Car insurance in South Africa is an industry that faces constant threats from inflation. Due to the rising costs of living, many people feel forced to the decision of cancelling other important expenses. Unfortunately, one of those expenses that usually get cancelled is car insurance.
Drivers search high and low for cheap car insurance quotes in South Africa. Although cheap car insurance sounds like a great solution, it’s not guaranteed to fix the problem.
Let’s take a look at the top ways inflation affects car insurance.
What causes inflation?
Inflation is the increase in the prices of goods and services in an economy. There are two main types of inflation: cost-push and demand-pull. ‘Cost-push’ is when the cost of producing goods or services rises, so consumers are faced with an increase in prices.
‘Demand-pull’ is when there is an increased demand for goods or services, but not enough capacity to supply & produce.
According to BusinessTech, one of the main causes of inflation in South Africa is cost-push. Specifically, the cost of energy has had a big impact on our country over the last 2 years. Currently, the year-on-year consumer price inflation is 5.9% in South Africa. Since energy is required to produce and supply almost all goods and services, producers have no choice but to raise the costs as the price of electricity goes up.
Due to inflation, households are faced with an increased cost of electricity, fuel, and groceries. Food is one of the main causes of increased household expenses as it takes up a big majority of monthly costs.
In March 2022, the increase rate of food and non-alcoholic beverages was 6.2% compared to March 2021.
Our monthly expenses and the lives of many have been greatly impacted by the increase in petrol prices. People are struggling to make it month-to-month to get to work every day and have enough fuel for other errands.
Rising petrol costs have been quite devastating to the car insurance industry. Since many people are trying to limit how often they drive, they also consider cancelling their insurance premiums. Although cancelling your insurance may seem logical to save money, in the long run, it’s far more detrimental to your bank account.
Instead of cancelling, we’ll give you some advice on how to save.
How to reduce car insurance premiums
Even though we cannot control inflation, we do have some control over our vehicle insurance premium. There are steps you can take to get a lower monthly premium instead of cancelling.
- Maximize vehicle security
One of the best ways to get a lower insurance premium is to make sure you have suitable security measures. Installing vehicle tracking is a great way to lower your risk of theft and can help you get a lower premium too.
If possible, park your car in a locked garage or behind a security gate at night. Remember to let your insurance provider know about the security measures you have in place.
- Check your car’s market value regularly
You might not be aware that the market value of your car is a factor in determining your monthly premium. Check with your insurance provider if the market value of your car has decreased and if it impacts your premium.
- Increase your excess
Some people may not understand the logic behind increasing your excess, but it makes more sense than you might think. You only have to pay the excess if you file a claim. The lower your excess, the higher your monthly premium. The higher your excess, the lower your monthly premium.
If you increase your excess, you can save on your monthly expenses by getting a lower insurance premium. With the money you save, you should be able to cover the excess should you get involved in an accident. As long as you budget smartly, you could save on expenses without cancelling your car insurance.
- Update your premium details
Updating your vehicle insurance premium policy details is good practice to see if your premium can be updated too.
Inflation has negatively affected car insurance companies over the last few years, especially since the cost of fuel keeps rising. However, instead of cancelling your car insurance premium, we suggest making adjustments where you can to lower your premium. Cancelling your car insurance could leave you in a much bigger debt in the event of an accident.
If you are looking for cheap car insurance quotes, it’s better to get multiple quotes at once rather than one or two.
Get a quick vehicle or home contents insurance quote from us on: https://qualityquote.co.za/car-insurance-quote/