Guiding consumers since 2009

Does installing a tracker reduce your insurance premium?

By Danielle van Wyk

Installing a tracker can increase the safety of your car and track it in the event of theft and hijacking. But what kind of impact will it have on your insurance premiums?

“Installing a vehicle recovery device can reduce a motorist’s vehicle insurance premiums quite drastically, saving consumers money in the long run. When purchasing insurance, one of the key questions that an insurance company will ask you during their risk profiling process, is if you have a recovery device installed, given that this increases your vehicle’s security,” states vehicle tracking company, Beame.

There has been a staggering increase in the number of stolen and hijacked vehicles in South Africa, which is why it’s essential for motorists to invest in stolen vehicle recovery devices.

“National crime statistics (2015/2016) released in September reveal an alarming increase in hijackings in South Africa, which rose by 14.3% over the previous 12-month period. This amounts to a total of 14,602 carjacking incidents,” reports Ctrack.

Having a tracking system installed not only increases the chance of a vehicle being recovered but with the latest technological advancements, it goes far beyond vehicle tracking.

“An affordable stolen vehicle recovery device purchased from a reputable company can help locate your stolen vehicle at any time of the day, nationwide. By doing so, you are not only able to reduce your insurance premiums but also have peace of mind, knowing that in the event of your vehicle being stolen, the chances of recovery are high,” Beame adds.

Another advantage of vehicle recovery devices, is that they are wireless. “Such devices are compact, robust and don’t interfere with the electronic warranty of your vehicle. Due to the size of the device and the fact that it can be installed anywhere in your vehicle, makes it difficult for criminals to find,” Beame states.

The impact on your insurance

King Price insurance states: “Installing a vehicle tracker may not necessarily have an influence on your insurance premiums. There are two different scenarios that are dependent on the value of the vehicle and the theft frequency.”

  • Scenario 1: If you drive a high-risk vehicle, you may be required to install a tracking device as a condition for theft and hijack cover, to mitigate the risk. In this scenario it won’t affect your premium, but your vehicle won’t be covered for theft of hijacking without it.
  • Scenario 2: The risk of the specific vehicle may not require a tracking device, but if you do install it you may get a discount on the theft portion of your premium.

“Broadly speaking, a car insurance premium is mostly made up of an accident risk portion and a theft risk portion. Generally there is a far higher risk of a car being in an accident than being stolen resulting in the accident portion being far higher than the theft portion. This ratio between accident and theft would obviously change if the vehicle is more prone to being stolen. A tracking device would only have an effect on the theft portion of the car insurance premium, i.e. the smaller portion,” reveals Arrive Alive.

However, King Price still notes it to be an advisable option. “It is advisable to install a tracking device in your car as it serves as an early warning system if your car is broken into or stolen, which improves the likelihood of keeping your wheels where you parked it or bringing it back safely. Owing to the technology available today, tracking devices are highly traceable with an encouraging recovery rate, which could keep your family safe in a hijacking or kidnapping situation.”

“Car insurers are very aware of the real risk of property/ vehicle loss through theft and hijacking and are also taking action to prevent such loss. Apart from working closely with the police services, the Insurance Crime Bureau and vehicle manufacturers they are also placing a greater emphasis on the installation of vehicle security devices such as tracking systems,” Arrive Alive adds. 

Considering it? Here’s what to do…

You can contact your insurer to find out what they can arrange for you, as some insurers offer a discount. You might also get free installation. If you arrange the tracker yourself, you should inform your insurer and they can advise of any adjustments to your premium, King Price points out.

It is advisable to go this route and contact your insurance company so that they can revise your current premiums. “Some insurance companies will usually ask you to send them a certificate of installation as confirmation that you have installed a recovery device,” Beame remarks.

Handy tip: If you are in need of car insurance, apply through Justmoney today. 

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