Car insurance is an essential barricade against financial hazards resulting from accidental damages. However, it is advisable not to settle a claim for every minor or small damage.
There are some implications of car insurance and minor claims. Explore this blog to see if it is a good idea to claim for small damages and other relevant details.
Should You Claim Your Car Insurance for Small Damages?
Raising a car insurance claim might be a wise choice at most times. But, there are some instances when you should pull back. Check them out below:
Small Damage Claims Impact NCB
No Claim Bonus in car insurance is a discount insurance companies offer to policyholders when they renew their premiums if they have not made any claims during the previous year. Therefore, even a single claim resets the NCB.
Policyholders are advised to waive small claims significantly if the amount in the NCB exceeds the repair cost. It is important to note that the NCB discount only applies to the self-damage portion of the premium, not liability.
Moreover, minor damage, such as scratches, dents, or broken mirrors, is common in urban areas and high-traffic zones. Fortunately, they can be easily fixed without significant cost. Additionally, this approach preserves your No Claim Bonus (NCB).
Avoid Small Claims if You Have Higher Deductibles
Deductibles in insurance are very common; this is the amount you and your insurer settle upon while deciding the installment and sum assured. Hence, you may refrain from claiming your insurance if your deductible is higher.
Also, according to the Insurance Regulatory Development Authority of India (IRDAI), cars with less than 1500cc have a compulsory deductible of Rs. 1000 and Rs. 2000 above 1500cc.
Avoid Small Claims in Case of Mutual Settlements
If your parked car is hit by another vehicle and the owner offers compensation, it will be wise not to make a claim. Claim resolution times vary depending on the severity of the damage.
However, you must still follow specific procedures, including notifying your insurer and filing an FIR if necessary. This involves effort that can be avoided by resolving the matter directly with the responsible party.
What Factors Should You Consider While Filing for a Car Insurance Claim?
There are multiple factors to consider when filing a car insurance claim. Sometimes, these can slip one’s mind in given situations:
- Claim history: Insurers often evaluate your claim history and frequency while deciding on premiums. If you file claims more frequently, you might pay higher premiums.
- Out-of-pocket expenses: Seek out alternative options and weigh your immediate and near future expenses against them. If it is not too much and not a burden, carrying out the repair cost might be better than filing a claim. Filing for unnecessary claims can lead to higher premiums, affecting long-term financial planning.
- No Claim Bonus: You might lose out on the NCB or No Claim Bonus if you file unnecessary claims in a year. Hence, only utilise your insurance if it is necessary and outweighs your financial capacity.
What are the Advantages and Disadvantages of Filing Small Claims?
While filing claims for small damages is not usually advised, some situations may favour the odds. Here are the benefits and drawbacks of filing small claims:
Advantages
- Filing for small claims can offer you a financial barrier if the repair costs outweigh your comfortable capacity.
- If you have near-future expenses in the pipeline, it might be more comfortable to purchase car insurance online to keep the budget intact.
- Nowadays, most insurers offer a streamlined process for filing claims. You can file your claims online, hassle-free, and from anywhere, making this option even more approachable in times of inconvenience.
Disadvantages
- Filing for claims more frequently can result in higher risk factors and increased premiums. This can result in an even higher expense if seen from the long-term financial perspective.
- You may lose out on discounts and offers such as No Claim Bonus. Specifically, if the repair cost is similar to the deductible, it is better not to file a claim.
There are no rules and regulations for filing an insurance claim. However, sometimes it is wiser to weigh the pros and cons and make a responsible financial decision than to go for an easily available option. Claims for small damages might not always result in financial benefits.
Also Read: Who Should You Trust After a Car Accident in San Antonio: A Lawyer or an Insurance Adjuster?
