This comes down to one of the finer, more finicky areas of managing your auto insurance for maximum value. As panel beaters, we try not to influence our customers too much on how to manage their insurance - after all, this is really their decision to hold with their insurance agent. But we can provide some input on how the situation can translate to crash repairs.
A big chunk of your decision making has to reflect how cautious you think you are as a driver, which no one can truly anticipate. At the end of the day, the whole business with insurance is trying to predict how likely you are to have an accident, which no one can really do with any high degree of accuracy. Even if you think you are a safe driver, there is a possibility that you are not, and crashes will still tend to happen, regardless of how cautious you are.
The only situation where you might never get insurance is if you knew with certainty that you would never have a crash while on the road. The reality is that nobody knows this for certain, and therefore insurance is for everybody.
The people who really know the odds in insurance are the people with all the facts and figures to hand - in other words, the insurance companies. Only they know the odds and how to price insurance over the long run, and even they would hesitate to predict whether a particular driver would have a crash in any given year.
But having some knowledge of your level of safe driving, hopefully based on some past experience and reasonable evidence, can help you make decisions on the finer points of insurance, such as whether or not you need a low excess. If you are confident in your abilities as a driver, it might stand to reason that you can handle a higher excess, which will typically cost you less on a monthly basis. Provided that your assumptions about your own driving skills are correct, this can hopefully help you save money on insurance over the long run.
But having a high excess isn’t for everyone and comes into play in a practical sense when you actually crash your car. If the amount of your excess is $1000, you will be able to claim far less if the impact of the crash is moderately severe and the panel beating costs come to $1250. The benefit of making a claim for insurance under these circumstances is marginal. You may then be scratching your head wondering if all the monthly premiums you paid were really worthwhile.
But even an excess of $1000 protects you from more serious crashes, and can be good value for money for the more careful drivers on the roads. Third party insurance is important as a minimum as well, because in the event of a crash you can be liable not just for your own damage but also the damage you inflict on the other person’s vehicle if you are at fault.
Another factor that comes into play is a No Claims Bonus. We have had situations in the past where a driver has had a crash and has had a low excess which would make claiming insurance for panel beating and repair completely justifiable - but who have held back because they don’t want to make a claim that would affect their No Claims Bonus.
However, your best option - hands down - if you are not certain of your driving skill or your safety on the road - or if you just don’t trust fate - is a low excess insurance policy that will pay out the amount you need for repairs and never put you too far out of pocket.
The final piece to the puzzle is peace of mind - how important is it to you to be able to rest easy knowing that your car is covered and repairs will be affordable if you have an accident. While this is largely an emotional decision, it is still an important one.
Whatever the finer points of insurance actually are, the reality is that this is a subject that few people spend their lives thinking about, but it can come into play in a practical sense if you are involved in an accident. If you are unsure about the amount of your excess, the first person to talk to is your insurance agent who we recommend you talk to to decide if your policy is really right for you.
No Claims Bonus
There are many factors that come into play when making even such a simple decision of whether to use your insurance and potentially forfeit your No Claims Bonus. Many insurance companies institute a No Claims Bonus because they know that over time it will act as a disincentive for customers to place claims.
Another question is whether insurance is available, and whether making a claim on insurance actually suits a customer’s priorities. There may be situations where customers don’t want to make a claim, simply because they don’t want to lose their no claims bonus with their insurer for example.
At this point, we can help you to weigh up the pros and cons. What will you gain by getting your car covered by insurance, for example? Could it affect resale value if you go with a cheap option for repair when you could have covered it for insurance.
Other questions you may ask yourself are, how likely is it that you will have an accident at some point in the future? Are you overall a safe driver? Accidents will happen, and when they happen it is good to have options.
There are trade-offs involved, and that is why a good relationship with your panel beater can work well for you in helping you to determine the best choice for your circumstances.