Personal Finance

Steps to take in keeping your car insurance quote affordable


Accident-free driving helps to keep insurance premiums low. PHOTO | FILE

Kenya’s insurance landscape has immense potential that is yet to be fully realised. This is evident from the country’s economic growth against the insurance market penetration that stands at less than three per cent.

According to the World Bank, Kenya’s growth is projected to rise to 6.1 per cent in 2017 with a growing middle-class that is estimated at 44.9 per cent of the total population.

With what appears to be a ready market for insurance solutions, why is the penetration still low? The answer largely lies in the lack of sufficient education that leads to misconceptions around financial wellness brought about by insurance is the answer.

Let us consider the second largest insurance segment, motor insurance. With third party car insurance being mandatory in Kenya, one would expect that the segment would not suffer persistent underperformance.

The industry still records numerous vehicles having the minimum legally required motor private insurance, third party cover, mainly because of the perceived high cost of a comprehensive cover.

This may seem like bang for buck but motorists will often take the lowest-cost premiums without taking into consideration how they will replace or repair their vehicles if damage or loss occurs.

Competitive rates offer a compelling marketing strategy and create a thriving business environment that may be favourable in the short-term.

In the long-term, an increased risk environment will cause a ripple effect in the insurance industry that ultimately negatively affects the economy.

How then does a motorist ensure that they keep their car insurance quotes affordable without sacrificing on the value of their vehicle?

To select smart insuring but still keep your costs reasonable, here are some tips:

1. Keep your car’s security updated.

You have control over your car’s security and can improve it yourself. A car alarm will get you some reduction but if you install a tracker from a recognised company, you could get higher reductions on your policy quote.

2. Inform your insurer if you modify your car. If you change your car suspension, lights, wheel size, engine and anything that may affect its performance, you will be required by the insurer to declare it.

If you omit the mention of these and similar modifications, your insurance provider may then decline to cover them or impose stringent conditions if you have an accident or loss.

3. Buy a car within your financial capability. To ensure that you do not stretch yourself beyond your financial capabilities, buy a vehicle that you can afford to maintain.

In the case that you need to repair or replace you vehicle, your insurer will often consider the costs related to the vehicle parts, cost of repairing the vehicle, the price of a new version of the vehicle, the vehicle’s performance and the vehicle’s security.

A car that you can afford to maintain will not burden you and will therefore be affordable to insure.

4. Stay claim free. The more years you have had car insurance and not made a claim, the more affordable your quote. If you do have an accident, you may want to try settling it privately if it is minimal damage, to protect your no claims discount.

5. Keep your driving licence clean. A clean driving licence can keep your insurance premiums affordable. If you are considered a high risk driver, you may be charged a higher premium.

There you have it. Whether the insurance premium rates under motor private are revised to favour the motorist or not, the above tips will go a long way in saving you some money and ensure vehicle risks are kept at bay.

Remember smart insuring is safer than the lowest cost option. With so many product and services in the motor insurance industry, guidance is the most important component of achieving your financial wellness.

Ensure that you receive adequate assistance before you pick a solution that you believe best suits you. Aim at reducing the risk on your end.

The author is a principal officer at Cannon Assurance.