Why motorists choose out-of-pocket repairs over insurance claims

Many motorists are reportedly choosing to pay for minor car repairs out of pocket instead of filing insurance claims, mainly to protect their no-claims bonuses and avoid increased premiums.

Motoring enthusiast Warren Tucker says drivers often hesitate to report damage from potholes or small accidents because insurers penalise even modest claims.

"You pay them every month so that when something happens, they come and sort you out," he notes, questioning the value of incentives that discourage legitimate claims.

Tucker explains that cashback or no-claims bonuses are not a reward, but simply a portion of a customer’s own premium being held back and returned if they avoid claiming.

"I looked into all of this, and it's actually a bit of a racket. Insurance companies have to comply with the FSCA [Financial Sector Conduct Authority], and they have to be an authorised financial service provider, and as such, they must comply with the terms and the rules.

"One of these rules is that an insurer must disclose how they come about with that no claims bonus, andalso what the fee is that they put onto your premium for that no claim bonus.

“So, it turns out that you can tell your insurance, I don't want a no-claim bonus and automatically your insurance premium will drop. What they've done is because of the way the FSCA works, that no claim bonus is then taking a portion, saying to you, well, to get this no claim bonus, we're going to take so much money and put it onto your premium.

"We are going to save that money and provided there's good behaviour on your part, andyou don't claim from us and the rest of it, we'll give you your money back in two years time, but it's your money.

“You've had that money added onto your premium, and all they're doing is they're saving that money on your behalf, incentivising you and giving your money back to you. That's all that bonus is because the FSCA has basically given certain rules around how you can run a no-claim bonus, or cashback or anything like that. This is how it works."

Tucker adds that many motorists choose self-funded repairs when the cost is lower than the excess, or when they fear losing discounts tied to claim-free periods.

However, he warns that repairing a vehicle through an unregistered mechanic can jeopardise future claims if insurers deem the work substandard.

Tucker says South Africa’s high premiums (among the highest globally) stem partly from the fact that only one in three cars is insured, raising risk for those who do pay.

He encourages motorists to regularly review premiums, vehicle value and optional extras such as excess waivers or trackers, which can influence costs and claim outcomes.

To listen to Warren Tucker in conversation with 702's Gugs Mhlungu, click the audio below: