When and Why Should You Avoid Making Car Insurance Claims?
Published On Aug 18, 2021
Read to know different situations when you should avoid raising any car insurance claim with reasons.
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Car insurance is a compulsion to be carried by every car owner while driving. It is mandatory by law and gives financial security related to damage or loss sustained by the insured car or towards third-party liability. When you purchase a car insurance policy and make a claim, your insurance company will be liable to bear the cost of repairing based on your policy coverage. But is it good to raise a claim for every damage your car incurs? Is it better to leave making any claim in specific situations? Let’s dig into some situations where raising a claim can be a liability instead of financial assistance.
When and Why To Avoid Raising Car Insurance Claims?
Car insurance is the best way to cope with the financial liabilities of accidents, theft, and other sorts of car damages or losses. But there are some situations where raising a claim can make you lose the No Claim Bonus (NCB). So, you should understand different situations when making a claim could not be a productive option and make an informed decision. Let’s discuss some of those situations in detail.
1. In Case of Minor Damage
Every car sustains minor damages like dents, scratches, broken mirrors, etc., frequently, when used regularly. The minor damages are common when you drive it on crowded roads against which you should avoid making claims. The smallest claim can affect your claim history and even your insurer can consider you as a risky driver that can increase your premium due to your risk profile. Hence, it is recommended to avoid raising a claim for minor damages.
2. When Deductibles Are Higher
Car insurance owns two types of deductibles as compulsory and voluntary. The former is fixed at Rs. 1,000 for a car with less than 1500cc engines while Rs. 2,000 for cars with more than 1500cc engines, while, the latter is fixed by the policyholder to be paid during the claim. When deductibles are higher, you should avoid making any claim as under the voluntary deductible, you have to pay a predefined percentage of the claim if your car suffers any damage. Now, if the cost of repair is lesser than the deductible amount, then raising a claim will be a loss-making process. Also, you will have to pay for the compulsory deductible as per the terms of your insurance policy.
3. If Third Party Has Paid the Repair Cost
Sometimes you meet an accident due to a third party. The insurance rulebook says that you should note the car insurance details and raise a claim against their plan. But, if the damage is minor which the third party wishes to compensate, then you must not raise any claim and settle the issue on the spot. The reason behind it is the claim settlement process takes time where you are required to inform your insurer, register an FIR, make a claim, etc., which could take from hours to days. Therefore, the agreement with a third party for a convenient deal is the best way out in such a scenario.
4. Your Accumulated NCB is Higher
No Claim Bonus (NCB) is a kind of reward that car insurance firms offer to policyholders for not raising any claim in a policy year. With every claim-free year for five consecutive years of the policy, your NCB benefit tends to get accumulated from a 20% to 50% discount on your own damage component during the renewal of your policy. In between, raising even a single or small claim can terminate the NCB benefit. So, to avoid losing this discount, you should not raise a car insurance claim. Also, it becomes unnecessary to make a claim for the amount which costs lesser than the NCB.
The claim is the most aspect of car insurance for which people purchases it. We buy a policy to get compensation for damage and losses through the claim amount. But, in some situations, you should avoid raising a claim to keep yourself in a beneficial position. Before making a claim, you must go through the aforementioned points. We hope the information in this article will help you make informed decisions related to the car insurance claim.
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.