Does The Price of Petrol Affect Insurance Premiums?
A new article has just been published on the UK site “The Telegraph”, claiming that lower petrol rates may cause an increase in car insurance premiums. According to the article, the reason behind this is the following:
Heavier traffic led to more crashes, Mr Jones said, with insurers increasing premiums to protect their profit margins.
“Logically, insurers might expect more accidents and more claims [when the use of cars rises],” he said.
We don’t know if this will have the same effect in countries like South Africa, but for many of us, just the thought of paying EVEN more on our car insurance premiums can cause a lot of panic.
The following article will teach you the advantages and disadvantages of choosing a policy that has a fixed annual premium and can prevent sudden price increases like these.
Fixed Rate vs. Annual Increasing Premiums
When you decide to get vehicle insurance, there will be two choices for you to consider with regards to your month-to-month premium payment. You can pick either an annual escalating rate, or a fixed rate. An annual intensifying rate will vary each year in accordance with interest rates. In addition to this increase, the premium will also increase due to the regular yearly boost. There are different angles to this option that have to be carefully thought about. You need to evaluate which type of alternative will be more practical and budget-friendly for you. The set rate is a set rate that you will have to pay monthly; this rate is not influenced at all by the rate of interest or any other hikes, but is for that reason more costly.
The yearly intensifying rate will be impacted by the rates each year. If they decrease, your premium will likewise reduce, conserving you money. The issue lies when the interest rate grows. This can be a frustrating extra increase that you might not be able to manage!
This is why one would think about the fixed/ flat rate choice. When they hear about the state of the interest rates, a lot of individuals find themselves to be a package of nerves. These rates affect bonds, many various type of monthly repayments and any amount of money that you are settling on a loan. The fixed rate is definitely a more costly choice, but if you think about the variation of the interest rates, then it begins to make more financial sense. There is a specific element of security in choosing the taken care of rate option, as a minimum of you will certainly understand precisely what monthly cost you need to pay at the end of monthly.
In hindsight, it can be said that somebody who has actually selected the set rate will have to learn to ignore the updates on lower rate of interest and any cash they could have saved. On the other hand, with the existing financial scenario crumbling around us, not relying on the decreasing of the rate of interest can be a good idea.