The beginning of this week marked a record-high fuel increase that had motorists slamming on the spending brakes. However, one thing that should not be cut back on, is your vehicle insurance and maintenance.
“We wish to advise commuters to not view the increase in fuel price in isolation, but rather to take a holistic approach to their vehicle maintenance. We find often that knee-jerk decisions are made when people are faced with a sudden financial shortage. However, cutting back on insurance payments and the maintenance of your vehicle can lead you into deeper financial distress,” said Christelle Colman, company spokesperson of Old Mutual Insure.
Making use of the public transport system could be a saving option, but amidst strike action and regular delays it is not necessarily the best solution.
“We urge commuters to seriously consider ride sharing or carpooling. Not only will this make a considerable difference to the cost of commuting to work, but it is also a good way to look after our environment.”
According to Colman you can cut back as much as 75% of your fuel costs if 4 people share the ride. You can also cut back substantially on the maintenance of your vehicle if the agreement is for each person sharing the ride to use their own car for one week of the month.
However, in the case of carpooling, do contact your broker or insurance company to determine whether there are any limitations on your policy restricting you from carpooling or allowing other people to drive your vehicle.
“Some insurance companies in the market are very strict with regards to who is permitted to drive the vehicle. With insurance it is always good to be pro-active by ensuring you understand the conditions of the policy contract. Also ensure you get all changes and agreements on record either in writing or via a recorded telephonic discussion,” Colman said.
Apart from fuel costs, the premium related to insuring your vehicle is often one of the biggest expenses vehicle owners face.
“We have a thriving competitive insurance industry in South Africa and you may very well be surprised at how much you can save by looking for alternative quotations,” added Colman.
2 ways to save on insurance:
- Shop around for better vehicle insurance premiums
- Ask your insurer to reduce your insurance premium if claims free or increase your excess which will result in a premium reduction.
Vehicle owners must remember that if they feel the financial pressure and they stop maintaining their vehicles, it could have some grave implications. It is a strict requirement by insurers that all vehicles must be maintained in order for the insurance cover to be in place, regardless of whether you have paid your insurance premium, Colman said.
“By way of example, if you are involved in a car crash on a wet road and insurers find your brakes failed due to being worn out or that your vehicle skidded into the other party due to smooth tyres, your claim will not be paid out. It is essentially personal financial suicide,” said Colman.
In addition, most insurers use your credit rating score as a factor for determining your insurance premium. By defaulting on credit payments, it could potentially lead to increased motor insurance premiums, especially at the time of taking out a new policy.
Times are tough but don’t make them any tougher by mismanaging your finances and especially your insurance cover.