Insurance Encyclopaedia


Premium refers to the amount you pay to your insurer to take on the risk to cover your stuff against a set of specified events listed in your policy wording.

What makes up my premium?

Your car insurance premium will be based on factors specific to you (like your car’s make, your age, etc), but it’s also dependent on a couple of other things specific to the insurer. For example, call centres and brokers are generally more expensive than selling and servicing online. Then your insurer will also add things like VAT, profit and SASRIA.

If I do not pay my premium do I still have cover?

If it is your first premium payment, you have to pay it in full before you will have any cover. From your second premium you will have at least 15 days grace to pay for your insurance from the date that your premium is normally due. During this period you still have cover if something happens to your stuff. However, your insurer will require you to settle your outstanding balance before they consider any claims. Check your specific wording as some insurers will give you a slightly longer grace period.

What is the relationship between my premium and my excess?

The higher your excess, the lower your premium and vice versa. So, choosing an excess is about finding a sweet spot between what you pay on a claim and what you pay each month for your insurance.

How often do I need to pay my premium?

With insurance you need to pay your premium first before your cover will start. Thereafter, you will typically have to pay your premium every month, although insurance policies with other terms do exist (e.g. you might pay once every quarter or every year).