The most important fact in car insurance that seems to be ignored
If we had to put a name to the general charades and goings-on in the insurance space in South Africa, we’d probably call it ‘The Emperor’s New Clothes Syndrome.’
Just like people in the classic Hans Christian Andersen tale kept up pretences rather than admitting to something that might let them appear stupid or incompetent… There are important facts in the insurance industry that are blatantly (and probably conveniently) being ignored.
But not at King Price. The king and his court threw down the gauntlet and challenged the entire insurance industry when we dared to raise this question… ‘If your car’s value keeps on going down, shouldn’t the cost of your insurance premium go down too?’ And guess what? We’re still waiting for other insurers to tell us WHY NOT.
But why does your car’s value depreciate?
There are only a few things in life that gets more valuable as it gets older, such as some properties, collector’s items, art, and wine, of course. Unfortunately the value of most other things we buy goes down.
The reason for this is that most items pick up wear and tear. So several years, plenty usage and some bumps and scrapes later, it will just not look as nice or be worth what it was when you originally bought it.
This is especially true for cars, because the older they get, the more you have to start spending on them for repairs and maintenance. And then off course they’re just not regarded as such a good investment anymore. Another major factor that contributes to the decrease in the value of cars; is the fact that there are constantly new, more hip and more advanced models that are launched on the market.
Make no mistake, at King Price we do understand that your car is worth the world to you, because we feel that way about our cars too. But the unfortunate truth is that unless you bought a very rare vintage car or collector’s item, your car’s value WILL go down.
How fast are cars supposed to depreciate?
The harsh reality is that by the time you finished reading this, your car has most likely depreciated. In fact, even if you buy a completely new car, the moment you drive it off the showroom floor, its value will drop immediately. There’s no hard and fast rule and how quickly and by how much it depreciates will vary from car to car and from brand to brand. But generally it decreases every month and by an average of 8-20% per year.
So if my car’s value keeps on going down, why doesn’t my insurance premium go down too?
Our point exactly. And it is for this very reason that we At King Price automatically decrease our clients’ premiums on a monthly basis, as their cars depreciate. And they don’t even have to nag or remind us, we do it automatically.
There are a bunch of moral lessons to be learnt from The Emperor’s New Clothes. One of them is that you should not believe everything you’re told by those who seek gain. And in the real world we should be critical when we look at the facts that are presented to us.
So why not join us in our fight against inflated insurance premiums. It’s the fair and logical choice for your insurance needs. Click here to get a quote now so you too can join our royal family and start saving immediately.