claims history.
Statistics have found that people under 25 who are male and have an extensive list of previous claims will, unfortunately, pay more for car insurance. Insurers have flagged these demographics as high risk and most likely to submit a claim due to accidents and other covered perils.
And while you can’t change gender solely for insurance purposes, and only time will take care of the age aspect, the best solution to fair premiums is to avoid claiming.
Before you argue, we’re well aware that some accidents can’t be helped.
Still, there’s something to be said about motorists who’ve gone years without claiming from their insurance provider. What we’re trying to say is steer clear of claiming unless it really can’t be helped.
1.3 Coverage Options
You’re a smart and capable adult, so I’m sure you know that there are multiple types of car insurance policies. Yay, you. But, the real question is, “Do you understand each one? Like really understand it?”
If not, have no fear (but maybe just a bit of shame, because wow) because Pineapple is here to help. Knowing the different types of car insurance coverage is great, but understanding?
Understanding these differences will help you pick a policy that meets your needs without any unnecessary expense.
The three types of coverage offered in South Africa are:
- Comprehensive insurance which covers damage to your car not caused by a collision (theft, vandalism, natural disasters, etc.), plus accidents involving other vehicles or buildings and objects. It's the most extensive coverage, which makes it more expensive but advisable for newer or high-value vehicles.
- Third-party insurance (some people also call this cover ‘liability car insurance’. Those people would be North American) is your basic, run-of-the-mill policy offering minimum coverage. This policy takes care of damage to other people's property and injuries to a third party in accidents you cause. The catch? It doesn’t cover damages to your vehicle. On the bright side, it's less expensive. Still, there’s no getting around the fact that it offers limited protection.
- Third-party fire and theft insurance is the slay queen sister of third-party insurance, a.k.a. Basic Betty. This means everything third-party can do, she can do better. Third-party fire and theft offers liability cover plus protection to your own car against fire and theft. Pretty self-explanatory, if you ask us. The policy can be a standalone one or form part of comprehensive coverage. We’d specifically advise it for cars that are highly targeted by thieves or in high-theft areas.
Selecting the right coverage means assessing your vehicle's value, financial situation, and risk tolerance.
Section 2: Regional Variances in Car Insurance Costs
Still on the hot topic of your risk profile, do you know what else forms part of that profile? Location, location, location.
The location where an insured vehicle is primarily kept significantly influences car insurance costs. This is due to regional factors like crime rates, traffic density, and weather conditions.
Let’s break it down into smaller, more manageable pieces.
Starting with the crime rate. Areas with high crime rates, especially a high incidence of carjacking or vandalism, will typically contribute to higher monthly car insurance premiums. If you live in an urban area, you’re likely to pay higher car insurance premiums compared to residential areas.
This is due to increased traffic congestion, higher accident rates, and a greater risk of theft or vandalism in densely populated areas.
Contrary to popular belief, rural locations generally have lower car insurance premiums than urban areas for the same reasons stated above. Less traffic congestion, fewer accidents, and a lower theft risk mean lower monthly insurance premiums.
Insurers consider the increased risk of claims in areas like these, leading to elevated costs for all vehicle owners in that neck of the woods.
Next to explore is traffic density. Regions with dense traffic are associated with a higher likelihood of accidents. Urban areas like cities, where traffic congestion is as common as load shedding, often have higher insurance prices than rural areas. The simple logic is more cars on the road, the higher the chances of a collision.
Lastly, places prone to severe weather conditions like floods and hailstorms or suffer from massive sinkholes (Centurion, we’re looking at you) can also see higher insurance costs.
Weather events of this kind increase the risk of car damage, from water damage to collisions on slick roads, leading insurers to charge their premiums accordingly.
So, how do insurers know this stuff? Are they weather whispers (we’re planning on trademarking this)?
No, the answer is less enchanting. Insurance providers use detailed statistical data to assess the risk of insuring cars in specific areas. This risk assessment directly influences the premiums that vehicle owners need to pay.
An example would be a car parked overnight in a secure garage in a low-crime area with mild weather. This will probably cost less to insure than the same car parked on the street in a high-crime urban area prone to severe weather conditions.
So, the next time you move houses and shop for insurance, consider how these factors might change and what that’ll mean for your coverage.
Knowing this can help you prepare for adjustments in your insurance costs.
Section 3: Understanding Premium Calculations
We can’t discuss insurance, particularly premiums, without mentioning excess amounts, discounts and other money-saving hacks.
Premiums vary widely between policyholders due to factors including the policyholder's chosen excess and the availability of discounts through bundling or other means. Let’s uncover the nuances of these factors to better understand the process behind premium calculations.
3.1 Excess Payments
Excess is the amount you agree to pay out of pocket before your insurance coverage kicks in to cover the costs of a claim. The excess amount you, as a policyholder, choose has a direct impact on your monthly insurance premiums.
Allow us to explain…
Picking a higher excess reduces the risk for the insurance provider because it signifies that the policyholder is willing to cover a larger portion of a potential claim.
So, this reduced risk leads to lower premiums because the insurer anticipates fewer costs on small claims, as you’re less likely to file for minor damages.
Conversely, choosing a lower excess increases the risk for the insurer. This is because you’re shifting more of the potential claim cost to the insurance provider. This increased risk leads to higher premiums to compensate for the greater likelihood of claim payouts.
The beauty of this relationship is that it allows you to have some control over your insurance costs.
3.2 Discounts and Bundling
Another way to reduce your monthly insurance premiums is through discounts and policy bundling.
Insurance providers often offer various discounts to reward customer loyalty while attracting prospective policyholders. For example, if you equip your vehicle with a tracking device, you may qualify for discounts. This is because your car’s far more likely to be tracked and recovered, thus creating cheaper car insurance for you.
There’s also the opportunity to lower your premiums with usage-based insurance policies.
If you drive less than a certain number of kilometres per year, you may qualify for a low mileage discount. With Pineapple, this is on a monthly rather than annual basis.
Known as the ‘Drive Less, Get Blessed’ discount, this benefit forms part of our comprehensive coverage and rewards motorists who drive under 300 km per month with up to 30% of their premiums back.
The logic behind this is that less time on the road means a lower risk of accidents. So, why not reward good behaviour with lower premiums?
Click here to get your own specialised quote and see how much you can save through Pineapple’s usage-based benefit.
Section 4: Market Trends and Comparison Shopping
The ever-increasing cost of living has forced many South Africans to search for the cheapest car insurance option.
The cost of insurance isn’t the only thing undergoing changes.
The industry itself is evolving, and staying informed about market trends while understanding the importance of comparison shopping is key to finding the best coverage at the most affordable price.
4.1 Industry Trends
South Africa’s car insurance market is characterised by significant growth, driven by rising vehicle ownership, urbanisation, and increasing awareness about the importance of insurance. This growth is fueled by regulatory mandates for car coverage, an expanding middle-class population, and technological advancements in underwriting and claims processing.
The market size was estimated at USD 3.77 billion in 2022 and is projected to grow at a CAGR of 8.1%, reaching USD 6.5 billion by 2029.
Additionally, the integration of digital technologies like telematics, artificial intelligence, and data analytics has emerged as a significant trend, allowing insurance providers to offer personalised policies and improve risk assessment accuracy.
That said, the market continues to face challenges due to economic disparities and the high costs associated with comprehensive motor insurance coverage. All of which limit market growth potential.
4.2 Comparison Shopping
The saying goes, “You can’t compete where you don’t compare.”
Under different circumstances, comparison is the thief of joy, but not where car insurance is concerned. Comparing quotes from different insurance providers helps you find the best value for car insurance to suit your needs.
But before you start comparing quotes, you first should understand the types of coverage you need, like third-party liability, comprehensive, or collision coverage.
From there, you can confidently get quotes from different insurers to compare prices and coverage options. But don’t overlook the actual policy; take a moment to consider the coverage details, excess amount, and any additional benefits or discounts offered.
And while you’re sourcing quotes, be sure to research each insurance provider’s reputation.
You need to have a clear idea of what you’re signing up for with regard to customer service, claim handling, and reliability.
Lost and don’t know where to start? Say less, Pineapple’s here to help.
To get the best comparative results, leverage online comparison tools and platforms like Hippo and Get Insured to complete the process of gathering and comparing quotes.
Conclusion
And there you have it; we've covered how your car's details, your driving history, and the type of insurance you choose can bump up or lower your costs. And don't forget, where you park your car at night can change the game too.
So, it should almost go without saying that there's a lot to think about before you pick a policy. From the kind of car you drive, to where you live, and even how you drive, every bit matters.
Thankfully, this neat little guide has set you on the right course (at least we hope).
As we've navigated through factors affecting insurance premiums, the takeaway is clear: armed with the right information and a keen eye for detail, you can find a policy that not only fits your budget but also adequately covers your unique needs.
Pineapple remains committed to showing you the ropes in a way that's easy to get while not boring you to tears.
And now to uphold the end of your bargain…
Please get a car insurance quote.
We’re not even asking you to full out take out a policy, just a simple, quick and painless 90 seconds quote.
The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.
Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply.
Team Pineapple
Team Pineapple comprises our company’s top talents, who are dedicated to creating clear, high-quality content on essential vehicle insurance topics. This diverse group, including actuaries, accountants, data scientists, and insurance professionals across South Africa, collaborates to produce enlightening and empowering articles.
Each piece is thoroughly researched, factually accurate, and rigorously reviewed to ensure quality.
*We say they’re the finest because we want them to keep writing for us!
