Car Insurance: Does It Make Sense To File Small Claims?

Car Insurance: Does It Make Sense To File Small Claims?


In the unlucky event that your car is damaged due to an accident or a passerby, many of us occasionally find ourselves pondering the same sequence of words, don’t we? These are: when should you use your car insurance, and when should you forego it?

There are no fixed rules for making a claim, according to industry experts. To decide how to claim car insurance for scratches in India

, it is in one’s own best advantage to make some calculations and keep in mind a few fundamental truths.

The concept of risk serves as the foundation for insurance, and increased risk inevitably results in higher premiums. One of the elements that affect premium rates is a negative claim history. In the instance of motor insurance, for example, it directly impacts the no-claim bonus, which becomes zero and forces a person to pay higher premium amounts in the future.

Before filing a claim for insurance, one should assess the quantum of loss, any impact on the NCB, applicable deductibles, and future premiums, if any, and should proceed only then.

In fact, for several reasons, experts advise against claiming insignificant sums.

The “deductible” or “excess” is the portion of a claim that the insured must pay and is usually outlined in auto insurance contracts. Only the remaining sum, after deducting the “deductible” amount that is to be paid in the event of a claim, is subject to further deductions like depreciation, etc. Making small claims near or below the deductible amount in your car insurance policy is often not worthwhile, as you may receive minimal or no benefits.

An insurer will typically offer a no-claim bonus (NCB) as a concession on the renewal rate after a claim-free year. Beginning at 20% after the first claim-free year, this NCB gradually rises to a maximum of 50% with each succeeding year without a claim. Another justification for avoiding making tiny claims is the fact that the NCB resets to zero even after making a single claim.

The amount of the renewal premium rate rise that could be brought on by frequent claims varies from insurer to insurer and relies on the type of the claims. The “nature of the claim” in this case refers to whether the damage to the car was caused by you or by a third party. If someone rear-ends your car and you submit a claim, it’s doubtful that your rates will increase normally. However, it would probably be difficult for you to avoid a rate increase if the blame lies with you since such claims are common.

A wise rule to follow is to refrain from filing a claim for minor mishaps, such as a scratch on your car’s bumper or body, and only do so in the event of a significant loss.

It can occasionally be beneficial to discuss the insurance company’s policies with your insurance agent so that you understand how to claim car insurance.

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