Monthly Archives: January 2010

Pay as you Drive

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Auto Insurance is partly based on the average kilometers insured people drive. But isn’t that unfair if you drive far less as the average person because you might be a stay at home mum, your work from home etc. There can be many reasons why you drive less as the average person. Why should you pay high premiums for your auto insurance if your car is standing still most of the time. Obvious you are at a lower risk to be involved in a accident as the business person who drives 30000 Km a Year.

Here is where Pay as you Drive comes into play. Hollard’s Pay as you drive is the first personalized auto insurance in South Africa where your auto insurance premiums are directly related to the number of kilometers you drive.

Pay As You Drive – Personalised auto insurance, where auto insurance premiums are based on your monthly mileage! Click Here to visit hollard for a quote

How do insurance companies make money

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Insurance companies earn money in two ways.

  • Through underwriting.

Underwriting is the  process through which insurance companies select what risks to insure and decide how much insurance premium to charge for insuring those risks

  • Investing the premiums

Through carefully investing the received insurance premiums in high return investments they will be able to earn money on the invested insurance premiums

The most difficult aspect of the insurance business is the underwriting of polices. Based on a wide set of available data, insurance companies  predict the likelihood that a claim will be made against their insurance polices. Insurance companies  price products according to the likelihood of claims.

 At the end of the insurance, the amount of insurance premium collected minus the amount paid out in claims is the insurance companies  underwriting profit.

Insurance companies  currently make the most money from their auto insurance line of business. Generally better statistics are available on auto insurance claims  and underwriting on this line of business has benefited greatly from advances in computing technology.

How to save on insurance premiums

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Insurance premiums can make a substantial dent in your monthly budget. However it is very important that you have your car covered with the correct insurance and cover. Being uninsured can destroy you financially when you are involved in a car accident.

Some steps you can take to reduce your insurance premiums

  • Get quotes from several motor and car insurance companies and compare them.
  • Increase your excess (the amount you are liable for in case of an accident or damage to your car).
  • Fit an A VESA approved immobiliser and install a tracking device.
  • Before you buy a new car do your homework, some car makes and models are more expensive to insure so it might pay to buy a different make or model.
  • If you are not doing a lot of kilometers it might pay to opt for a pay as you drive insurance where your premiums are determined by the distance you drive. The less you drive the lower your monthly insurance premium.
  • Drive responsible. A no claim history is good for lower future insurance premiums and some insurance companies even pay a bonus after a couple of your no claiming.