Want to reduce your car insurance premiums during lockdown? This is what happened when I did.
As uncertainty looms and questions clutter our minds about how to cope during the global Covid-19 crisis, consumers are looking at different ways to save money.
One way to do this is to look at reducing your car insurance premiums during the lockdown period. You don’t want to abandon cover altogether though, rather you should reassess your risk exposure and adjust your cover accordingly. We are driving less right, so should we be paying less? Traffic has slowed right down, and we are staying home much more, but can we expect lower car premiums to help us have a bit of extra cash?
We suggest that you speak to your insurance provider and help them understand your circumstances right now. The emphasis is that you need to call them – they will never offer you a reduced premium if you don’t take the initiative and ask. By the way, this is something we encourage you to do at least every six months anyway, but during this tough economic time you need to do this more than ever.
Let me tell you how I got my car insurance premium down by 50% from Hollard when I asked them to reassess my risk exposure in this time.
What are my options?
1. Firstly, I called my insurer (Hollard) and asked them what my options were; we decided as step 1, I can limit my cover due to the fact that I won’t be driving that much during lock down:
If your vehicle is not being used during lockdown, is safely parked at home and paid-off, you could consider reducing your cover from comprehensive to limited cover (third party liability, fire and theft only). This will exclude accident cover, but as a result you will have a substantially lower premium. Once you can or need to drive again, you can change back to comprehensive cover to ensure that you’re covered for any accident damage. There is a logical expectation that the lockdown period might be extended and as such, this change could help you to reduce your premium during this period.
2. Secondly, we decided to increase my excess payment, consistent with the reduced risk mentioned above:
The majority of statistics indicate that claims are decreasing in lockdown. If you live in a security complex or secured location, lockdown presents a great opportunity to increase the excess on vehicle, theft and all-risks policies. Even a relatively small increase in excesses on any of these policies will dramatically reduce your premiums. Since chances of vehicle damage, theft or robbery in lockdown have decreased, if you’re in financial difficulty, now could be the time to increase excesses on these sorts of cover.
By looking at these two factors my monthly car insurance premium dropped substantially from around R1600 a month to around R1000 per month.
As further assistance to their customers, my insurance provider paid 20% of the paid premium (R1000) back into my bank account at the end of April – which brought me to a total saving of around R800 in total after the premium reduction and Covid-19 relief. That is a combined 50% saving!
South African insurance companies have proposed various ways to assist their customers with some sort of Covid-19 relief plan. It’s best to chat with your short-term insurer and understand the impact of whichever relief option you choose. Easy questions to ask when starting that conversation could be around limiting your cover and increasing your excess during the lockdown. That way you can ensure that you still pay a premium which you can afford during the lockdown period, with the peace-of-mind that your possessions are covered against any unforeseen losses.