How to estimate the real cost of car insurance ?

How to estimate the real cost of car insurance.

Andre Willers .

1 May 2013

Synopsis:

We derive the serious accident rate from death rates . Hence the cost per accident .

 

Discussion :

1.The only reliable statistic is the body count .

From Italy .

http://www.istat.it/en/archive/65209

The mortality rate, calculated by means the ratio between the number of deaths and the number of accidents resulting in death or injury per 100, referred to 2011, is 1.85. This value is slightly lower than the level recorded in 2010 (1.93).

 

2. South Africa :

The road fatalities for 2011

http://en.wikipedia.org/wiki/List_of_countries_by_traffic-related_death_rate

Total was deaths per year was 13 802 . Assuming Italian rates of 0.0185 , this means 13802/0.0185 = 746 054 fairly serious accidents per year  per vehicle .

South Africa in 2010 had about 9.8 million vehicles . ENatis from  http://carinsurance.arrivealive.co.za/how-many-vehicles-are-in-south-africa-november-2010.php

Your chances of a serious “write-off” accident per year is then about 764 054/9 797 413 = 0.07798528 .

Your annual premium should then be Price of car x 0.078

A 200 000  car should be about 15 600 pa = 1 300 per month .

The real cost over 5 years is then 15600x2.5 + 200 000 = 39 000 + 200 000 = 239 000 , a whopping 19.5% higher .

 

Extended third party : This means ½ the cost (ie about 750 per month)

 

3.Is it worth it ?

Every 1/0.07798528 years  = 12.8 years your vehicle gets written off , with you .

From AA stats , the average age of a SA car is 11 years , though other sources make it nearer to 13 years .

This is average , remember , which means there are  5 million cars older than 11 years   . Basically valueless .

http://www.aa.co.za/about/press-room/commentary/all-you-need-to-know-when-in-an-accident.html

The average age of cars on South African roads is 11 years 

The logic matrix is then :

3.1 If new car and have money , comprehensive insurance .

3.2 If new car and no money , extended third party

3.3 If old car and no money , get good lawyer

3.4 If old car and have money , extended third party .

 

4. Cheap insurance :

You will regret every sigma deviation from these above prices if you should ever have the temerity make a claim  .

“I am sorry sir , I know the wheels are now square . But they taste funny . The contract clearly states that reckless driving over chewing gum invalidates any claim . If it was bubblegum , we would have to report you for reckless driving .”

 

5. What to do  for pensioners ?

Don’t buy a new , expensive car that stands and rusts .

Fix up an old clunker for local trips .

Use public transport . Cape Town actually has some decent , safe public transport now .

For longer trips , travel in style , using the money you would have spent on a useless car .

Fly business class and rent cars as needed . Cheaper .

 

Remember the Blue Train has an eco-friendly pissoir all the way .

Beats stopping at every little bush across the desert .

http://www.luxurytrains.co.za/?gclid=CPWe9Yvn87YCFdHLtAod_S8Ang

You can have 10x2 x R8 200 luxury Blue Train trips for the cost of one little car .

 Not to mention Rovos   http://www.rovos.com/

6.Things started to go to hell when first Class morphed into Business Class .

At least a Gentleman now can travel in his own spacecraft .

 

Gravity is for plebs !

Andre.

xxxxxxxxxxxx