You know which car you want, how much fuel it’s claimed to consume and which safety features it has. But before you buy the car (with cash or through a vehicle-finance agreement), have you factored in the cost of monthly insurance for your new wheels?
So it’s time to upgrade your car, is it? Perhaps it’s out of warranty and its service/maintenance plan has expired; maybe you’re worried about the prospect of expensive repairs and maintenance. If you are in a financial position to buy a new car, go for it, but, before you take the final step, there is one factor that most people overlook when finalising their decision. And it could make a difference to your bottom line.
Insurance premiums depend on several factors
Of course, you must take out an insurance policy on your new asset and you, like many motorists, may think that car insurance premiums are based on the Rand value of the vehicle only, but that’s not always the case. There are many factors that insurance companies look at when calculating premiums, such as:
Make and model of the vehicle
- Some vehicles, such as sportscars, are more likely to be driven at high speed, while other cars may be more expensive to insure because they are statistically at higher risk of being stolen.
- Vehicles that aren’t fitted with many modern safety features may be subject to higher premiums.
- Then there are cars whose high-tech features will be costly to repair if damaged. That can also push premiums up.
- Premiums can also increase if there’s a likelihood that the car could cause significant injury to a third party in a collision, for which the insurer could be liable.
- Engine size could also affect the cost of premiums because insurance companies consider high-powered vehicles as being at greater risk of being involved in a serious accident.
With so many different kinds of cars now on the road, from classic to electric, don’t assume the cost of the insurance. Rather find out.
Solution: Make a shortlist of the cars you like, then get quotes for that specific vehicle. This way you are informed about premium charges before you commit to buying. Ensure that you provide all the car specs to the insurer, including any modifications you are thinking of adding. Ask the insurance company what additions will bring your premiums down (for example, fitting a reputable car-tracking service).
The drivers of the vehicle
If you are buying a brand-new car with the intention of allowing an inexperienced driver to drive it, then be aware that this may push up your insurance premiums. A younger driver is seen as a greater accident risk by insurers, and it doesn’t really matter how well they drive or if they are driving a family-friendly vehicle – their age will be used as a measurement of probability and your insurance premium will go up.
Solution: If a teenager is going to be driving your vehicle, opt for a less expensive car so that you can afford a comprehensive insurance policy. Otherwise, keep the car off limits to younger family members and rather make use of a ride-share app if you don’t have time to drive them to where they need to be.
Parking for the vehicle
Believe it or not, where a car is parked overnight (or when it’s not in use) can also change your insurance premium. Will the car be parked in a lock-up garage? Is the garage in a secure complex or estate? Does the complex have remote-controlled gates, security guards and CCTV? These are all factors that an insurance company will consider when calculating the insurance premium for a new car.
Solution: Give your insurer all the details regarding how secure your vehicle will be. Remember that insurance companies will also look at where you live and the rate of crime in the area. If you’re aware of theft or hijackings in the area where you will be parking your car, consider a less expensive car or budget for a higher insurance premium. Alternatively, consider bundling your car and home insurance together, because some firms may discount your premiums if you insure both your car and your home with them.
Is one insurance policy on your new car sufficient?
For many new car owners, the thought of a bad accident happening on the very day they get their new car is a nightmare situation. After all, you’re looking forward to hitting the road in your new wheels and no one expects that their first, second or third drive will end in tears. But, bear in mind, most new cars (no, virtually all of them) depreciate in value the moment that they are driven off the showroom floor.
If your new car has been financed through a loan, and it is in an accident (or gets stolen) soon after you take possession of it, what the insurance will pay you (market value) may not cover the total amount you owe the bank (settlement value). This is why many new car owners should consider taking out top-up cover. It may seem like it’s not really necessary, but you will be thankful for it if the worst does happen!
Conclusion
Buying a new car is an exciting and fun moment in any motorist’s life – from that new car smell to the fancy gadgets your old vehicle may not have had. But it pays to do your homework because a car is a substantial purchase that you may drive for quite some time. The last thing you want is to be paying an insurance premium monthly that you didn’t expect – and didn’t budget for.
If you need comprehensive car insurance, get a Budget Insurance quote today. Contact them on 086 1600 120 or leave your details and they’ll call you back. You can also request an online quote.
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