How Much Does A Claim Affect Car Insurance?
Buying a car is a big investment and thus you must protect it with adequate car insurance coverage. In fact, you must insure your car with at least a third-party insurance plan in order to maintain legal compliance as a car owner.
However, it is important to remember that a car insurance claim can have long-term effects on your policy premiums. This is because after you make a car insurance claim, insurance companies start considering you to be a risky driver. Whereas, if you do not make claims during the policy period, you are rewarded with a No Claim Bonus (NCB), which is essentially a discount on the own-damage premium of the subsequent year.
Types Of Car Insurance Claims
In India, there are primarily three different types of car insurance claims, which have been listed below:
Every Indian car owner is required to have third-party liability coverage for their vehicle. Third-party car insurance is meant to protect third-party persons, their property, and vehicles from accident-related liabilities. Thus, if you get involved in an unfortunate accident where some damage has been caused to a third-party, then you can make a claim for such damages under a third-party car insurance plan.
Own Damage Claim
This type of car insurance policy pays for damage incurred by the insured vehicle. The compensation under this policy is paid in case of accidents, natural disasters, man-made disasters, riots, theft etc.
Comprehensive Car Claim
A comprehensive car insurance policy includes the coverage provided by the above-listed two separate policies. In addition to paying for the damages sustained by the insured car, it also covers third-party liability coverage. Additionally, it safeguards the insured vehicle from theft and man-made and natural calamities. You can extend the coverage of this policy by opting for various available rider options like zero depreciation, road side assistance, tyre protection, etc.
Will Filing an Insurance Claim Affect Your Car Insurance Premium?
No matter how careful you are behind the wheel, poor road conditions and other drivers’ poor driving might result in car accidents. If you file a claim after an accident, your car insurance rate may be affected. This is due to the fact that insurance providers provide monetary protection in return for a premium, and the premium amount is established by estimating risks.
You will be requested to pay a higher car insurance premium amount if your risk profile is deemed to be high. Additionally, your amount assured may be affected and your options for insurance add-ons may be restricted if you have filed numerous claims in the past. You could occasionally be completely rejected for comprehensive car insurance.
However, your premium price might not change if you cover your own incidental repairs and avoid making claims for petty repair work. This comes in handy at the time of renewal when the car is inspected by the insurance company to decide the premium and sum insured amount. This also helps you keep your No Claim Bonus intact.
How Does an Accident Claim Affect Third-Party Premium?
The cost of third-party car insurance is unaffected by accident claims. The Insurance Regulatory and Development Authority of India’s desire for consistency in third-party insurance rates is the cause of this. Third-party insurance premium changes have not been allowed to rise or fall.
The IRDAI releases third-party auto insurance rates each year, and insurance providers are not permitted to alter the finalized rates. Additionally, third-party coverage does not cover harm to the insurer’s vehicle, thus the driver cannot make a third-party insurance claim for any loss or damage.
What Leads to a Premium Increase After an Accident Claim?
A larger premium is incurred when an accident claim is made for the following two main reasons:
Losing the No Claim Bonus
Insurance companies offer customers a reduced rate for the renewal of their auto insurance if they haven’t filed any claims. Your comprehensive auto insurance coverage includes an accrued benefit known as the No Claim Bonus.
As was previously discussed, insurance companies analyse your risk profile before determining the premium payment. You may experience something known as premium loading if you often file claims with your auto insurance. It alludes to the extra premium levied to people who submit insurance claims frequently. This is because such clients represent a bigger risk for the insurance company. The insured declared value (IDV), the nature of prior claims, the condition of the vehicle, and the claim settlement amount are only a few of the variables that affect loading percentage. Whatever the cause, the premium loading is typically between 10% and 15% of the previously paid premium.
Your premium amount rises if you are in an accident. With the correct insurance coverage, though, this may be reduced. You may still maintain a cheap premium even if your automobile has been in an accident by avoiding making claims, especially for small losses, purchasing a rider called No Claim Bonus Protector, and installing anti-theft devices will cut your rate because it will lessen the insurance company’s responsibility, and also online insurance shoppers might save money by purchasing auto insurance since the premium is lower.