When it comes to insurance, there’s one point of confusion or frequently asked question that stands out – how it is that your vehicle, which depreciates in value over time, continues to be insured at the same, or even a higher, premium?
This is a common gripe for short-term insurance policyholders but one that can be easily explained, said Tyrone Lowther, head of Budget Insurance.
The costs associated with repairing and replacing vehicle parts play a far more significant role in determining premium price and that in fact, most of the insurance premium goes towards covering the vehicle against accidental damage, and paying for damages caused to other persons vehicles and property, he said.
“Electronic items like airbags can drive the cost up significantly. On some models, the cost of the windscreens is prohibitive, integrated headlight clusters look great but cost a fortune, and even bumpers can have a significant replacement cost, as today they often have sensors in them for park-distance control.
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