Understanding Car insurance Claim

You enter into a contract with your insurer by buying car insurance. 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 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 car insurance claims promptly. To help you gauge this, you can look at the company’s Claim Settlement Ratio.

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

What is Claim Settlement Ratio?

The dictionary defines a claim as an application for compensation under the terms of an insurance policy. Claim settlement ratio is the percentage of total claims settled to the total claims received by the insurer in a financial year. It helps you understand the likelihood of the insurer paying or compensating you for your loss.Claim settlement ratio is an important yardstick to measure the reliability of an insurance company.

By comparing the Claim Settlement Ratio of different car insurance companies, you will get a rough idea about the likelihood of your claim getting settled. While this does not entirely depend on the Claim Settlement Ratio, a comparison leads to a better understanding of the reliability of an insurance company.

Important Factors for Choosing an Insurance Company

These factors will help you choose your ideal car insurance company:

Claim Settlement Ratio by IRDAI

Taking a look at the claim settlement ratio of an insurance company will give a basic idea of the likeliness of you claim being settled.

Financial Stability

Having a basic idea of the financially stability of an insurer will be helpful in case of claims involving larger amount of money.

After Sales Services

It is important that your insurer provides a good service after you purchase a car insurance policy.

Type of Claims

Cashless claims

When you make a cashless claim against your car insurance policy, you do not have to worry about the repair costs. It is important that you take your car for repairs to a network garage. 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.

A network garage is the one affiliated with your car insurance company. Your insurer will deal with this garage directly.

Reimbursement claims

You need to pay for the repairs from your pocket and then submit the original bills, payment receipts, etc. to your insurer. Your insurer then subtracts the deductible amount and reimburses the repair amount to you. You can get your car repaired at your preferred garage.

Documents Required To File A Claim

Keep the following documents ready while filing a claim:

  • The copy of the registration certificate of your Car.
  • Police report or FIR.
  • The copy of the insurance policy
  • The copy of your license.
  • Original repair bill, cash receipts, etc.

The Claim Process

Third party

Immediately get in touch with your insurer if you cause damage to the third party. In case, another vehicle causes damage to your car or property, note the details of the car owner and their insurer. In case of a major accident, the Claims Tribunal will decide the compensation to be paid.

Own-damage

When you have a comprehensive car insurance policy and your car gets damaged, you need to get in touch with your insurer as soon as possible. One week is the ideal time within which you need to inform your insurer about the damage.

A surveyor will be assigned to examine your damaged vehicle. The surveyor will ascertain the reason and the extent of the loss after which your insurer will send 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.

Theft

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. It 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 the Return to Invoice cover, then the amount will be equal to the car’s purchase value.

Common Reasons for 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.

Incorrect Information

The details provided by you in the application form are incorrect or false

Alertness

The accident took place while you were driving under the influence of intoxicating substances.

Documents

You were driving without a valid driving license.

Ownership

You own a second-hand car and the insurance is still in the name of the seller.

Rules

You failed to inform your insurer, about the accident, within the stipulated time frame.

Haste

You get your car repaired without or before informing your insurer.

Carelessness

The damages occur due to your carelessness.

Depreciation

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.

Illegal Use

You use the car for purposes other than those mentioned in the policy.

Inactive Policy

A claim filed against an inactive car insurance policy will be rejected.

Avoid Claim Rejection


  • By driving  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.