When buying a new car, people often worry about the cost of insurance. Fortunately, there are several studies every year to find the cars that cost the least in insurance to help you choose.
You already spend much money when you decide to buy a new car, so learning how to save money on maintenance and insurance costs can help you save much money.
Buying a new car does not just mean raising the capital to buy it; there is another significant cost to consider – the monthly car insurance premiums.
Finding the right insurance for you may seem like a tedious task, but it is worth the effort because, while you do not want to risk driving an uninsured or uninsured car, you do not have to pay for additional coverage.
Do your homework
This is probably the most important advice when buying something really, but especially when it comes to car insurance. Many people end up paying in excess because they are convinced to buy more insurance coverage than they need to.
Research the companies you are considering. Contact the South African Insurance Association (SAIA) to find out if the insurance authority is authorized.
Read all fine print before signing anything. If you do not understand something, ask for a full explanation. Ask friends and family members you trust if there are still things you don’t understand.
Beware of an almost unbelievably low premium, as this usually equates to a large excess (the deposit you pay when your insurer pays a claim). Find out exactly what your excess will be and make sure you can afford it. And be sure to check for any additional costs that you may be required to cover if you apply. If you are not at risk, you can, of course, opt for a larger excess to reduce your monthly insurance payments.
Make sure you ask about the implications of having someone else drive your car, you need to set up an additional driver in an insurance policy to make sure you are covered should something happen while driving the vehicle.
Find out how easy (or difficult) the insurance company claims process is. Read reviews online about other people’s experiences – this should give you an idea of how good, average or bad a company is.
Be sensible, but economical
If things sound too good to be true, they usually are. Buy with the legitimate insurance companies and get the offer that suits you.
Before you settle down with a company, get some quotes and compare them. Then turn to those you care about and ask if you are eligible for a discount if you combine home insurance with a vehicle policy.
Ask if there are optional policies in your policy that can be removed to reduce the premium. Find out if the company offers value-added benefits that will help you in an emergency or when you need to drive without your car. Find out how flexible the policy is: are you able to change it at any time? Does the insurer offer rewards for good driving behaviour or years without demand?
Find out who will lower your premium rates, and watch out for policy slips, which happen when agents try to include additional policy coverage in your package without your knowledge or approval, your rates increase significantly.
The market value of a car is almost always lower than the retail value and takes into account several variables, including mileage, vehicle status, service history, and accident reports. If you were to sell your car privately, the market value would be the price you could probably sell it for.
So which one should you choose? Many insurance companies recommend that customers insure their cars for replacement value. In the case of older cars, this would mean the retail value. However, in a total loss scenario where your car is either stolen or written, it is not often that you will receive an amount of money that will allow you to purchase the same car you own. This is because the prices of vehicles are constantly changing and do not forget about the excess of which you are responsible.
Consider that the retail value is higher than the market value, which is higher than the commercial value, and therefore your premium may be higher or lower. Make sure you talk to the insurer that will best suit your car and your budget. You do not want to be left with little or no money if your car is stolen or taken away.
There are many reasons to opt for a new vehicle instead of a used one. One of the biggest reasons is that newer cars tend to be built efficiently, which can save you money on fuel costs and is better on the environment. This can even lower insurance rates in the right direction, as powerful cars with large engines usually cost more to cover.
Another saving grace for new car buyers is that insurers can be at least confident in the vehicle’s history or lack thereof. If used vehicles have often undergone repair work and have been fitted with modifications, they may raise doubts about some of their components.
The main obstacle to finding new high-value car insurance is quite apparent: it is the fact that new cars tend to be expensive. Of course, insurers base their quotes on what they will have to pay if the vehicle is in an accident.
Remember that cars depreciate. It is not uncommon for a vehicle to lose a third or more of its value within 12 months, so don’t be surprised at what you get if you have an accident in the first year.