It often happens that somebody is innocent in an accident. Or believe they are, which is not the same thing.
Then they want to put in a third party claim against the guilty party’s insurance. This is a bad idea for two reasons.
I have an appointment with a prospective client. When we discuss his insurance needs, he tells me he had an accident. As a civil engineer on site a sub-contractor reversed into his parked vehicle. He reported the accident to his insurance, but then decided it will affect his no-claim bonus and therefore put in a third party claim against sub-contractor’s insurance.
He was about to settle for R8 500. I advised him not to settle, it was day 28 and the claim must be submitted within 30 days. We could wait with the broker’s appointment until the claim was settled.
He followed my advice and re-opend the claim with his insurance. When the panel-beaters started opening up his car, they discovered more damage. The total claim increased to R45 000. That is a far cry from R8 500. And, as you know, once you settle for full and final settlement, the difference is for your account.
The Story Continues
This story has a sequel. His work took him to Oudtshoorn. He wanted to buy a new car, but the salesman said he cannot trade in his vehicle, since the accident damage was not repaired properly. I contacted the insurance company, an assessor agreed the work was shabby and the car was repaired properly.
I think that was good advice to claim from his own insurance, don’t you think?
This is the next reason you claim from your own insurance.
The third party phones me and says my client is guilty and he wants to put in a claim against my client. I “advise” him to claim against his own insurance. But it is a no claim bonus, excess and cash back bonus and what have you and he wants to claim directly.
He wants to claim directly. So this is what I tell him: “Make a note. My best advice is to claim against your own insurance. You are not my client I cannot really advise you, and I do not handle your claim. In fact, our office does not even do it. It goes to the legal department, somewhere. You are not their priority. You do not pay us a premium, so you are not a client. You are a claimant.
“But, since you want to do this, send us a letter of demand and three quotes.”
“But my insurance only requires one quote!”
“I just told you we are not your insurance! If you claim from your insurance, they only require one quote and their legal department will work with our legal department. But now you want to do all that yourself. We need a letter of demand and three quotes.”
As time goes by and he deals with the legal guys, he phones again. “If I knew it was going to be this much trouble …” ? Remember I warned you? You did know. There is nothing I can do. That is the process.”
(As jy nie wil hoor nie, Boeta! Sometimes people do not have their own insurance and my heart bleeds for them! It is not a process I would choose for myself).
Your No Claims Bonus
Let me put your mind at ease about No Claims Bonus.
Firstly, it is only your no claims bonus on the specific vehicle that will be affected. That means it is only the premium on that vehicle that is affected. Normally not a huge amount.
Secondly, your insurance will start the process to recover their money. When they do recover the money, they will also try to recover the excess you had to pay. Sometimes it takes a long time.
The moment the recovery is finalized, your no claims bonus will be re-instated.
CASH BACK POLICIES
My opinion on Cash Back Bonuses:
Since people normally only die once, I can see a benefit for a cash back on a life policy.
But please do not be so naïve to think the cash back is free! Show me any company who can give you 5% or 10% or more back from their turnover or profit and I will show you a company who over charges. Business is too competitive to work at these extreme margins.
And a cashback will only prevent small claims that people can easily pay from their own pockets.
So the cash back is another insurance policy that you pay for. If you do not claim, then the insurance looses the bet, and you get a very handy cash bonus. Often it is a life saver!
(If you do not believe me that you pay for the cash back, ask for a quote with or without a cashback.)
Penalized Once, Twice, Thrice
A without cashback policy penalizes you in two ways for an accident: you pay an excess and loose 2 years on your no claims bonus.
If you have a cash back policy, you loose your cash back, too! Even if it is on the last day before you become entitled to the cash back! Triple Whammy!
|This is just my opinion, you may feel differently. That is fine by me. If you have received a cashback or two, you will think I am a fool. That is also fine by me!|
That is why I will never go for a cash back policy. Last time I did a quote on a life policy with and without cash back, I decided I can do much better by saving the extra premium with Capitec. Only I did business with a company with no cash back.
Since I am writing about short term insurance, let me add that the companies that disclose the cost of cash back options, it is not a significant premium.