The meaning of a ‘no claim bonus’ in short term insurance
A phrase that is lately often used in the short term insurance space is ‘no claim bonus.’ But what exactly does this mean? To help you understand it, let’s explain…. Let’s say you have a comprehensive car insurance policy with a short term insurance company… But in your first year you so happen to be one of the lucky ones who do not have a single accident, fire or hijacking incident for which you need to lodge a claim. Then typically; most short term insurance companies would give you an incentive for not claiming- also commonly known as a ‘no claim bonus.’ This no claim bonus is usually given to you in the form of a cash reward, or sometimes your short term insurance fees would simply be decreased from that moment onwards.
Is a ‘no-claim bonus’ really a bonus?
All short term insurance companies in South Africa have to be registered as authorised financial service providers at the Financial Services Board and have to comply with the relevant laws and regulations. One such rule that the general public is not necessarily aware of; is that all insurers who offer such a no claim bonus… Are forced to reserve a percentage of their premium income for this purpose. In reality, for you as the short term insurance policyholder, it just implies that your premium is inflated at inception, to provide for this amount that needs to be placed in reserve… And then you are given back your OWN money at a later stage, IF you’re fortunate enough to not have claimed, of course. Meaning that the no claim ‘bonus’ is actually nothing but bogus.
Why you need to say ‘no’ to the no claim bonus
The big problem that we at King Price have with this no claim bonus; is the fact that it departs from the assumption that ALL drivers are a risk. ALL drivers are thus penalised with higher premiums from the start; pretty much like being accused of being guilty until proven innocent. And as King Price is truly on the side of the people, we decided to firmly say ‘NO’ to this no claim bonus sham. Instead, we offer ALL our clients discounted premiums right from the word go.
One of the main reasons why we are able to do so, is because we have taken years to develop a high-tech risk rating system, which we believe is currently THE fastest and most accurate of its kind in our country. In practise, this enables us to calculate each driver’s behavioural patterns individually and more precisely than what was ever possible before. For our clients this essentially means that they do not have to pay a penalty for someone else’s driving sins. So do the smart thing and join us in saying ‘NO’ to the no claim bonus. Click here for a short term insurance quote that is discounted from the start.