The lowdown on a no claim bonus…
Considering what it would cost to replace what we have, very few of us can actually afford to go without insurance. But when shopping around for insurance, there’s nothing wrong with making sure that you’re at least getting your money’s worth… Or more than you bargained for. Which is why it totally makes sense to investigate the merit of a no claims bonus. To do so sensibly, let’s first make sure that we do understand what a no claims bonus really means…
A no claims bonus decoded.
The most common definition of a no claims bonus in South Africa is: ‘a cash bonus that rewards you for not claiming, after (usually) three consecutive years.’
What it means in practise is that if you don’t claim within those three years, you will get a prearranged percentage of your own money back.
For example… Your insurance company offers a 3 year, 10% no claims bonus. You’re paying R1000 per month for your car insurance and you don’t have any incidents that you need to claim for, for three years in a row. Your insurance company then should reward you for the fact that you have not claimed by giving you 10% of what you paid back. In this case it will come to R3600 (R100 per month for 36 months).
How likely are you really to get a no claims bonus?
Whilst the idea of a no claims bonus really sounds wonderful, the joy of it may very well be short-lived. This is because if you do claim, then the cycle starts all over again and you have to have another three claim free years before you’ll benefit from the no claims bonus at all.
This is why we say NO to the bogus ‘no claims bonus’.
What insurance companies conveniently don’t tell their clients; is this… All insurers have to abide by the laws and regulations of the Financial Services Board. This means there are fair and ethical limitations to what means may be used to entice clients.
So to provide for your ‘no claims bonus’ within the parameters of what is legal, insurers inflate your premium upfront and they place this money in reserve. All it really means is that you’ll get your OWN money back, IF you’re lucky enough to NEVER have an incident to claim for. Now while insurers very well get away with this from a legal perspective, we at King Price declared war against it.
Why bank on maybes if you can bank right now?
The question we dared to ask at King Price is… Why pay more for a POSSIBLE no claims bonus that you could have later, if you can just pay less right now? Besides, if you thought that you’d never have an incident that you’d need to claim for, why would you need insurance at all??
So instead of inflating premiums at inception, we give ALL our clients super cheap insurance right from the start. Not just those who didn’t claim. Best of all is that our premiums continue to decrease every month as your car’s value depreciates.