Thinking How to Avoid Raising Car Insurance Claim? Here’s What You Need to Do

Every car owner knows that unexpected repair costs can put a dent in their wallets. That's why having car insurance is like a safety net, providing financial protection against unforeseen expenses arising from accidents or damage. However, there are situations when it might not be in your best interest to file a claim with your car insurance provider. In this article, we will explore the scenarios when it might be more beneficial not to submit a claim. By understanding these situations, you can make informed choices about when to take advantage of your car insurance coverage and when it may be more advantageous to handle the costs independently. 

4 Times When You Should Not Claim Car Insurance

Here are four instances where filing a car insurance claim may not be the best option:

• If there is minor damage

When it comes to minor damage to your car, such as scratches, dents, or broken mirrors, it may be more convenient and cost-effective to handle the repairs yourself rather than filing a car insurance claim. These minor damages are common, especially in crowded urban areas or places with high traffic density. Instead of going through the hassle of raising a claim for such minor issues, you can repair them independently.

One of the key reasons to consider resolving minor damages on your own is the potential impact on your No Claim Bonus (NCB). NCB is a reward provided by insurance companies for not making any claims during the policy period. By handling the repairs independently, you can keep your NCB intact and enjoy lower premiums in the future.

Furthermore, minor damages often come with affordable repair costs, which you can easily manage out of pocket. Raising a claim for a small amount, such as Rs. 500, may not be worth the effort and paperwork involved.

• When Deductibles Outweigh the Claim

Deductibles play a crucial role in car insurance claims, requiring you to pay a certain amount from your own pocket before the insurer covers the remaining repair costs. It's essential to consider the deductibles, which come in two forms: Compulsory and Voluntary.

As per the guidelines set by the IRDAI, the Compulsory Deductible ranges from Rs. 1,000 for cars with less than 1500cc to Rs. 2,000 for cars above 1500cc (subject to changes).

In scenarios where the repair costs are lower than the deductibles, filing a claim may not be advisable. By doing so, you would need to bear the Compulsory and Voluntary Deductibles, if applicable, without significant reimbursement from the insurer. Additionally, filing a claim for such minor expenses could lead to the loss of your valuable No Claim Bonus (NCB).

• Mutual Agreements and Third-Party Liability

In situations where your parked vehicle is involved in an accident caused by another driver, opting for a mutual settlement can be a viable alternative to filing a car insurance claim. If the responsible party agrees to bear the costs of the damages, it may save you the time and effort involved in the claim settlement process.

When your parked vehicle suffers damages due to someone else's negligence, such as a neighbour's car crashing into it, you can seek compensation under their third-party liability insurance coverage. This means you don't have to raise a claim under your insurance policy since you were not at fault as a driver.

To initiate a third-party claim, you must file a First Information Report (FIR) at the nearest police station. This step ensures that the incident is properly documented and aids in the claim process.

By opting for a mutual settlement and leveraging the third-party liability coverage of the responsible party, you can avoid the complexities of raising a claim with your insurer. This approach streamlines the resolution process and enables you to receive compensation for the damages without impacting your insurance policy or incurring additional expenses.

• Your total NCB is greater

One crucial factor to consider before filing a car insurance claim is the potential impact on your accumulated No Claim Bonus (NCB). NCB is a valuable discount that car owners can enjoy on their insurance renewal premiums for not raising claims over a specified period, usually five consecutive years.

By maintaining a clean claims record, you can qualify for discounts of up to 50% on the Own Damage component of your Comprehensive Car Insurance Policy. This reduction in car insurance renewal premiums can lead to significant savings over time.

Therefore, it is prudent to protect your NCB by refraining from unnecessary claims. Assess the severity of the damages and weigh them against the potential reduction in your NCB and subsequent premium increase. If the repair costs are manageable and fall within your budget, it may be more beneficial to handle them independently and preserve your hard-earned NCB.

By carefully considering the impact on your NCB, you can make informed decisions about whether raising a claim is truly worth the effort and potential long-term financial implications.

Conclusion 

When it comes to car insurance, knowing when not to file a claim is just as important as knowing when to file one. Handling minor damages independently, evaluating the cost-effectiveness of deductibles, exploring mutual settlement options, and protecting your NCB can help you avoid unnecessary paperwork, preserve your discounts, and potentially save money on future premiums. Remember, car insurance should be utilised strategically to maximise its benefits and minimise potential drawbacks.

FAQs

• Is it advisable to file a car insurance claim?

It is advisable to file a car insurance claim when you experience significant losses or damages that exceed your ability to handle the expenses independently. Car insurance is made to provide financial protection for such unforeseen events. However, it is essential to carefully assess the situation and consider the potential impact on your insurance policy, such as the deductible amount, potential premium increases, and the effect on your No Claim Bonus (NCB).

• Is it better to use car insurance or pay yourself?

The decision to use car insurance or pay yourself depends on the severity of the damages to your car. If the repair costs are less than the deductibles set by your insurance policy, it may be more cost-effective to handle the expenses out-of-pocket. On the other hand, if the repair costs are significantly higher and exceed your out-of-pocket capabilities, raising a car insurance claim may be more advantageous. 

• Can I file an insurance claim one year after the accident?

The deadline to file an insurance claim varies depending on the insurance provider. In most cases, there is a time limit of seven days from the accident date to raise a claim. However, this can vary between different insurance companies. It is generally recommended to file a claim as soon as possible after an accident to ensure a smoother claims process and avoid any potential complications.

• Does Car Insurance cover dents and scratches?

Yes, car Insurance typically covers damages like dents and scratches. For minor damages that are within your budget or can be easily managed out of pocket, it may be more cost-effective to handle the repairs independently without filing a claim. This approach helps preserve your No Claim Bonus (NCB) and prevents potential premium increases in the future. 

• How do insurance providers determine the estimated cost of car damage?

Insurance providers determine the estimated cost of car damage by assessing the current value of the damaged parts. This valuation considers factors such as the vehicle's make, model, age, and condition. After establishing the value of the damaged parts, the insurance company applies depreciation to account for wear and tear.

Also read: 10 Must Knows of Car Insurance Renewals