Wait! Do Not Claim That Car Insurance Yet!
The apple of your eye, your treasured sedan has been scratched all over by some naughty neighbourhood kids when you left it parked on the streets. You are wondering if you must file an insurance claim to get reimbursed for the repainting and polishing of the car. But before you take a call on that, read this article!
When should you make the claim?
If the damage to the car is substantial
The car insurance cover is meant to act as financial armour against accidental damage that can render the vehicle unfit for use. Therefore, if the financial liability incurred is substantial, even after factoring in the deductibles, then it is best to opt for the insurance claim.
If you or the third-party driver has suffered some major injuries
The insurance will cover any legal expenses incurred in the event of an accident and will also provide for damages caused to third-party property and the medical expenses incurred by virtue of injury to the third party in the accident. However, if you just have Third-Party Insurance, then it will not cover for the injuries caused to yourself or fellow passengers and will definitely not cover for the losses/ damages that your car has suffered. An own damages insurance plan or a comprehensive plan will cover these expenses.
When should you not make a claim?
To safeguard your NCB
If there are small dents or scratches on the car and you wish to file a claim then think again, for there will be a loss of the No Claim Bonus – a discount offered by the insurer at the end of a claim-free year.
Most NCBs offered start at the rate of 20% for the first claim-free year and steadily rises to 50% maximum for every subsequent claim-free year thereafter. If you have accumulated NCB over the years, then a single claim will result in the loss of the same; paying out of one’s pocket will help you gain the NCB.
To get better insurance offers from other insurance companies
Recurrent filing of insurance claims adversely impacts the claim history of the insured. This may result in an increase in the renewal premium rate or the premium if you wish to go for a new insurance policy. This is because the insurer will deem you to be of a higher risk to the company and to compensate for the same will demand a higher premium.
For example, Rita is an extremely careful driver and has not had any major accidents on the road. However, she is very picky about the way her car looks and even a tiny dent or scratch irks her driving to raise a claim with the car insurance company.
Her claim history is chequered with small claim amounts here and there. When she decides to change her insurance company and get insurance for the new year, the premium charged is significantly higher. She wonders why she has been an exceptional driver on the road.
The answer lies in her claim-filled history. On the other hand, Shankar, who paid for small repairs out of his pocket, got a much better deal out of the same insurance company and also got to transfer his No Claim Bonus onto his new policy.
One must exercise the discretion vested within him or her after a lot of thought and consideration. In circumstances that the payment of deductibles is close to or higher than the claim amount, or when repeated claims will affect future premiums or when there is a chance of losing a hefty No Claim Bonus, it is best to avoid making claims from the car insurer.
A minor burn in one’s pocket will benefit the insured in the long run. An alternative that the policyholder can avail is to purchase the small repair add-on to cover such expenses – but do so if the said cover comes at a reasonable price.