Insurance is something everyone loves to hate, but is absolutely vital to protect valuable assets. However, what can you do to minimise the cost of insurance on your vehicle?
For anyone financing a new vehicle through a bank or other financial institution, a requirement is comprehensive insurance cover on that vehicle – naturally the bank wants to protect its money as much as you want to protect your vehicle.
Over and above the comprehensive policy that generally covers the vehicle for theft, fire and accident damage, there are add-on options such as scratch and dent cover that applies to the minor bumps and scrapes that occur with daily use.
Willers Baard, Underwriting Management Consultant from EQSTRA Fleet Management, explains: “There is often a misconception that smaller losses and the repairs thereof will not have a material impact on future Claims Bonuses and Insurance Premiums in general and that insured drivers do not have to be careful and try and avoid losses as far as possible.
“Insurers are using the incident history of the policy holders as rating factors. Some of the South African Short Term Insurers are using complex data analysis models and systems to determine the claims patterns and potential future losses of individuals and to determine the risk premium.”
“Any loss with a value of more than the excess or ‘own amount payable’ will have a direct impact on a Claim Bonus and therefore the future payable premium.”
The actual premium charged also takes into account the age of the driver, previous losses and geographical area where the client is based. This last item is linked to crime statistics for that area, particularly vehicle theft. Insurance quotes are also affected by the number of claims on a driver’s or company’s loss record.
“Therefore, one of the best ways to save money on an insurance premium is to build up a ‘no claims bonus’ or a ‘no-claims-discount’ (NCB/D).”
“The NCB/D provides a reduction on the cost of your insurance for every year passed without making a claim. As a rule, your NCB/D is transferable between insurers, so you will not lose it by switching providers.”
The NCB/D can also present drivers with a decision in the event of an accident or incident that causes only minor damage. Claiming the cost of minor vehicle repairs can mean missing out on years of NCB/D’s. This can lead to some drivers deciding to cover repair costs to their vehicle and even the vehicle of the other party involved. This is normally an informal arrangement between the insured and with the other party.
“Do not miss out on future opportunities to save money by claiming for small damages, especially if there is not another party involved in the incident,” says Baard.
A number of insurers also exclude damage to vehicle windscreens and only includes it in a policy if you request it, at an additional charge. The reason for that is chips incurred due to the loose gravel or stones on the roads. Insurers encourage their policyholders to repair vehicle chips to avoid costly replacement of their vehicle windscreens. This also cuts down on seemingly small losses that impacts directly on the bottom line. Windscreen chips are normally repaired with no excess and no impact to NCB/D’s.
It is always a good thing to keep your car in good condition and a number of us forget to check important things such as wipers or tyre tread – and this could lead to a claim being rejected.
“The approach of insurers regarding their pricing models is changing and the person that claims often will start carrying more and more of the premium and higher excesses. The sharing of data between the various Insurers has also been agreed to. This means your claim record is not a secret anymore. You may soon find that when applying for an Insurance Policy the insurer will already have record of your loss and NCB/D,” warns Baard.
“Ensure you understand the impact of your small and seemingly insignificant claims on your future premium. Ask your insurer about the impact before you decide to lodge a claim.”
Naturally the best way to avoid any claims is to drive carefully and to avoid those small bumps and scratches that could cost you money in the future.
A clean and dent-free vehicle will also garner more in trade-in value when it comes time to replace your vehicle.
However, keeping it scratch and dent free is not easy, but we have 6 valuable tips you should keep in mind:
1. It may be nicer to park closer to the shopping centre entrance but that is where the highest trolley traffic is found and along with that a bigger chance of suffering a dent. Rather park a bit further away where the traffic is reduced.
2. In parking lots, look carefully at how the vehicles either side of your chosen spot are parked. Are they inside the lines? Are their wheels straight or still angled from turning into the parking bay? Is there enough space for you – and them – to get in and out of your vehicles without the door banging into the other vehicle?
3. Be especially careful in underground parking lots where the ramps and turn angles can be very tight.
4. Do not follow other vehicles too closely – small stones can easily be thrown up and damage your windscreen or chip the paintwork. This applies especially to trucks carrying sand and stone as the material being blown off the back of the truck can literally sandblast the front of your car.
5. Leave enough space ahead of you at traffic lights or in stationary situations that, should you be bumped from behind, you will not do the same to the car in front of you.
6. Always ensure your lights are in peak condition and correctly aimed – dogs, cats and other small animals are difficult to see as are other hazardous objects including potholes, rocks or anything else lying on the road. Adjust your speed and slow down, especially in unlit areas.