The effect of inflation on insurance
How inflation affects your insurance premium
In most cases your cars insurance premium will decrease as the car gets older, but this might not always be the case as inflation could have an adverse effect and negate any savings.
Insurance premiums tend to increase in line with inflation and it is expected that inflation will remain at approximately 7% for the next few months.
These increases in your insurance premium are due to the fact that even though your cars value may decrease over time, the cost of repairing your car should you be involved in an accident increases over time. This is due to fact that the cost of paint, parts and labour will continue to increase with inflation as these costs are market related and not linked to the age of your car.
Insurers report that most claims are generally as a result of accident damage and as a result a greater portion of your premium goes towards the risk associated with accident damage.
The easiest way to save on insurance is to shop around and get comparative quotes. Your insurance premium is calculated by taking several factors into account and each insurer places their own significance on each of these factors, which will result in varying pricing. The following advice can ensure you pay the best premium possible.
Choose the correct excess
The excess is the contribution that you will need to pay when claiming from your insurance. A lower excess will result in higher premiums and a higher excess in lower premiums, so it is a decision you need to make based on your personal situation. If you do opt for a higher excess in order to save on your monthly premiums it is important to make sure that you will be able to cover the amount, should you need to claim for loss or damage.
Your claims history
When calculating your insurance premium, insurers will look at how often you have claimed in the past. Motorists who haven’t been in any accidents or who don't claim regularly will enjoy the benefit of lower premiums.
Comprehensive insurance covers your vehicle for all kinds of damage including fire, theft, hijacking, natural disasters or an accident with another vehicle regardless of who is at fault. If your car is financed, most banks will require that the vehicle be comprehensively insured. Due to the scope of coverage, comprehensive insurance is the most expensive form of insurance.
Driving a luxurious car
The premiums of high-end luxurious vehicles as well as vehicles that are sold in limited quantities, such as special edition models will be more expensive since it will be significantly more expensive to repair or replace these types of cars if they are damaged or stolen.
Where your car is stored
Where you live and work will influence your insurance premium. For example, if you live in a high-risk area, your insurance premiums will be higher. Transversely if you live in a regular neighbourhood, park your car in a locked garage and have security features such as an alarm or tracker, your insurance premiums will be lower.
When calculating risk and your premium insurers will also consider things like your age and gender as well as how the car is used. Coverage for men as well as using a car for business will be more expensive as insurers see this as a greater risk.