A car insurance policy protects you from any financial loss due to damages to your vehicle. India has a population of 130 crores. It is no surprise that crores of insurance claims are made in a year. The total amount of motor insurance claims, made during 2015-16, were for Rs 15,428.54 crore, as per IRDAI. This is a sum total of the paid claims and the estimate of unpaid liabilities during the year.

The dictionary defines a claim as an application for compensation under the terms of an insurance policy.

Let us simplify this for you:

You enter into a contract with your insurer. The insurer promises to compensate you for the loss that you might suffer due to an unfortunate incident which involves your car. In return for such a payment/compensation, you pay a certain sum of money in the form of premiums.

Now let us assume that your car gets involved in an accident, and you suffer a huge loss due to the same. As promised by your insurance company, you are expecting to get paid for this loss. Here you need to file a ‘CLAIM’ in order to get paid by your insurer.

Making a car insurance claim is the process of informing the insurer about the loss and then expecting the insurer to pay/compensate for it. You, thus, request the insurance company to take necessary actions.

This is why it is important that you opt for an insurer who settles your claims promptly. To help you gauge this, you can look at the company’s Claim Settlement Ratio.

What Is Claim Settlement Ratio?

Motor Insurance Claim settlement ratio is the percentage of total claims settled to the total claims received in a financial year.

Car Insurance Claim & Claim Settlement Ratio - Acko

It thus helps you understand the likelihood of the insurer paying or compensating you for your loss.

Car insurance Claim settlement ratio is an important yardstick to measure the reliability of an insurance company. However, you must consider various other factors before selecting your insurer.

Important Factors for Choosing an Insurance Company

Here are some of the important factors to consider before you buy your car insurance policy from an particular insurance company:

  1. Claim Settlement Ratio
  2. Financial Stability
  3. After Sales Services

Let’s understand the above factors in detail:

  1. Claim Settlement Ratio by IRDAI: Taking a look at the IRDA car insurance claim settlement ratio of an insurance company is an important step while choosing an insurer for your car. By doing this, you will get a basic idea of what are the chances of your claim to be settled with a particular insurance company.
  2. Financial Stability: Having a basic idea of how financially stable an insurer is, will be helpful in case of claims involving larger amount of money.
  3. After Sales Services: It is important that your insurer provides a good service after you purchase a car insurance policy.

Types Of Claims:

The owner of an insured car can make either one of the following two types of claims:

Most of the insurance companies have their own network of garages where the damaged vehicles can be taken for repairs.

When you make a cashless claim against your car insurance policy, you do not have to worry about the repair costs. You just pay the deductible amount and the rest is taken care of by your insurer. The deductible is a portion of the bill that you pay from your pocket compulsorily or voluntarily.

  • Reimbursement claims

You make a reimbursement claim when you get the car repaired in a garage that is not necessarily a part of your insurer’s network of garages. In such a case, you pay for the repairs from your pocket and later submit the original bills, payment receipts, etc. to your insurer. Your insurer then subtracts the deductible amount and reimburses the repair amount to you.

The Claim Process

Depending on the type of your car insurance policy, listed below, you can follow these steps:

  • Third-party
  • Own-damage
  • Theft


If a third-party suffers a loss due to your car, you must immediately inform your insurance company and the police. In case, another vehicle causes damage to your car or property , then note down the insurance details of the third-party vehicle. You will then have to inform their insurer. The insurer will then transfer the matter to a tribunal. This tribunal then decides the compensation for the loss occurred. The insurance company then pays money as a compensation accordingly.


In the case of any damage to your car, you must inform your insurance company within a week. If you delay the claim, the insurer could reject your claim. This is because the metal parts can corrode if exposed for a long time. This can increase the cost of repair.

Once informed, your insurer appoints an independent surveyor to examine the vehicle. The surveyor then ascertains the reason and the extent of the loss. This can happen either at the accident spot or at the garage before it gets repaired. After a careful examination of the state of the car, an insurer sends an approval/rejection of the claim. Meanwhile, you can take the car to the garage for repair or ask your insurer to do so. If your claim is approved, you will be paid or compensated for the loss.


If your car is stolen, the first thing you must do is, inform your insurer and the police. You will have to submit documents such as the copy of your car’s registration certificate, your driving license, FIR from the police, etc. Some insurers also ask for the car keys.

If the police cannot locate the car within a reasonable time period, it issues a  on-traceable certificate. Such a certificate allows your insurer to proceed towards the settlement of your claim.

The insurer will then pay you the current market price of the car. If you have taken an Return to Invoice cover in Car Insurance, then the amount will be equal to the car’s purchase value.

Claim Rejections

An insurance company reserves the right to accept or reject a claim. So, it is advisable to take necessary precautions to avoid getting your claim rejected. Here are the cases in which your insurance company may reject your claim:

  • The details provided by you in the application form are incorrect or false.
  • The accident took place while you were driving under the influence of intoxicating substances.
  • You were driving without a valid driving license.
  • You own a second-hand car and the insurance is still in the name of the seller.
  • You failed to inform your insurer, about the accident, within the stipulated time frame.
  • You get your car repaired before a surveyor inspects it.
  • The damages occur due to your carelessness.
  • The insurer observes that the repair cost will be higher than the depreciated value of your car. You will then be given an amount equal to the depreciated value.
  • You use the car for purposes other than those mentioned in the policy.

Things To Remember

For a hassle-free claim settlement, ensure you do the following:

  • Always drive with a valid license.
  • Do not drink and drive.
  • Know your coverage and exclusions well.
  • Read the policy document carefully.
  • Keep a copy of your insurance policy in your car at all times.
  • Know the claim process well.

Why is Comparing Claim Settlement Ratio Important?

Comparing the car claim settlement ratio/history of an insurance company is important to get a basic idea about the possibility of getting your claim accepted. Higher claim settlement ratio implies lower chances of claim rejection. However, it is not the only factor based on which the performance of an insurer should be judged. Other factors like after-sales services, on-road services, financial stability of the company, etc. should also be taken into account.

Frequently Asked Questions:

1) What is partial claim settlement?

Partial claim settlement occurs when your insurer pays a certain percentage of your claim instead of the whole amount. This may happen if the insurer thinks that the claim that you made is not necessary. In such a case, your claim may not be rejected, but partially settled. To avoid such circumstances, you must read the policy document carefully.

2) Why should I check the claim settlement ratios of different insurers while comparing them online?

You buy an insurance policy to be protected during unfortunate events with your car. This happens only if your insurer honours your claim. Their claim settlement ratio gives you an idea about their credibility.

A lot of factors must be taken into consideration before choosing a company. A higher claim settlement ratio is one of them.

3) How does a No Claim Bonus affect my claim process?

A no claim bonus discourages small claims.

If you do not make a claim in an active policy year, you get a No Claim Bonus. Such a bonus entitles you to a discount on your premium amount when you renew your policy. This discount can scale up to 50 percent.

You can avoid making small claims. This helps you reduce your cost of insurance. However, if the loss is huge, you must do some calculations and then go for the right option. For example, let’s say your premium is Rs 10,000. Your second year’s NCB is 20%. Meaning, your premium reduces by Rs 2,000. Now, the repairs cost you around Rs 3,500. Of this, you pay a compulsory deductible of Rs 1,000. This means the insurance company will only pay Rs 2,500 if you claim. In this case, you could save Rs 2,000 in the future if you pay Rs 2,500 from your pocket today. But it does not make sense. The cost-benefit does not work out in your favour. Had the discount been higher, then you could have considered paying from your own pocket.

4) What is the relationship between add-ons and claims?

You can enhance your car insurance coverage by paying extra. The additional covers that you get are known as add-ons. The most common car insurance add-ons include zero depreciations cover, return to invoice, consumables expenses, passenger cover, etc.

Add-on covers affect the number and the amount of claims that you make. You are unlikely to pay for the loss from your pocket at the time of claim.

News Update:

IRDAI Proposes Survey of Vehicle Claims Only Above Rs.75,000

– November 1, 2019

Vehicle insurance claims of up to Rs.75,000 will henceforth not require any assessment by the insurance companies’ surveyor. Currently, claims above Rs.50,000 requires loss assessment by surveyors. The Insurance Regulatory and Development Authority of India (IRDAI) in a draft has proposed to increase the cap for the appointment of surveyors in vehicle insurance to above Rs.75,000 and all other insurances to Rs.1.5 lakh. Under the Insurance Act 1938, claims above Rs.20,000 required surveyors to assess the loss, which was later increased to Rs.50,000 due to the incline in loss claims in non-life insurances marked by inflation.

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