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When to Raise a Car Insurance Claim and When to Avoid?

Published On Jul 07, 2021, Updated On Aug 09, 2021

Read this article to find out when you should raise a claim and why you should avoid claiming your car insurance for minor damages.

Insurance is acquired to assist you in avoiding the costs of repairs that may arise if your vehicle is damaged. Despite the fact that car insurance was created to assist you in overcoming financial problems, experts advise you to avoid claiming modest amounts on your automobile insurance. This essay will assist you in comprehending the reasons behind that recommendation.

When to Raise a Car Insurance Claim and When to Avoid?

How Is A No Claim Bonus Helpful?

Car insurance firms provide reductions on premiums rates in a variety of ways. The No Claim Bonus is one of them. NCB is the most significant discount on your car insurance premium. This discount is cumulative, which means it grows with each year of claim-free coverage. The following are the general details for each claim-free policy year's percentage discount:

1. If a policyholder goes a complete year without claiming an insurance amount, he or she will receive a 20% bonus.

2. The policyholder will receive a 25% bonus if they go two full policy years without claiming an insurance amount.

3. The insured will receive a 35 percent discount if he or she goes three years without filing a claim.

4. The insured will receive a 45 percent discount on the premium if they go four years without filing a claim.

5. An individual who has gone five years without filing a claim will receive a 50% discount on their premium.

When Should You Not Claim Your Car Insurance?

Most people advise you to avoid filing a car insurance claim settlement for minor damages sustained by your car. This is mainly because you can get a discount on your car insurance premium when you have a claim-free year. This will help you to reduce the cost of your car insurance premium. However, you can claim your insurance for major unavoidable repairs. You can also claim your car insurance if you have chosen a long term policy. Most companies will retain your NCB component even if you file a claim settlement in the policy duration. However, they might limit the number of claims you can file in the given term. 

How Can Not Claiming Insurance Be Beneficial? 

No claim bonuses are a discount on the premium that a policyholder receives if they do not use their insurance for the entire policy year. The discount percentage rises over time, resulting in a higher discount every policy year.

When a claim is submitted, the discount is reduced to zero, and the NCB cycle is restarted. Avoiding insurance claims for small damages such as scratches and dents will help you save money on your premiums through the NCB. 

Premiums for insurance also have a propensity to rise and fall over time. When it comes time to renew your insurance, you will notice that the increasing cost of your coverage has resulted in a greater financial loss than the cost of small damage repairs. For example, if your car has been dented and scratched for five years, it is sensible to file a claim because the cost of repair will be significant. If you claim your car insurance for minor scratches, on the other hand, your NCB percentage will decrease to 0 and you will not receive any savings on your premium. Hence, it's best to avoid filing a claim for minor damages and instead file a claim for big ones. No-claims bonuses have no bearing on the cost of third-party car insurance. This is due to the fact that third-party insurance only covers damage to third-party cars and their owners, leaving the policyholder's car unprotected. 

Take Away

When it comes to obtaining a car insurance policy, premiums are a significant consideration. Everyone wants a car insurance policy that provides comprehensive coverage at a reasonable cost. NCB is one of the most effective methods for achieving that goal. So ride safely and avoid filing car insurance claims for minor damages.

Also Read: 

All About Car Insurance Frauds In India

How to Cancel A Car Insurance Policy and Receive A Refund

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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