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April 18th, 2017 by

You have seen and heard all of the adverts. How are you going to spend your cash back bonus? Spoil yourself after three years of not claiming! Images of the family enjoying a vacation in Thailand or the Seychelles are splashed all over the screen. New insurance customers start planning out the family vacation they will have in three years, while eagerly signing the new insurance contract.

Various companies promise cash-back with different products, whether it be short-term insurance or life insurance. OUTsurance, for example, is renowned for their OUTbonus. Every day-time ad on TV rings of getting your cash back, should you not claim for a certain period of time. This is one of their biggest selling tools in fact. This, and getting rid of the middle man. The company proudly splashes promises to spoil you with your 10% back on car insurance in three years.

CTAs 01 05 1 - Is The Claim-Free Bonus Bogus?

But, do the numbers work out? Is it too good to be true?

Let’s Take A Look At The Numbers

OUTsurance is currently offering insurance for a 40-year-old stay at home mom, driving a 2017 VW Tiguan, for R773. This is quite realistic, as a stay-at-home client is less risk to the company. She is expected to do more car-pooling and errand runs rather than be on the road for business. So, let’s work out the numbers:

  • The premium over a year equals R9 276.
  • During the second year, the premiums will usually jump by 10% to R850, equaling R10 200.
  • The third year, we are looking at R935, and a total of R11 220.
  • Over three years you are looking at a total of R30 696.
  • 10% of this is R3 069.90.

That’s around three to four months of premiums that you are getting back. After an entire three years of not claiming.

This means that the company is then pocketing around R27 000 of your hard earned cash.

Is this really a benefit to you?

Are You Being Tricked?

In certain cases, yes, it is great to get a bit of extra cash back in your wallet in a few years. This is especially true if you have not been in an accident or incident, at all, over the three years.

But, what are the sacrifices in the meantime? Hundreds of cases have been reported that drivers have, in fear of losing their cash-back bonus, simply not reported an accident or incident and waited for the three years to be up.

Whether it is a minor bumper bashing, a scrape into a wall, or a cracked or broken windshield, drivers would rather avoid claiming for these incidents than lose their bonus.

By encouraging you not to claim, the companies are almost demonising claiming. But, what is the actual point of insurance in the first place? The fact is, you insure your car, or household goods, so that if something does go wrong, it will be covered and you won’t need to fork out unnecessary cash for it.

The basic fact is: insurance companies simply do not want to pay out!

They would rather dangle small portions of the total money you are spending than pay out to fix your car or replace your stolen laptop.

Battling to get your claims paid out? Get a quote from us and we will assist in making sure that you get paid out!

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The Devil Is In The Detail

Many will come back and argue that, should the accident not be their fault, they should still be entitled to their cash-back bonus. Which seems totally fair.

The problem here lies in the fact that you will need to look closely at the contract. It states that the insured will need to provide “complete and absolute proof” that the accident was not their fault.

“In the event of a motor vehicle accident, provided the insured provides complete and absolute proof that the driver was totally free of negligence without contribution to the cause of the accident, then the application of the no-claim bonus shall not be affected and the first amount payable (the excess) shall not be payable by the insured.”

This gets somewhat tricky. In many cases, you will need to get a sworn statement from the person who caused the accident. If they refuse, you will need a written affidavit from a third party, who was not a passenger in either car, stating that you were not responsible.

Your Premium Soars, Should You Claim

What insurers do not let you know is that, the minute you claim, your risk profile will be significantly increased, whether it was your fault or not. You will end up paying increased premiums to the insurance company. The no-claims bonus period will also restart after you have claimed. So, you will wait another three years to get a small percent of your total cash back from the insurer.

We question, is it really worth it?

  • Rene Fourie

    The fault people make is to put a “non-claim bonus” on the list when deciding on insurance. It means nothing.

    When deciding on insurance you go on what friends and family experienced, on their recommendations. Some people are lucky, and some simply are not lucky – with client service. Personally I have had the worst with Auto and General, and an absolute horror story with Indwe. But with Outsurance a breeze.

    But then my friends have the exact opposite.

    The fact remains is that you cannot count an “out bonus” as part of your decision. That is like playing the Lotto for R50, and think you will win the R50 back.

    Only take in consideration firstly the brand, then the price – in comparison to other companies. And when you compare make sure it is not just price – make sure the cover is exactly the same. They will differ vastly on excess when you claim. Make sure it is as low as possible. They all say “your excess on the windscreen is R800” and then in super fine script “or 1/3 of total value, whichever is higher”, and then at time of damage you find out your windscreen is R12000! You pay R4000 yes… Not R800… So you simply take the insurance with the low excess which will be about R200 / month higher, but your excess on windows is a set R400, and other damage are R1000 (or nothing in some cases)

    There are lots of fine print regarding out bonuses. Even changing your address, or a simple detail such as changing your car can affect the bonus (as in void it)

  • Julian Burger

    To be insured, you have to ensure that your premises are completely burglar proofed, i.e. windows barred and doors with safety gates. You also need to have a burglar alarm connected to a call out security company obviously at a fee. If any of these requirements are not met, you pay a penalty on your premiums to accomodate these short falls, yet if you experience a burglary, you first of all battle with a payout and secondly your premium is hiked considerably. So what is the use of insurance when you have to ensure you are burglar proofed, pay for your cover in case of an incident but are penalised when an incident occurs. With a vehicle, as an example, you are a third vehicle in a three car pile up, could in no way have seen the accident coming or in any way avoid it, yet you are penalised for claiming whether you provide as much proof as possible of all the accident participants. Insurance companies are a law unto themselves and are in it to enrich their business and not for the customer’s advantage.