Glen Langenegger, general manager of Budget Insurance, explains: "While most customers assume that the biggest risk to their vehicle is theft or a complete write-off, this isn't the case. In reality the actual value of the vehicle is not a major determinant of the premium price. Rather, factors such as the cost of repair play a far more significant role."

The greatest risk to clients, and thus the insurance company, is the cost of vehicle repairs as a result of an accident. In recent years these costs have escalated above expected inflation levels.

This is principally because of the ever-increasing sophistication of modern vehicles. Even entry-level vehicles these days include sophisticated components previously seen only on higher-end models. Many components, which may have been safely repaired in the past, now need to be replaced by expensive new integrated components.

Fitting new airbags in a modern vehicle alone may amount to between R40 000 to R50 000. Another important factor is that comprehensive motor insurance covers not just your vehicle but any damage to third parties as well. Should you cause an accident, third party claims will be covered by your insurer, and there is no way of knowing whether you will clout a rusty VW or a brand new Porsche. So your policy is priced accordingly for this risk.

"Of course, having a vehicle properly repaired should be a priority to both client and insurance company," Langenegger points out. "This is necessary, not only for the appearance of the vehicle, but also for safety reasons. Hence, as a broker, we will only place business with underwriters that utilise reputable repairers and undertake to offer a lifetime guarantee on maintenance work."

Fromwww.insurance-times.net