08 Oct Car Insurance Rates In Kenya Getting Expensive In 2019
No doubt that car insurance rates in Kenya are expensive compared to other countries globally. As a result of high rates on car insurance, car owners are feeling the pain of paying high premiums on car insurance rates.
The car insurance companies have reasons to justify why they charge high premiums.
Such reasons can be the increased cases of car theft, fire, carjackings in urban areas and car road accidents.
It is important to note that, the car insurance companies in Kenya face major hurdles. Such challenges are ;
First, lack of public awareness on car insurance policies. Secondly, shortage of skills in the insurance sector. Thirdly, inadequate tax incentives and lastly lack of saving discipline.
Despite the challenges and the electioneering period experienced in 2017, according to Insurance Regulatory Authority (IRM) the insurance industry in Kenya recorded a growth of 6.3%. This is from a record of KES 196.64 billion in 2016 to KES 209.0 billion in 2017.
Are you wondering why car insurance rates in Kenya are expensive?
In this article we are going to shade light on the reasons why you are paying more on car insurance rates in Kenya ?
But do you understand Car insurance? Car insurance Kenya is a mutual agreement between the insured and the car insurance provider.
The insured pays annual premium in return the insurance provider covers the legal claims expenses and damages done to the third party.
There are three major types of car insurance covers in Kenya as follows;
- Comprehensive car insurance policy, it covers you financially against legal liability arising from third party property damage, death, bodily injury.
It also covers the damages done to your vehicle as a result of accidental fire, theft or accident.
- Third party car insurance which is also referred to as ‘act only’ is the least legal level of cover mandatory to drive a car on Kenyan roads.
It protects you financially, when you damage someone else’s property or end up causing injuries to them while driving.
- Third party, fire and theft insurance, it covers you financially, when you cause damages to the third party. It also provides coverage where passengers get injured. It provides coverage to specific risks.
Private motor vehicle insurance policy
The private motor vehicle insurance policy protects you financially against the accidental loss or damage to your private car.
It also covers you against legal liability arising from third party property damage, personal bodily injury and any legal claim procedure arising out of vehicle owned and operated by you and your family.
The cost of private vehicle insurance has doubled. The car insurance companies are mitigating revenue losses that result from cases of fraud, reckless driving and failure to resolve cases in the courts as quickly as possible.
The high premiums on car insurance policies have been greatly contributed by lack of sharing information among the insurance providers, thus giving rise to dishonest policy holders.
According to insurance industry report 2017 by Insurance Regulatory Authority, car insurance companies in Kenya reported losses.
The figure below shows the trend in net premium income and direct expenses incurred by the insurance companies ( in billion) in Kenya over the last five years according insurance report 2017 by Insurance Regulatory Authority.
Note that direct expenses include commissions and management expenses.
Some of the big losers were;
- UAP General incurred losses of KES 400 million
- CIC General Insurance reported KES 540 and
- Britam Insurance suffered losses of KES 495 millions.
While the top insurance companies in Kenya were the big winners such as APA Insurance reported profit of KES 85 million and AIG had a profit of KES 25 million.
The private motor vehicle owners pay more for car insurance rates as the insurance providers feel the the impact of higher costs and lower returns from the private motor sub-sector which has high risks.
The car insurance rates for private vehicle owners is estimated to be roughly at 3.5 – 4.5% of the car from most car insurance providers.
It is important to note that some car insurance companies offer different insurance rates depending on the age and value of the car, gender, marital status etc
Other car insurance providers offers flat rates for all vehicles, here are factors affecting car insurance rates;
- Marital status
- Driving record
- Claims history
- Credit history
- Vehicle use
- Vehicle type
- Miles driven annually
- Coverage and deductibles
PSV Motor Insurance Rates In Kenya
The commercial public service vehicle insurance policy covers you against liability arising from third party; death or bodily injury. It also protects you financially against third-parties-property damage and it covers the medical expenses.
There are limitations to Public Service Vehicle Insurance Policy; it won’t cover you when your vehicle is used for racing competition, rallies and social purposes.
These are types of PSV Vehicles;
- Matatu and Busses, these are the most used vehicles on Kenyan roads.
- Tour Vans, this type of vehicles are mostly used to carry tourists and visitors in and outside the city
- Chauffeur driven cars, this type of vehicle are considered less risky because they are assigned to specific drivers. Companies like Uber, Little cab and among others use this kind of service to their to their clients.
- Car vehicles hire, an individual hires the vehicle to use for business purpose, although this kind of arrangement is considered to have high risk.
- Yellow Line Taxis, this type of vehicles operate at international airports.
The following are the main covers for PSV Vehicles;
- Comprehensive insurance policy
- Third party car insurance
- Third party, fire and theft insurance
The PSV Motor Insurance Rates varies from the types of vehicles used. For instance for chauffeur driven cars, the premium rates are cheapest starting from 5.2% to have the comprehensive insurance policy cover.
For yellow lines taxis and cabs also have the same premium rates as they are considered less risky.
Car vehicles hire have high premium rates as they are perceived to have high risks, the comprehensive insurance cover starts from 10% of the value of the car in addition passenger legal liability.
Lastly, the matatu and buses are the most expensive. Their rating are based on the third party insurance calculated on the seating capacity in addition to motor asset insurance.
The premium rates start from a minimum of 6% value of the vehicle based on the car insurance company.
Third Party Car Insurance Rates
As noted before third party car insurance in kenya is the least legal level of cover mandatory to drive a car on Kenyan roads according to the Kenya Traffic Act Chapter 405.
So, what is covered in third party car insurance ;
- Death/injury liability coverage.
- Property damage liability coverage.
Third party car insurance doesn’t cover the cost of damages to your car. It also doesn’t protects you financially, when your car is stolen, vandalized or damaged by natural disasters.
Before buying a third party car insurance cover, you need have the following documents;
- Your National ID, for the purpose of identification.
- Your log book, to show you are the rightful owner of the car.
- Your car valuation report, which shows the value of your car.
In comparison with the other motor insurance rates, third party car insurance rates haven’t changed much, although the third party motor vehicle insurance quotes vary from different car insurance companies.
The third party car insurance rates for private cars starts from KES 5,063 to KES 10,000, while the cars used on Uber, Little cabs and among other online taxi platforms are charge a flat rate of KES 9580.
The insurance rates have remained fairly constant, but it is important to note that car insurance companies do not offer PSV Motorcycle Insurance for motorists or boda-bodas. It is perceived to have high risks.
Comparison Of Car Insurance Rates
According to a study done by Quadrant Information Services, the average annual cost of car insurance in USA is $ 1308 in 2018.
The cost of car insurance rates in USA varies from state to state, although the ratings are based on the insured and not the car itself.
For instance young drivers in USA are considered to be reckless drivers, because of this the car insurance companies charge them high on premiums.
Some of the factors affecting the car insurance rates in USA include;
- Marital status
- Where you reside in USA
- Your job
According to British Insurers, the average car insurance premium in the UK for comprehensive policy cover was £485 per annum which is equivalent of £40.41 a month.
These are the factors affecting car insurance rates in UK;
- The car you drive( make, model, age, security, value and size of your car)
- Your driving experience and age
- History of claims
How To Use Car Insurance Calculator
The Car Insurance calculator provides you with the premium quotes and with additional of customized benefits which are based on the information you have given. Most Car Insurance Calculator Kenya have two options;
- Premium Calculator for used cars
- Premium Calculator for new cars
Check our online car insurance calculator on NEXT and let us help you to compare insurance quotes in return you get the best deals on car insurance rates in Kenya. You don’t have to be a guru in mathematics in order to calculate your car insurance premium in Kenya.
For instance when you want to calculate the premium rates for old cars, you need to give the following information;
- The car type
- Any existing car insurance policy if any
- Registration number
- The owner details
- Claims reports if any
For new cars, you need to provide the following information;
- Car make
- The model of the car
- Years of manufacturer
- Personal details