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Does Car Insurance Premium Go Up After Claiming for an Accident

Published On Oct 28, 2020 9:00 AM By InsuranceDekho

Do car accidents affect insurance premium? Does car insurance premium increase after claiming for an accident? Let’s read all about it and find out answers of such questions.

Despite being extremely careful and taking all the necessary precautions, it is still possible unfortunately that you may meet with an accident on the road and be faced with damage to your vehicle. The unpredictability of accidents is the very reason why it is important to be protected under all scenarios and to avail of car insurance which would allow you to raise a claim in case of damages occurring in an accident and cover some of the costs arising from the same. However, raising a claim may have some impact upon the future insurance premium that you would have to pay to your insurance company.

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Let’s read all about it and find out how raising a claim for an accident impacts your car insurance premium.

Effect of Accident Claim on Comprehensive or Standalone Own Damage Car Insurance

The claim for an accident would be made as part of the insurance coverage in a comprehensive car insurance policy or a standalone own damage insurance policy. The premiums for the same are based upon the risk factor of your vehicle as assessed by your insurance company. If you raise a claim for an accident, it is possible that the insurance company will view you as a risky customer and then raise the premium for your policy upon the renewal. It is also possible they offer you less add-on covers or reduce the coverage available to you.

Effect of Accident Claim on Third Party Insurance

When it comes to third party insurance for your car, the premium is not affected on raising a claim for an accident. This is because the claim for an accident would fall under own damage and would not impact the third party premium, and also this is mandatory by law and uniform across insurers and thus the motor insurance company is not permitted to increase or decrease its premium based on any accident that occurs.

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Reasons for Increase in Premium After A Claim

The following are the reasons why the premium at the time of renewal is impacted:

Premium Loading

If you regularly raise claims, you would be considered as a risky customer and would be charged with higher premiums. This is known as premium loading and is done on the basis of the perceived risk posed by a particular customer.

Loss of No Claim Bonus

No Claim Bonus (NCB) refers to a discount that is available at the time of renewal if no claim is raised during a policy tenure. When you raise an accident claim you will be then unable to claim the discount offered by NCB, leading to higher premium.

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Therefore, in case of standalone own damage insurance or a comprehensive insurance plan, raising an accident claim would result in a higher premium. The reasons for this are that you would be considered a higher risk customer and you would lose your NCB discount.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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