How Much Should Your Car Insurance Increase Actually Be?
Have you gotten the email yet… “Dear Customer, here is your annual policy update”? This is pretty much code for we are increasing your monthly insurance premium.
This time of year between Christmas, new years and the everlasting Jan/ Feb is an exciting time but it’s also the time that every single one of your debit orders increase. Insurance premiums, gym contracts, Medical Aid premium and more go up and the only thing that seems to stay consistent is our salary. Many companies have decided not to pay bonuses this year, not because they don’t want to but because most companies simply can’t afford it.
There are some insurance companies that seem to be taking chances when it comes to the annual insurance premium increases. So the question is how much is an acceptable annual car insurance premium increase?
How Much Should My Car Insurance Premium Increase?
There isn’t a straightforward answer for every scenario here as circumstances may be different for every person such as, if you have claimed your insurance premium could be increased more than usual etc. But if we are looking at someone who has not claimed, their circumstances have not changed, they have not moved, the car is still parked at the same place as always and the list goes on, how much should your insurance change then?
The simple answer is no more between 8% and 15% . Premiums should increase inline with inflation. “Within the industry increases will vary from Insurer to Insurer, based on individual client criteria, having had claims or not, credit check variances (if their score improved or not), but normally between 8% – 15%, however in all cases if client does not agree with increase they should contact their Insurer.” – Juan Manuel V-Plus Brokerage
My car and household insurance increased by 25%, that seems ridiculous” Lisa Truman
Lisa received an email from her insurance company, First for Women, stating that her car and household insurance will be increased from R653 to R815.69 as of Jan 2020. That is a 20% increase which a lot more than the normal increase. Keep in mind Lisa’s situation stayed the same, she had no claims, did not move, change jobs or anything of the sorts.
So why did Lisa’s car and household insurance increase so drastically? Maybe because First for Women decided to reduce her car insurance excess from R4600 to R3950? What did Lisa do? She is with a brokerage who negotiated the original premium for her and she contacted them. The brokerage got straight to work and got the premium reduced. Lisa’s car and household insurance premium from Jan 2020 will now be R669.27 instead of her original increase that the insurer emailed her of R815.69. That is only a 2.5% annual increase.
What does this show you? Don’t ever just accept something if you think it’s wrong.
Why is My Car Insurance Premium Increasing Every Year?
There are a number of factors that cause your insurance premium to increase every year there are factors relating to you and then there are factors that are completely out of your control.
Factors beyond your control include things such as:
- Increase in cars on the road. More cars on the road, increased chance of accidents
- Inflation, your insurance will almost always increase due to inflation
- Increased price of labour, irony of this is usually that the consumers salary will stay the same and they are paying for an increased salary of a select few
- Increased price of parts, they say it costs the same to fix an old bumper and a new cars bumper
- Collisions, vandalism, or increased claims in your area.
- Liability claims paid out by the insurance company for the entire volume of the clients they insure can impact their general liability rates. So if the insurance company that you are with didn’t do as well as expected for the year, and paid out more than they forecasted it will lead to an increase in your car insurance premium.
The driver details changes such as:
- Claims history and driving record.
- Change of address, placing you in a new area that may be more expensive.
- Cancellation of home policy, or other policy causing you to lose the discount for having more than one policy with the same insurer.
- Change of employment.
- Mistakes. Yes, insurance companies can sometimes make mistakes. Never assume that the rate you got is the best rate.
What Should I do If it Feels Like My Increase in Premium is Excessive?
So you may think your increased insurance premium isn’t warranted… do not just accept it because firstly companies take chances and secondly people can make mistakes.
- Contact your insurance company before the increase and request an outline as to why there was such a massive increase, they are obligated to give you a detailed explanation as to what happened to your insurance premium.
- Fight it: negotiate with them on the phone and tell the insurance company that you want them to review your policy. They will then send your request back to the relevant department and see if they can get you a better deal.
- Compare Premiums: do not accept that your premium or service you are getting is the best. You can always compare online, which will take you 5 minutes to get an approximate quote:
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