The facts about fixed premium car insurance
The facts are that car insurance is also subject to the ravages of inflation. That means the ever-present threat of premium hikes.
In the fight to attract customers in a diminishing pool of takers, many of South Africa’s short-term insurance companies have devised innovative plans to peg premiums at fixed rates.
Several insurance companies will cover your vehicle at a fixed premium for 12 months. And, adding to the bells and whistles will also offer a cash-back bonus for a stipulated claim-free period.
But there is one insurance company that stands head and shoulders above the rest when it comes to consumer attraction, and that is Prime Meridian Direct (PMD).
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The company guarantees a fixed premium for the life of the policy.
On top of that, there are no excess payments to be made when lodging a claim and there are no annual increases. Also, PMD’s low-cost insurance offering starts from as little as R149 a month. That equates to about half of the cost of comprehensive vehicle insurance available in the country today.
Another car insurer offering a tempting package is MiWay. PMD offers premiums fixed for three years and further guarantees of no administration fees. The company says that based on a monthly premium of R1 000 its fixed premium rate saves motorists R70 a month. That equates to more than R2 500 over the three year period.
Now that’s no small change.
Another tempter is King Price Insurance. While the company doesn’t actually offer fixed premiums, it does decrease premiums monthly. That is in tandem with the vehicle you drive depreciating in value.
The Automobile Association (AA) offers car insurance premiums that decrease annually. Other attractions include no excess payments if an AA-approved vehicle repair workshop is used. And its possibly unique free battery replacement.
Now that’s food for thought.
Facts About Other Car Insurance Companies?
So now let’s take a look at some of the other insurance companies offering motorists fixed premiums.
Outsurance offers premium-fixing for 12 months as well as 10% cash-back after three claim-free years.
Momentum, a leading South African short-term insurance company, also offers guaranteed premiums for one year, irrespective of whether or not you lodge a claim.
Buying insurance can be a headache because of the diversity of incidents that can occur when driving a vehicle.
Here is an example of one of the most frequently asked questions from visitors to vehicle insurance company websites.
Why does my premium increase every year even though the value of my car is depreciating?
“Unless you have chosen otherwise, your car is not only covered for theft but also for repairs in the event of an accident. The labour cost of repairing your vehicle and parts used increases every year, so the unfortunate consequence is that your premium increases in line with these costs”. (Miway)
In other words, premiums fixed for a year will undoubtedly increase every 12 months.
However, there are solutions – such as fixed payments for life, or decreasing premiums in line with vehicle depreciation – to ease the financial load.
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