We know that we can afford a certain amount per month on the repayment and seldom give the same attention to the insurance premiums we will have to pay on our new pride and joy.
All insurance premiums are based on a risk profile. These profiles are a combination of many factors, such as age, sex, area of residence, vehicle type, usage (private or business), accident history and so on. If you are under 25 years of age, for example, buying a sports car will affect your insurance premium to a great extent. Insurance companies have access to databases that show exactly which demographics are involved in the most accidents.
The highest risk category in terms of accidents are male drivers between the ages of 18 and 24 and they are penalized heavily on their insurance premiums. If you fall into this category and want to keep your premium as low as possible, don't opt for a 'performance' vehicle such as the VW Golf GTi.
According to an Outsurance call centre agent, a very high risk vehicle at the moment is any black Volkswagen. This goes for all models. Not only are they easier to steal (according to some insurance profiles), but there are plenty of them around which makes them more difficult to recover and therefore the risk to thieves is lower. VW parts are also in high demand, which increases the risk profile. If you happen to 'bling' it up, it'll affect the VW's risk profile even further.
Another Outsurance agent was kind enough to inform me that, if you are a motorist on a tight budget, consider something like a Chevrolet Spark LS. This vehicle has an extremely low risk profile. This is due to a variety of reasons such as the small engine, making it a 'slow' car which isn't as likely to be driven into a tree at 200 km/h.
The area you live in also has a very big effect on your premium. I recently relocated from Pretoria to Cape Town and my insurance premium dropped by a whopping R63, approximately 9% on my two vehicles and household contents. This is quite a saving, and all it is, is the area where the cars sleep at night. One of the vehicles even parks outside, and the insurance is still lower than it was in Gauteng. Obviously no one?s going to relocate in order to save on insurance, but it?s worth remembering when getting quotations.
So, if you are trying to save every cent possible, firstly, steer clear of a high theft risk. Buy something that isn't too popular and isn't easy to steal. If you aren't sure, call your insurance company and ask them for some guidance. This doesn't mean you have to opt for cheap and nasty, just the road less traveled.
Secondly, don't buy the car with 4 turbochargers, a nitrous oxide kit and a set of wings that can manage 200km/h in second gear. These vehicles are considered huge accident risks and some firms won't insure them at all.
Thirdly, shop around - phone as many companies as you can, many of them are very similar, but you will find a few that can offer huge savings for your specific profile. Get an insurance broker involved, they might be able to look around and find you a better package deal. If you add household insurance to your profile, this reduces the risk score on your profile and might save you a couple of rand.
Lastly, look at the average mileage you do. If it's a few hundred kilometers a month, it may be beneficial to consider a pay-as-you-go scheme. Find out from your insurer what your excess is - if you increase your excess you will pay a lower premium and vice versa. My personal advice is to go for the excess waiver - it isn't fun coughing up a few thousand rand when you crash your car. By opting for an excess waiver you pay slightly more every month, but in the event of your vehicle being stolen, smashed or hijacked - you don't pay any excess at all.
For more advice, contact an insurance broker - tell them what you are looking for and they will give you all the professional advice you need to save every cent possible on you insurance premiums.