Durban - As a car owner, you might think that not claiming or your car’s value decreasing every year should be the reasons enough for your monthly car insurance premiums to go down every year.
However, that is not the case.
Below is a closer look at the car insurance renewal process.
Like the car insurance application process, there are many factors involved in the car insurance renewal process.
An insurance policy runs on a month-to-month basis and people have the option of exiting at any time by giving sufficient notice.
When a policy is up for renewal, the insurer will review the policy and may adjust the monthly premium.
During the renewal of a policy, the cost of the premium can even though the value of the car hasn’t increased. The knock-on effects of the Covid-19 pandemic has had an impact on the cost of insuring your car.
The pandemic has resulted in an ongoing global supply chain crisis making it more difficult to access car parts for repairs and car paint. Shipping industry constraints, as well as supply and demand pressures, can result in price increases for these items.
A factor like this will impact the total cost to insure your vehicle which, in turn, will affect the premium when you renew your policy.
Your insurance premium factors in the cost of fixing your vehicle if you are in an accident or a complete replacement in the cases of total loss.
The cost of labour and car parts going up will influence the renewal process, resulting in a higher premium.
The renewal process of a policy will also look at whether you paid your premiums on time over the last year and whether you claimed within that period.
According to Keletso Mpisane, head of MiWay Blink, there has to be a careful balancing act, as the car has decreased in value over the last year while inflation, the cost of labour and the costs of repairs have increased.
“With this in mind, insurers must carefully weigh up all these factors and strike a fair balance between reasonable increases in premiums, meaning fair practice towards the customer, and their business objectives,” Mpisane said.
It is important to go over your existing car insurance policy and research the renewal process involved so you have a better understanding of how your premium is calculated.
IOL Business