Does installing a tracker reduce your insurance premium?

By Danielle van Wyk

Installing a tracker can increase the safety of your car and locate 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,” notes Beame, a vehicle recovery company, on their website. “When purchasing insurance, one of the key questions that an insurance company will ask you during their risk profiling process is whether you have a recovery device installed, given that this increases your vehicle’s security.”

The majority of vehicle tracking and recovery companies in South Africa claim to have a recovery rate of over 90%. Without a vehicle tracking service, the Tracker website notes, there is only a 5-10% chance of recovering a vehicle.

This statistic alone presents a compelling case for tracker installation. A dramatic increase in hijackings across the country was noted in crime statistics released for Q3 2021 by the South African Police Service. A total of 5,455 hijackings were reported across the country, representing a 13.8% increase compared with the same period in the previous year.

The top three hijacking hotspots in South Africa were Gauteng, KwaZulu-Natal, and the Western Cape.

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.

The Tracker website states, “Modern vehicle tracking using GPS/GSM technology allows you to personally monitor and track the location of your car at any time via a smartphone app. You can check the current status of your car – its odometer reading, mileage, whether it is stationary or moving, its speed and location.”

Additional features include sharing your route with family and friends, panic button installation, receiving notifications when you enter a high-risk area, roadside assistance, and car service reminders, the Tracker website further elaborates. The placement of tracking systems in vehicles has also improved to ensure maximum concealment.

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The impact on your insurance

The King Price website notes that installing a vehicle tracker may not necessarily influence your insurance premiums. There are two different scenarios that the site outlines.

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, a tracker won’t affect your premium, however, your vehicle won’t be covered for theft or 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.

The Arrive Alive website elucidates, “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,” the website says.

However, the King Price website notes that trackers are still 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. This improves the likelihood of keeping your vehicle where you parked it or bringing it back safely. Thanks 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.”

The Arrive Alive website adds, “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.”

Considering a tracker? 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, the King Price website points out.

If you arrange the tracker yourself, you should inform your insurance company, so that they can revise your current premiums. “Some insurance companies will ask you to send them a certificate of installation as confirmation that you have installed a recovery device,” the Beame website remarks.

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