Let’s consider some of the factors you should consider in your decision:
What is the excess payment?
The excess is an amount of money that will come out of your pocket when you claim from your car insurance. If you have a low excess - say, R1500 - it could make sense to claim for a typical small scratch/dent, which is usually in the region of R3000 to R5000 to repair. But if your excess is larger - for example, R10000 - it will probably be more than the cost of the repair. So, you could claim and get a small amount or nothing back for your trouble.
On top of that, your insurer may consider that you made a claim during the year when it’s time for your annual premium review. It may assess you as a higher-risk customer and increase your premium as a result. Your premium increase over a couple of years could be higher than the cost of paying for the repair of your car, out of your own pocket.
Do you have a no-claimS bonus?
Many car insurers offer a no-claims bonus. As the name implies, this is an incentive not to claim from your car insurance. The bonus is usually a percentage of your premiums paid back to you in cash, after a set period of time, provided you have not made a claim. You will lose this bonus if you claim after a minor incident, even if it turns out that your claim was lower than your excess.
Was another vehicle involved?
This is when it starts to get a bit trickier to decide. If the accident was not your fault, the other driver might apologise profusely and promise to pay personally, without involving insurance companies. You should be careful of accepting such an offer, even if it seems attractive not to hassle with insurers and excesses, and all the accompanying red tape.
First, you will be on your own, without your insurer to fight in your corner if the person does not honour the deal. You could find yourself chasing them for weeks for the money they promised to pay. Second, it is possible that something that looks like a minor dent on your bumper could hide deeper damage to your car, that might be more expensive to repair than the other person anticipated.
Likewise, if the accident was your fault, you can offer to settle out of pocket, but it might not always be a good idea. It could be that it will cost far more to repair the other vehicle than you expected or can afford.
Additionally, the other driver might try to hit you with unfair claims, for additional damage and injury, which is when you’d like to have your insurer at your side.
Are policies for minor damage worth your while?
Many insurers now offer policies that cover scratch and dent damage - the premium may be as low as R100 a month. Be aware that such policies cover only up to a small amount - for example, R3000 per incident.
This does not mean the insurer will pay for the first R3000, but that it will pay only if the repair will cost less than R3000. So, if the damage is deemed to be R3000.01, your claim will be rejected. In practice, this cover is seldom enough to result in a valid claim, because even a tiny dent on a mid-range sedan can cost R5000 or more to fix these days.
Plus, you will need to accept the word of the insurance company’s assessor about whether the damage will cost more than R3000 to repair.
Your friend at the autobody repair shop might be able to do the job for less, but that doesn’t matter. Check the wording of your policy carefully and choose a reputable provider if you are going to go this route.
So, what can you do?
Scratches and dents are a reality of car ownership. Save some cash in a rainy-day fund for minor repairs and other day-to-day hassles. Try to find an affordable and reputable car repair shop you trust to buff out scratches or do micro-location paint jobs for you.
Think about your cash flow and risk tolerance when shopping for car insurance. If you are really worried about paying for repairs out of pocket, opt for a policy with a lower excess. If you are buying from an online provider, you can experiment with different excess values online, or on the app, to understand how reducing or increasing the excess will affect your monthly premium.
Greybe is the co-founder of Naked Insurance.