Car Insurance Day: What you need to know if you're in the market for a car in 2023
Johannesburg - Coming off the back of a difficult financial month for many, "Januworry" woes are, according to reports, set to continue well into 2023. Not only has another interest rate hike been announced in the last week, putting strain on South Africans who have debt, but the cost of fuel will also increase between 7% and 13% as from today.
Against this backdrop, and given that the world observes Car Insurance Day on 01 February, now is a good time to discuss what families and individuals who are in the market for a new car in 2023 need to know, including not forgetting about insurance.
According to Lizo Mnguni, spokesperson for Old Mutual Insure, one of the most important things that potential vehicle owners need to do amidst this climate, is research.
"Remember to account for insurance when calculating what you can afford. This is because your premium can differ greatly between brands, years and even colours" says Mnguni. "Once you have a shortlist of cars, call your insurer or broker to ask which car is more expensive to insure. Your broker will be able to tell you which car will help you save on your insurance."
He states that if you are looking for cars that are right for your family, you need to put the time into the research, especially given that cars are often said to be the second biggest expense that you are likely to make. You can use trusted sources for reviews, YouTube videos, manufacturer specs, and reputable automotive benchmarks to compare the performance of vehicles, such as the 2023 South African Car of the Year (COTY) competition.
"This competition finds South Africa's best cars every year, and also looks at it for different categories, such as the Best Compact Family vehicle, best Midsize vehicle, best Performance, or even best New Energy. The esteemed journalists have already done the legwork for consumers, and have considered things like value for money, total sales, and all-round worthy winners," says Mnguni.
When it comes to saving on your vehicle insurance, Mnguni says that there are two approaches to consider.
"If you have savings, you could consider using more of your rainy-day fund to afford an increase in your excess, which you would be liable to pay were you to experience an accident. By increasing your excess with a lump sum, you are likely to reduce your monthly premium by a considerable margin of between 10% and 20%," says Mnguni.
Another option for policyholders who aren't able to increase their excess, may be to consider moving over to a usage-based insurance product. This product allows you more flexibility and gives you tailor-made insurance, based on how often you use your vehicle.
"For example, if you don't use your vehicle for an extended period and it is parked in a safe area like a garage it means you are not at risk of having an accident. This may entitle you to a discount on your insurance premium."
He explains that on Old Mutual Insure's usage-based insurance product called UBI, vehicle drivers can take a picture of their mileage to show that the car hasn't been used, upload it via the app, and then receive a refund on the premium paid.
He adds that given the current environment, it is important to remain adequately insured and to not look for shortcuts by underinsuring your vehicle. "It is important to abide by the terms and conditions of your policy so that if you have a claim, it is not rejected.
"Another positive trend we are noticing is that the global inflation environment and supply chain disruptions, which were causing delays on vehicle deliveries and spare parts, as well as pricing trends to buck, is now shifting and easing off. Over the medium-term this could also translate into savings for cash-strapped consumers who are looking for a vehicle in 2023," concludes Mnguni.