Many South Africans have been affected negatively by the Covid-19 pandemic and subsequent lockdown. For many, the recently announced, sharp petrol price increases might be the straw that finally breaks the camel’s back.
As the lockdown are eased in many parts of the world and economic activity resumes in large parts of the globe, global fuel prices are rising significantly. When you combine this with the fact that South Africa’s cash-strapped government has hiked the fuel levy to boost its own revenue, local consumers are set to feel the pinch, not only at the petrol pump but across the board as increased fuel prices drive price inflation throughout the economy.
Those South Africans lucky enough to have jobs that they can do from home might consider that a R1 increase in the per-litre cost of petrol might not affect them too closely. After all, many people use their vehicles much less these days. The reality, however, is that “fuel price increases have a domino effect on prices throughout the economy,” says Christelle Colman, insurance expert at Old Mutual Insure.
If one only considers increased taxi fares along with the increased cost of producing and delivering food in an economy beset with job losses, wage freezes and reduced working hours and remuneration packages, already hard-pressed South Africans are going to find it significantly harder to make ends meet over the next few months. In short, “whether one owns a vehicle or not, everyone pays when the fuel price goes up,” says Colman.
In this bleak environment, monthly vehicle insurance payments must stand out as one of the most obvious ways to cut costs, “easily realising several hundred rand’s savings a month – for very little extra risk – especially if you are working from home,” says Colman.
The reality, however, couldn’t be further from the truth as it is far costlier to be uninsured than to be insured. This is particularly true especially when one considered the risks of driving uninsured on SA’s roads. Recent estimates show that 65 - 70% of the approximately 12 million vehicles on South Africa’s roads are uninsured. This means that should you get into an accident with one of these cars, you could take a devastating financial knock that could set you back irreversibly should you be uninsured.
Instead of cutting your car insurance, Colman offers the following top tips on saving money while still ensuring that your vehicle remains insured:
- Many insurers are now offering ‘pay-as-you-drive’ products.
- Consider carpooling to reduce fuel costs when commuting to work. However, as stated above, contact your insurer for possible policy implications.
- Find a broker who will assist in obtaining several quotations from various insurers on your behalf to check if you are paying the lowest possible premium, without sacrificing the benefit of good insurance cover.
- Ask your broker or insurer to reduce your insurance premium if claims free or increase your excess which will result in a premium reduction.
- If your negotiations are unsuccessful, consider shopping around for better car insurance premiums.
- Consider increasing the excess on your policy in return for a premium saving.
- If the warranty on your vehicle has expired, look for reputable vendors who will be able to service and maintain your vehicle at affordable prices.
Colman concludes, “a good insurance policy is an integral part of a holistic financial plan. It ensures that you do not suffer a devastating financial set back should anything bad happen. During these uncertain times, there is no substitute to the financial peace of mind a good insurance cover offers.”
PERSONAL FINANCE