When To File A Car Insurance Claim And When To Avoid It? | Bharti AXA GI

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When To File A Car Insurance Claim And When To Avoid It?

While purchasing a car – one is required by law and prudence to purchase car insurance. The car insurance papers are one of the essential documents that must remain in your car at all times. The car insurance entitles you to claim the expenses incurred out of injury to owner and third party, and repair in case of an accident. Since the very purpose of purchasing car insurance is to claim this expense – then why must one consider whether to file a car insurance claim or not? Interestingly, there are certain factors, which make perfect economic sense.

These are:

When the cost of repair is minuscule:

For every year that a vehicle owner does not file a claim, she receives a no claim bonus (NCB). This is a percentage reduction of the yearly premium. For each year that no Claims are made – the No claim bonus amount increases. The No claim bonus amount generally begins at 20% and can go up to 50% for consecutive years of making no claim.

For instance, one may find that due to a mishap, the car has suffered some minor damage. Either the side view mirror or the headlight might be broken. In such a case, by filing a claim for minor repairs, one may end up losing the substantial no-claim bonus which is due next year.

Therefore if the no claim bonus due next year is higher than the cost of repairs, then it is better to not file a claim.

 

 

Increase in Future Insurance Premium:

The premium amount is based on an assessment of risk and the possibility of an insurer having to make a payout. In case of claims made often, the assessment of risk goes up and the premium will accordingly rise. In the case of infrequent claims and proof of third party fault – your insurance premium would probably not be increased. This decision is at the discretion of the Insurance company.

Deductibles:

Every Car Insurance policy has a clause for deductibles. A deductible is an amount paid by the insured in case of a claim before the insurance plan kicks in. For example, if the expenses work out to be Rs 4000 and the deductible is Rs 3000, then one needs to pay Rs 3000 from one’s pocket and the remaining Rs 1000 will be paid by the insurer as the claim amount. But, if the expense is equivalent to Rs 3000 or less then the insurer won’t be any payout by the insurer. Thereafter too – the calculation of the payout is influenced by the age of the car – which will also reflect on the latest value of the vehicle, etc. before arriving at an amount which will be approved and reimbursed or paid.

Even in this case, if the cost of damage is less than NCB,  one should avoid filing a claim. Building on the above example, if the NCB due for next year is Rs 8000, then it doesn’t make sense to file a claim for an expense of just Rs 1000.

We can see that having adequate knowledge of the No Claim Bonus, Deductible Amount, Impact on future Premium and Actual Repair Expense sustained are the major determinants of whether or not to file a car insurance claim.

There is also the clause of third party claims that may come to mind. This is in case of no fault of your own if the car meets with an accident – then the amount can be claimed from the Insurer of the other Car – which has caused the accident. By following this route you would not lose your benefits or no claim bonus. But for claiming this – you need to file a police complaint or an accident report as well as be able to prove that you are blameless yourself in this incident. In case someone is hurt, it is always advisable to file an accident report at the police station.