When you want to choose the most appropriate car insurance, usually a lot is taken into account, including filing a claim later. Quite a lot of people think that taking car insurance and unused is waste and loss. Because if there are no claims at all, it means that the premiums are forfeited and it is a shame that you have wasted several million in a year just to buy insurance. So this triggers people to think twice when insuring their car.
Many people feel disappointed with this kind of situation. They are not satisfied with the policies implemented by the majority of car insurance companies. Imagine, you have already paid a high enough premium, but if you don’t use it, it just disappears. Not to mention if there is a claim submission, it is not certain that the sum insured will come out according to expectations.
Sometimes when submitting a claim it turns out that the claim paid is not in accordance with the agreement because this rule is from an insurance company which is often overlooked due to not being careful in reading the terms and conditions submitted. So annoying, right?
This is what finally began to be understood by a number of insurance companies. Because they feel they don’t want to lose customers due to things like those mentioned above, many car insurance companies are starting to offer “no claim, money back” car insurance products. With the emergence of this type of product, the rhythm and excitement of the auto insurance market have increased again.
Most of the customers feel tempted by the offer because they think there is nothing wrong with paying in advance if the money can be returned later. If you think about it, there is nothing to lose. However, is it really that easy?
Get to know the ‘Car Insurance No Claim Money Back’ Program
Often this type of insurance sets a trap that the customer doesn’t think of. Surely many think that as long as the car is good and there are no obstacles or accidents then the money can be fully returned. Well, this thinking should be revised. Because it is impossible for a business to lose money or not make a profit at all. Don’t simply think that money can come back easily. There must be terms and conditions that must be studied clearly before deciding to take car insurance.
Instill in advance the thought that premiums are the main source of life for the insurance company. This premium is usually used by the insurance company to pay a number of costs. Therefore, there are several cost components that have been calculated by the insurance company before determining the premium. The following costs are:
1. Claims Ratio
This cost component is the ratio between the premiums received and the claims paid. So if in a year out of 1000 cars there is 1 claim, then the claim ratio is 0.1%.
2. Acquisition Costs
Included in the cost of the acquisition is the cost to pay for marketing costs. This fee also includes fees for intermediaries such as banks, insurance agents, insurance brokers, leasing, and so on.
Included in overhead costs, namely the cost of expenses to pay for the operational costs of the insurance company concerned. For example, employee salaries, building rental costs, maintenance costs, electricity costs, paying for advertisements, and so on.
4. Profit Margin
Of course, no company wants to lose money. Therefore, this component must and must be taken into account by the insurance company in determining the amount of premium. If not, then the insurance company would find it difficult to get profit from the products it marketed.
From the four cost components, a premium that must be paid by the customer is created. Logically, all these costs will be used by the insurance company. So how will they return the money if there is no claim? Of course, with the terms and conditions earlier.
Usually, the main requirement is never filing a claim at all in the current insurance period. It’s a bit difficult, right? Because every day we use a vehicle, every day there is a risk to our vehicle.
Even if it is true that there is no claim and it is returned, it is not certain that the insurance company wants to return 100% of customer funds. Surely later there will be a discount on this fee and that in the end, your funds will only return about 50%. It can also be returned a certain percentage and the customer is required to continue insurance in the following year. Funds will be returned in the form of a discount in insurance costs in the following year.
In general, if you think about it further, these conditions are only natural to apply. The insurer certainly does not want to lose credibility and tries to keep its promises. Because of that, a condition that is not burdensome for the insurance company is issued in returning customer funds. The insurance company tries to keep its promises at the beginning, but on the other hand, will think of trying to get the maximum benefit.
For example, if it is returned in the form of a discount in the insurance fund in the following year, it means that the insurer has time to turn the funds into other investments until they reach a certain profit. In addition, the value of money will decline over time. So that in the following years the initial insurance value that we paid was not felt by the insurance company. Compared to the premium value, which will also increase each year. So the deductions made by the insurance company could be only a few percent.
One more thing, generally the amount of premium on this form of insurance is much more expensive, can reach a difference of around 10% -15% with other types of insurance. Thus, even if only partially returned, of course, the insurance company will not feel a loss. On the contrary, as customers, of course, we will feel the loss. Because the slogan that was set in the beginning was not entirely correct.
Don’t be Tempted Easily!
Looking at some of the explanations above, it is quite clear that in determining the car insurance to be used, you should not be tempted by their advertisements which state that money can be returned if there is no claim. If you want to choose the right car insurance, you should consider the risk to your vehicle, the ease of submitting a claim, the premium costs that are still reasonable, and the credibility of the car insurance company.
Keep in mind that nothing is free to buy protection. There are definitely costs that you have to spend. It’s just that, by thinking smart, these costs can be reduced to a minimum. Happy hunting for car insurance products!