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CityPress - - Business -

One of the most frus­trat­ing things af­ter a mi­nor car ac­ci­dent that wasn’t your fault is los­ing out on your in­sur­ance perks such as your no-claims bonus, and that your record has now been “tar­nished”. Vir­gin Money In­sur­ance* hopes to can­cel this worry and says that, with its in­sur­ance prod­ucts, clients don’t get pe­nalised with a hike in their in­sur­ance pre­mi­ums if the ac­ci­dent wasn’t their fault. The com­pany also high­lights that you ben­e­fit from get­ting 10% of your car and home in­sur­ance pre­mi­ums as a cash-back bonus if you don’t claim in a three-year pe­riod.

While these in­cen­tives sound en­tic­ing, some com­men­ta­tors ar­gue that these perks shouldn’t be the rea­son to switch in­sur­ers.

Santie Stevens, a rep­re­sen­ta­tive for per­sonal lines and com­mer­cial lines at In­sur­ance Busters, says: “Take note that this [type of of­fer] is the case with most in­sur­ers, sub­ject to their abil­ity to re­cover the money from the third party.

“Most of the time, the pre­mium is not af­fected if a third party is found to be guilty of caus­ing the ac­ci­dent. How­ever, an in­surer can pe­nalise you with ex­cesses if no third-party de­tails are pro­vided.”

CASH-BACK BONUSES ARE A DIME A DOZEN

As for the cash-back bonus, Stevens says most in­sur­ers of­fer this in­cen­tive.

A sim­ple search on­line re­veals that di­rect in­surer OUT­surance of­fers you a 10% cash-back bonus if you don’t claim for three years. Plus, if you are claim-free for another two years, you re­ceive a fur­ther 10%, and then 10% of your paid pre­mi­ums back for ev­ery claim-free year there­after.

Other di­rect in­sur­ers of­fer vari­a­tions of this deal. Some of­fer more cash back, while oth­ers make you wait for fewer or more years be­fore you get a bonus back.

For ex­am­ple, ac­cord­ing to Bud­get In­sur­ance’s web­site, you will re­ceive 15% back of all your pre­mi­ums paid over the first two years of claim-free, un­in­ter­rupted cover.

Then, just like OUT­surance, Bud­get of­fers 10% back of all your pre­mi­ums paid if you re­main claim­free for a fur­ther two years, and 10% back of all pre­mi­ums paid for ev­ery claim-free year of con­tin­ued in­sur­ance.

Mean­while, 1st for Women of­fers cus­tomers the en­tire first year’s pre­mi­ums or up to 25% of all your pre­mi­ums paid over the first four years, which­ever is less. So if your pre­mium is R700 a month, you could get up to R8 400 back. MiWay In­sur­ance pays a loy­alty re­ward equal to a month’s pre­mium ir­re­spec­tive of whether or not you claim.

But not all in­sur­ers of­fer cash-back bonuses. Some of­fer other things, such as points or re­wards.

Dis­cov­ery, through its Vi­tal­i­ty­drive pro­gramme, has gam­i­fied its in­cen­tives. The aim is to get as many points as pos­si­ble to up your sta­tus and ben­e­fit with bet­ter re­wards. You can, for in­stance, get up to 50% of your fuel and Gau­train spend back ev­ery month.

It also of­fers dis­counts such as 25% off your Uber trips, but, ul­ti­mately, it en­cour­ages cus­tomers to drive more re­spon­si­bly.

“All in­sur­ers have their own unique lit­tle perks that make the one dif­fer­ent from the other. What I do see is that more in­sur­ers will be mov­ing to­wards telem­at­ics and start re­ward­ing their cus­tomers for good driv­ing be­hav­iour,” says Stevens.

Telem­at­ics uses GPS and mo­bile de­vices to send and re­ceive in­for­ma­tion. In­creas­ingly, in­sur­ers are in­sist­ing that telem­at­ics de­vices are fit­ted to cus­tomers’ cars so that they can mon­i­tor the driver’s be­hav­iour. Good driv­ing, such as fol­low­ing the speed limit, can be re­warded.

Stevens adds that the cash-back scheme is an out­dated in­cen­tive.

“It is old news and not as pow­er­ful as it was 10 to 15 years ago. Many in­sur­ers of­fer lower rates with no cash-back bonus, but in­stead of­fer other ben­e­fits that are more suit­able for to­day’s cus­tomers.

“How­ever, the cash-back poli­cies will al­ways have a place in the mar­ket be­cause peo­ple are dif­fer­ent and have dif­fer­ent risks and needs.”

SO SHOULD YOU SWITCH IF YOU LIKE THE PERKS?

In­sur­ance ex­perts rec­om­mend that con­sumers reeval­u­ate their home and car cover ev­ery year.

Lizette Eras­mus, an in­sur­ance ex­pert at In­te­griSure, says: “Clients should re­view their cover at least once a year with the aim of en­sur­ing their re­place­ment val­ues are up to date. Be­cause of tur­bu­lent mar­kets, re­view­ing your cover twice a year is also rec­om­mended.”

While it’s pos­si­ble to hunt around for the best cash­back deal and other perks, there is a dan­ger that you may be get­ting the wrong type of cover for your needs.

Eras­mus warns that re­view­ing cover with the aim to save money can be dan­ger­ous as it could lead to a cut in cover, which in turn could lead to dis­ap­point­ment if you need to make a claim.

“Re­mem­ber that the pur­pose of in­sur­ance is to place you in the same po­si­tion you were in be­fore a loss or dam­age oc­curred. You can only look at ways to save once you are sat­is­fied that your cover will do that for you,” says Eras­mus.

Stevens agrees: “A year ago, a cus­tomer may have faced a spe­cific risk and mit­i­gated this by shar­ing the risk with an in­surer of his or her choice. But that same risk may no longer be rel­e­vant and should be re­moved from the cover.

“This is why it is im­por­tant to speak to a pro­fes­sional bro­ker who can help you as­sess these risks, and en­sure that you are shar­ing the cor­rect risk with an in­surer and not throw­ing away money by pay­ing for some­thing that you may not need cover for.” *City Press ap­proached Vir­gin Money In­sur­ance for com­ment, but it did not re­spond prior to pub­li­ca­tion

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