Is it worth participating in or actively looking for a car insurance company that offers a cash back bonus if you don’t make a claim? In my opinion, NO – read on to see why it actually costs you a great deal more.
Some time ago, my father in law visited us from the U.S. and instead of hiring a car, we offered him the use of my wife’s car to get around Cape Town. He appreciated the offer and accepted gladly, it’s a nice comfortable car and it meant he could come and go as he pleased without incurring any additional cost to his already expensive holiday.
We took a drive up to Knysna, and parked in a wooded forest parking area near our rented accommodation. He parked between two trees and unfortunately managed to dent the front fender on reversing out of a tight space. It was purely accidental, and the tree had a minor rub mark on it’s bark – the car however, would need a new front fender. No one was harmed and he was deeply sorry, so we thought that it would be best not to make any insurance claims until we returned home. We didn’t bother going to the police either; it really was a minor affair.
We also knew that we had 6 month left before we qualified for our amazing “no claims bonus” – so we decided to drive the slightly dented car and then repair it from our own pockets (paying cash) once we had collected the cash back. It was an amount of R12,000 and we figured that the damage was around R5000 at most – as it was a fender replacement and respray. No other panels of the car were damaged and it was a standard Mercedes colour, so we figured that for a few months of driving a slightly dented car, we would save R7000 – worth doing in my book!
The months rolled by and soon enough, we were R12 000 richer – wonderful, what a good idea to have a not claimed for our car insurance and the received a no claims bonus which rewarded us for being so careful – delighted!
A few days later, my wife decided to shop around to see if she could find a more competitive car insurance offer and to her delight, she was able to reduce her monthly premiums but such a large amount with an insurance company that did not offer any bucks back bonus that it actually saved us R14000 – which was R2000 more that we were paid out! Now, what this means is that if we did not have the no claims bonus dangled in front of our noses, then we would have claimed on the insurance without hesitation and we would not have driven around in a dented car for six months, and we would have had far fewer hassles of dealing with the auto body works company.
So really, it’s far better to pay lower monthly premiums and claim when you need to rather than go through all this bucks back, smoke and mirrors nonsense!
It gets a bit more complicated, and I feel it’s worth mentioning the following. The car was still under warranty, and because of this we had to take it to a manufacturer approved body shop – which just happened to charge an arm and a leg for a simple fender replace and spray! This resulted in our initial estimate from a panel beater being completely wrong and the final cost was actually R8,800 – a total rip off. The company in question was Mercedes-Benz Body Repair Centre in Montague Gardens, do not use them EVER. Their parts mark up was over 100% and it took them over 8 working days to complete this simple job. Beware of them – poor service and unreasonably high costs come as standard.
This just strengthens my case against no claims bonus incentives – I feel that they are cleverly calculated schemes that prevent you from making an insurance claim when you need to – and ultimately they save the insurance companies a great deal in claims. No insurance company is going to give money away, you the consumer are simply paying for this bonus out of your own monthly premiums. You may as well put the extra money into life insurance or some other investment opportunity.