How insurance is calculated

How is insurance calculated?

Many risks occur during our day to day activities, but if your life is insured with a reliable insurance company in all the aspects of your life will be covered. There are various quotes of insurance premiums that as a client can opt for.

The level of car insurance premiums is merely charged to a customer depending on the risk and statistical data that is available. The statistics must consist of your driving experience, health and age. For instance, a young man who drives a lucrative sports car is probably going to pay more premiums than a 60-year-old man who drives a Peugeot 206.

Car Insurance Calculation South Africa

Car Insurance Calculation South Africa

Your Age

Age is one of the most fundamental factors that insurer put into serious consideration. Young drivers are likely to encounter higher risk due to lack of driving experience unlikely older drivers so mathematically they are likely to involve in many accidents.

This means that young drivers aged between 18 and 30 years are most likely to pay higher premiums.


There are specific occupations that always keep you on the road, for instance, you are a general manager of a company and you have many movements on the road. The premiums you are likely to pay are higher because there is a higher probability for an accidental risk to occur.

There are other occupations that are reputable and there is a different pricing of premiums, for an example, a company CEO is more likely to pay higher premiums than a company general manager.

The car you drive

The car that you drive can also determine the amount of premiums you pay for your insurance. This consists of:


The more valuable your vehicle is the more expensive it is to restore or repair, stolen. On the other hand, do not assume that your insurance can only cover your car only. There are also expensive cars on the road and third party insurance is the one legible to cover the car that you involved within an accident.


If you own a sport car or one of the fancy cars that have a powerful engine, your premiums are most likely to be higher.

Car modification

Modifying your car will increase your premiums and it is advisable to consult the insurance company that your car has been modified. If you don’t consult them your cover will be invalid if you claim in the future.


Desirable cars in Mzansi such as the Volkswagen and the well-known BMW (gusheshe) are reported to be of high risk by the insurer. However, if you improve the security of your vehicle you can have your premiums reduced.

Where you live

Your hometown also determines the cost of your car insurance. If you live in areas where crime and theft are at pick you are legible to pay more premiums.

If you live in high vehicle theft such as Pinetown in Kwazulu Natal and Benoni in Johannesburg there are a risk and mostly and dangerous stretch roads.


Installation of alarms and other built-in security may reduce the amount of premiums you are likely to pay because these electronics will scare away thieves.

On the other hand, where you park your car when you are not using it also determines the amount of premiums the insurer will charge you.

Parking your car at places where there is no vulnerability to theft or carjacking will influence your premiums.

If your car is parked on the streets during the night it is vulnerable to theft and carjacking. But if it’s parked in a well-secured garage of car park your premiums will be reduced.

How you use your wheels

If you use your car to ferry a lot of things such as people, properties and valuable goods your premiums are higher. This will also involve the mileage of your vehicle, and more driving you are likely to get involved in an accident.

Driving history and non-claims bonuses

If you had made claims for the past years, to the insurer it is a factor they will consider when calculating your premiums. If you haven’t made any claim you should provide a form called no-claim bonus (NCB).

In most cases, insurance companies mostly accept NCB to a client who has five NCB this will automatically reduce your car insurance premiums.

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