How Much Does A Claim Affect Car Insurance?

Owning a car is a dream for many and your priority would be to keep your car covered in case of any damages. In fact at least a third party liability is mandatory to comply with Indian laws and avoid paying any hefty fines. However, a third-party liability only provides coverage for third-party person or property and doesn’t provide any coverage for own damage. To ensure that your car is covered at all times you must have a comprehensive car insurance policy. In case if you already have a third party insurance you can opt for own damage insurance that provides cover when your car suffers damages. Now that you know the perks of having an insurance, you must know the effects that a claim has on your car insurance policy.

Car insurance claims tend to increase your premiums in future as you are considered a risky driver, additionally you will lose on your No Claim Bonus or NCB. No claim bonus is a discount on your premium that is offered by the insurer when you do not make any claim during the policy tenure. 

Does car insurance claim affect your insurance premiums?

Poor road conditions, erratic driving by other drivers may result to road accidents irrespective of you driving carefully and safely. During these accidents your car may suffer minor or major damages for which you would raise a claim. Raising a claim, for any damages affects your insurance premiums in the future. As the insurance companies provide monetary compensation for the damages, it deems your profile as risky as compensation is decided by estimating the risk quotient of a driver.

If you are deemed as a high risk driver you will have to pay higher for your premiums. This remains the same even if you change your insurer on renewing car insurance. Moreover you lose the benefit of No Claim Bonus. Additionally on making numerous claims, your assured sum also gets affected and you are restricted to some of the add-ons. You may also be rejected for a comprehensive car insurance in future.

Therefore to maintain your profile as a low risk driver and to keep your No claim Bonus intact, you must pay from the pocket for the minor damages which could be a dent or a scratch. 

Affects of car insurance claim on Third-Party Insurance

 The third party insurance rates are fixed by the IRDAI and is same across all insurance providers. Regardless to whether you raise a claim for third party liability the insurance providers cannot change the premium rates. The third party insurance is revised by the IRDAI every year and the insurance companies cannot alter the rates once finalised.

Moreover a third party insurance does not provide any compensation for damage to your own car. Irrespective to whether you choose the best car insurance in India  your car insurance premium for third party liability remains the same.

What are the different insurance claims that you can do?

Primarily there are three types of insurance claims :

Third party insurance claim: Third party insurance claim can be raised in a situation when your car happens to meet with an accident where damages occur to third party. You can claim this insurance for third party damage and not for own damage.

Own damage claim: Under this insurance, compensation is paid when your own car suffers damages due to accidents, due to natural calamities such as storm, thunder, earthquake or man-made calamities such as theft, vandalism etc.

Comprehensive Car insurance claim: This car insurance claim provides coverage for third party premium as well as Own car damage. This insurance also allows you to choose add-ons for your vehicle with higher premium.

Now that you are aware of the different insurance claims and that raising a claim increases your premium in future, let’s check what leads to your premium increase after the claims.

Premium loading:

After analaysing your risk profile the insurance companies determine your insurance premium. You will experience something as premium loading if you file claims. The premium loading is dependant on multiple factors other than just raising claims such as IDV of the car, condition of the vehicle, nature of of previous claims. The loading can be upto 10-15% on your previous premium.

Losing on No claim Bonus:  

The discount that you get on your insurance premium for not raising your claim is No claim Bonus. When you raise a claim you lose the discount and your premium automatically increases.

Final word:

In case if you have made any claims during the policy period your increased premiums will be reflected at the time of car insurance renewal online. So just to keep your premiums low try to avoid making small claims that can trigger your premiums cost unnecessarily.

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