Why some colours of car have higher insurance premiums

Some large insurance companies in South Africa still consider car colour when determining premiums, and darker colours can result in higher premiums.

Speaking to 702, insurance expert Ismail Canfield said using colour as a factor in determining car insurance premiums is a methodology used by older companies, which some insurers in South Africa still employ.

“As a broker, we deal with different insurance companies in South Africa, where some use the old methodology, and some use the newer methodology to determine their premiums — it’s not always a universal method that’s being used,” said Canfield.

“In some cases, then the colour will play a role; in some cases, it won’t.”

He said that in his experience, some bigger insurers are still using the factor of colour to determine premiums.

“The reason they do is because of the cost of the paint and the cost of repairing the vehicle at the end of the day… The darker colours would also obviously be less visible than lighter colours on the road,” said Canfield.

He explained that this means there is a higher probability of darker-coloured cars being involved in accidents.

However, Canfield noted that although a darker car may attract higher premiums from insurers that consider car colour, the difference will be minimal.

“The newer methodology would look more at factors like the driver’s age… vehicle make and model, claims history, and even lately, they will use a body-to-power ratio of the vehicle in order to determine the premium,” he added.

However, he noted that although vehicle colour and driver age can play a role, other factors like credit profiling also contribute to determining premiums.

“You could have two people who are twins. They are exactly the same age, drive the same vehicle, stay in exactly the same house, and even if they have the same colour vehicle, they can have different insurance premiums,” said Canfield.

Another factor insurers could consider when determining premiums is the type of powertrain your vehicle uses, with some insurers applying higher fees to electric vehicles (EVs) in some scenarios.

MyBroadband spoke to several prominent vehicle insurers in South Africa about getting cover for EVs.

Hollard Insurance, Naked Insurance, Outsurance, and Santam said they all provide comprehensive insurance for EVs and don’t charge special fees that are not charged on similar petrol or diesel cars.

“Currently, there is no difference between the rating factors of EVs and conventional vehicles,” said Santam’s head of personal underwriting, Marius Kemp.

“At this stage, we are still monitoring the trends to see if there is a material difference in the risk.”

Naked Insurance co-founder Ernest North and Outsurance chief client relations offices Natasha Kawulesar said insurance for some EV models could cost more than an ICE car of similar value due to the cost of EV parts.

However, they explained that, like with ICE cars, the driver’s risk profile, residential address, and vehicle cost are the main factors that are considered when determining EV insurance premiums.

This means premiums could be lower for a specific EV model if its typical drivers have fewer accidents, either because they are more careful or because these cars have advanced safety and driver assistance systems.