What To Do Instead of Cancelling Your Insurance: 5 Tips
When the going gets tough, you may be looking at your insurance premiums as a way of cutting costs. But think twice! There are many reasons why cancelling your car insurance is a bad idea.
Instead of cancelling your insurance altogether, rather look at lowering your premiums to make things more affordable.
Using a R1,200 monthly premium with a R3,000 excess as an example, we list our top savings tips and detail how much you could save each month. Let’s dive in!
Tip #1: Shop Around
When you’re shopping around for any kind of service, they say it’s good to get at least three quotes from different insurance providers before you decide.
But how does 11 sound?
With Hippo’s car insurance comparison tool, you can get up to 11 quotes from South Africa’s leading providers.
Possible savings from switching insurance: R390 every month*
Tip #2: Pick The Right Insurance Type
There are different types of car insurance with varying levels of coverage and monthly premiums. Here’s a quick rundown:
Comprehensive insurance is the full package. With this, your insurance company covers your car in case of theft, loss, or accidental damage. It's top-notch but has higher premiums
Third-party, fire, and theft insurance: covers damage to someone else's vehicle when you're at fault (but not your own vehicle). As the name suggests, it will also pay out for fire damage or if your car is stolen. It's not as all-encompassing as comprehensive and thus has lower premiums.
Possible savings by switching from comprehensive to third party, fire and theft insurance: R360 – R600 per month.
Third-party only insurance covers damage you cause to someone else's car – but not to your own car. This means the premiums are generally the lowest of the three options, but you’ll also have the least amount of cover.
Possible savings by switching from comprehensive to third-party only insurance: R600 to R840 per month.
💡NB: Though downgrading your insurance could save you money monthly – it also leaves you with less cover. In particular, you won’t be covered for your own damage if you’re in an accident. It’s very important to consider this before changing your insurance type.
Tip #3: Choose Your Excess
Another way of reducing your monthly insurance premium is by opting for a higher excess.
Because it reduces the amount the insurer would need to pay out, a higher excess means a lower premium.
But be careful—you don’t want to set your excess so high that you wouldn’t be able to afford it when you need to make a claim. This 25-year-old new driver, for instance, had to pay a whopping 55% excess on his VW Polo R-Line after he wrote it off. The car’s retail value at the time was R306,000 and his insurer only paid out R135,200 – leaving him to foot the rest!
| Monthly Excess | Premium |
|---|---|
| R3,000 | R1,200 |
| R4,000 | R1,140 |
| R5,000 | R1,080 |
Tip #4: Up Your Car Safety
Your monthly insurance premiums are calculated based on what’s called your risk profile, which includes things like your age, job and where you live.
By lowering your risk profile, you may be able to lower your premiums. One way of doing this is by installing safety features in your car — like an alarm system or tracker.
If you’ve moved house recently, consider whether your security has changed. Maybe you have a garage now when you didn’t have before, or you’re in a complex with more security features. Let your insurer know and you could save on your premiums.
Check out How Does Your Car Insurer Calculate Your Risk Profile? and How to Choose Car Insurance for more on the factors that determine your risk profile.
Here’s what you could possibly save by making certain security changes. Please note that these are rough estimates and will differ between insurers:
| Change | Possible Savings (%) | Possible Savings (R) |
|---|---|---|
| Parking in a garage | 10% to 15% | R120 to R180 |
| Installing a tracker | 10% to 15% | R120 to R180 |
| Moving to a safer neighbourhood | 15% to 20% | R180 to R240 |
| Getting married | 5% to 10% | R60 to R120 |
| Getting older | 5% to 10% | R60 to R120 |
| Moving to a saver neighbourhood | 15% to 20% | R180 to R240 |
Tip #5: Drive Safe
Insurers reward safe drivers – so avoid traffic violations to qualify for lower premiums over time.
Many insurers now offer usage-based or telematics insurance where they track your driving habits via a mobile app or a device installed in your car. Safe driving behaviours, such as smooth braking and steady speed, can lead to lower premiums.
OutSurance’s SmartDrive programme, for instance, uses an app to score your driving style, the time of day that you typically drive, how often you use your phone while driving, and whether you generally obey the speed limits. Once the minimum requirements are met, you get a 10% discount on your premium! Using our example, that would be R120 less each month. **
Possible savings from driving safer: Discounts vary from 10-30%, meaning savings of R120-R360 a month.
Save today
When it comes to cars: don't cancel your insurance when you could be saving on your premiums instead. As we mentioned, with Hippo you can quickly compare different insurers for a better deal. In fact, people save R390 every month* on average by finding car insurance through us. Why not compare today?
* Based on independent research by Kaufman Levin & Associates 2023.
**At time of writing – November 2024.
This article is for informational purposes only and should not be construed as financial, legal or medical advice.
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