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When and why should you avoid making car insurance claims?

When and why should you avoid making car insurance claims?

When and why should you avoid making car insurance claims?
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By CNBCTV18.COMOct 20, 2022 6:55:11 PM IST (Updated)

Making a car insurance claim in case of an accident or any damages caused to your car helps you stay financially covered. But does it make sense to raise frequent claims every time something happens to your car? Let’s find out.

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Accidents are unpredictable in nature and can not only cause great mental distress but can also put you in financial stress. A comprehensive car insurance cover protects your vehicle against theft, man-made and natural calamities whilst also providing third party cover. Though there is no such hard and fast rule which dictates you to claim only a few number of times in a year, as a vehicle owner, it is important to understand that not every situation requires you to rush to the insurer and ask for coverage. Making frequent claims can not just strip you off the no claim bonus discount, but also lead to an increase in out of pocket expenses.
Given below are the scenarios under which you should avoid making a car insurance claim.
Claim for minor damages:
When driving, your car is prone to minor dents, scratches, broken mirrors. Raising a claim for such minor repairs can have an impact on your claim history as the insurance company can consider you to be a risky driver which can also lead to an increase in premium at the time of renewal.
Impact on no claim bonus: No claim bonus is a discount of up to 50 percent which is awarded to the policyholder for making no claims for five consecutive years. The discount starts at 20 percent for the first claim free year. Making small claims means your NCB goes back to zero which makes you ineligible to receive a discount on the premium.
In case of higher deductible: There are two types of deductibles in car insurance i.e. voluntary and compulsory. Compulsory deductible has to be mandatorily paid by you at the time of claim. As per IRDA, for cars not exceeding 1500cc, the compulsory deductible is Rs 1,500 and for cars higher than 1500cc, the deductible is Rs 2,000. On the other hand, voluntary deductible is the amount you choose to pay at the time of claim which also has an impact on your premium. Higher the deductible, lower will be the premium and vice versa. In case if the claim amount is lower than the deductible, then making a claim makes no sense.
If the third party has borne the repair cost: Your car may get damaged due to a third party and in case your car has been damaged due to another driver’s mistake then you can raise a claim against the plan. If the third party agrees to compensate you against the damages then it is best not to raise a claim on your own policy.
Repair cost is lower than no claim bonus: If the no claim bonus is higher than the repair cost then it is best to pay from your pocket instead of raising a claim and losing out on the accumulated NCB.
While having a car insurance policy does give you a sense of respite, however, in the above situations it is best not to raise a claim.
(The author, Ankit Agrawal, is co-founder and CEO at InsuranceDekho. Views expressed are personal.)
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