The law makes it mandatory to have a car insurance policy. Having a car insurance plan ensures not only compliance with the law, but also a safety net for any damages or repairs. So whether it is minor scuff or major damage, you can be at ease knowing that an insurance policy can help you cover the cost of repairs.
But making a car insurance claim isn’t always the alternative. Various factors determine whether you should make a claim or not. Following are the scenarios where it is not advisable to make an insurance claim.
Scenario 1: Where the cost of repairs are lower than the no-claim bonus
Although you have an insurance policy, it isn’t at each period you make a claim. At such times, insurance companies offer a renewal benefit in the form of a no-claim bonus (NCB). A no-claim bonus is a benefit wherein you, the policyholder is offered concession at car insurance renewal.
The NCB percentage ranges from 20% to 50% wherein a concession is offered on the own-damage component of your comprehensive car insurance plans. Since the own-damage portion comprises the majority of your comprehensive car insurance premium, it makes a significant difference in premium at renewal date. Thus, it is always a must-consider decision when filing an application for the claim.
Let us further understand using an example. Mr Kotian has a car insurance policy with a total premium of ₹10,000. The own-damage premium comprises approximately ₹8000. At the second year, the NCB renewal benefit is 20% of own-damage cover, which comes to ₹1600. Now in case of an accident or damage, if the cost of repairs exceeds the amount of NCB benefits, it is a sensible decision to file an application for the claim. On the other hand, claiming a smaller amount will cause loss of renewal benefits and will not decrease your premium at renewal.
Scenario 2: When third-party can pay for the repair cost
Say your car is at the sixth renewal date without making a claim for any previous periods. At this date, you will receive a heft NCB benefit. Now if you meet with an accident with no fault of yours, there are three options – (i) make payment out of your own pocket (ii) file an application for claim (iii) file a third party car insurance claim since it isn’t your fault.
Now the process of making a third-party insurance claim is slightly difficult since it involves the Motor Accident Claims Tribunal as civil courts do not have jurisdiction over motor insurance claims. Moreover, you have to file first information report (FIR) that proves the accident occurred due to no fault of yours. This way, you can get compensation for damages from the third-party’s insurer as well as save your no-claim benefits.
To conclude, there are benefits of not making an insurance claim. It helps you keep your premiums in check along with having insurance for any major unexpected damage.