Car insurance comparison: Direct insurers vs. brokers

Insurance companies claim you can lower your monthly car insurance premiums by cutting out the middle man and getting a quote directly. Last year Justmoney (our sister website) compared car insurance quotes from direct insurers and brokers to see where consumers could get the better deal. This year Moneybags and Jessica Anne Wood look for where you can get the best deal.

The problems I encountered

Last year when I did this comparison for Justmoney, my age (I was 23 at the time) meant that certain insurers were hesitant to insure me. Despite being a year older (24), I encountered the same problem this year. Some insurers will only insure drivers over the age of 25. This poses a problem to people under 25 wanting to insure their vehicles. In this instance, you might have to be insured under an older family member’s insurance policy as a primary driver for the vehicle.

I had an added issue this year as one of the brokers noted that my profession as a journalist could pose an added risk to getting cover. One of the brokers I spoke to noted that certain claims might not be paid out as my profession is considered risky due to the general nature of the profession. Despite being office bound and not out in the field, essentially not putting myself in dangerous situations for my work, being a journalist is still seen as an insurance risk to a degree.

Lastly, some of the insurers and brokers would also not provide vehicle cover on its own. These companies require a person to take out home contents insurance together with vehicle cover. This is a problem for people, such as myself who live with their parents and who do not have home contents that need to be insured.

Despite these challenges, I was able to find five direct insurers and five brokers who offered me car insurance quotes, as well as one insurer and one broker who were unable to assist me due to the reasons mentioned above. The results were as follows:

Insurers:

insurers comparison

Brokers:

broker table updated
Analysing the results

From the above results, it is evident that on average, going through a direct insurer is cheaper this year than going through a broker. The cheapest quote that I received was from Santam at R245.65, followed by a quote from a broker, Aon Cape Town (which was also for Santam), of R273.86. What contributes to the discrepancy in price is the brokerage and administration fees that a broker charges.

While the most affordable insurance option came from a direct insurer, the most expensive option came from a broker. Incompass Insurance Brokers had the highest quote at R450.46.

MiWay was the only direct insurer who informed me that there is a joining fee of R275 when taking out insurance with them. For Hollard Insurance, your excess does not cover window or windscreen repair, and you require permission to have this fixed. It is an additional R750 for this repair.

Compared to last year, the average insurance quote from direct insurers is lower, however, the excess is higher. In terms of excess, the lower the excess generally the higher the premium and vice versa. The increase in the average excess could be the reason for the lower insurance premiums quoted this year.

However, your car insurance premiums should decrease on a yearly basis, regardless of the excess you pay, as the value of your car declines on an ongoing basis, and therefore the amount of insurance needed should decrease as well. The sales person from King Price claimed that they are the only insurance provider which decreases your premiums monthly as the value of your car depreciates.

comparison table updated

While some of the insurance companies I received quotes from for each year are different, from the companies that were the same, the quote from First for Women was higher than last year, while Budget Insurance this year said I was too young to get cover. 1st Insurance Brokers last year offered me the highest quote at R523.56, which is vastly more than I was offered this year (R348.65). However, it was still one of the highest quotes that I received.

Despite some of the changes in the insurance information, the average cost of the quotes that I received from direct insurers this year is R80.58 cheaper than last year. For brokers the average quote was R57.93 cheaper than last year and this year. However, the excess for both direct insurers and brokers is higher than it was last year. This highlights the need to compare new car insurance quotes each year.

My tips following my experience

Be careful when accepting the cheaper premium as it may not be the best deal for you. A broker pointed out that a lower insurance premium could mean that you are the only person eligible to drive the vehicle. An open driver policy means that anyone with a valid driver’s licence who has your permission can drive your car and if they are involved in an accident your insurance company will pay the claim. Thankfully Santam’s quote, which was the cheapest, does fully cover me if I allow other licenced drivers drive my car.

It’s essential to find out if you have an open driver policy because if you allow others to drive your car and you don’t have that benefit, your insurer will reject any accident claims.

You can get a lower car insurance premium if you agree to have a higher excess. However, this means that in the event of an accident you will have to pay more for repairs out of your own pocket than if you had gone with a higher premium. Make sure you have savings set aside to cover the excess should you have an accident.

One important thing to remember when shopping around for insurance quotes is to check what benefits you get with the different insurance companies. Some insurance companies offer take home services after a night out, but the number of times you can use this service per year may differ according to the company. The following offered me a ‘take me home service’ included in the premium: MiWay, Santam, King Price and 1st for Women.

Ask about any discounts that you might be entitled to. For example, the sales consultant from King Price was able to offer me a manager’s discount if I were to take out the insurance policy through her over the phone. I would pay a monthly premium of R280 compared to the R330.78 I was quoted when I asked for the quote to be emailed to me.

If you want an instant quote, go direct. One of the benefits of going through a direct insurer is that they are able to give me a quote almost immediately over the phone. Some of the brokers I spoke to were not able to do this. Some of them required me to fill out a form and send it back to them, and then took several days to get back to me with a quote.

Direct players offered more convenience by giving customers the ability to engage with them online. However, most of the brokers I contacted didn’t offer this convenience. After filling in my details with direct insurers’ websites, a consultant would then contact me for more information. I found that the adjusted premium that direct insurers were able to give me was often lower than the estimate generated on their online application process.

I found that I was able to get a cheaper premium when I contacted the insurance companies directly compared to what the brokers were offering from the same insurance companies.

Ultimately, by shopping around, you are able to find the best deal. I was amazed at the cost difference between the insurance quotes that I was offered.

Notes:

The information was sent to brokers and insurers:

I drive a 2011 Hyundai Atos 1.1 GLS that was purchased new from the dealership. The vehicle is paid off and has the following values according to Transunion Auto, Auto Dealer’s Guide:

  • Trade value – R53, 025
  • Market value – R55, 965
  • Retail value – R58, 905
  • Original value – R94 900

When I phoned for quotes, I was asked the following questions, to which I provided the below responses:

  • How long have you been insured? – Five years
  • Have you made a claim in the past three years? – No
  • When was your driver’s licence issued? – August 2009
  • Where do you park your vehicle in the evening? – In my driveway, no gate
  • Where do you park your vehicle during the day? – In a secure garage in the Cape Town CBD
  • Has your engine been modified? – No
  • Have you had any extra fittings added to your vehicle? – No
  • Do you have any security features? – Factory fitted immobiliser

To read last year’s Justmoney article, click here.



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