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