It is an open secret that buying a good car insurance policy will provide a financial backup in case of damage. There are some other insurance secrets that the policyholder may not always know about. Knowing some of these industry secrets can help you reduce the cost of your policy. Let’s dive straight into the top 15 car insurance secrets that you may not know.
- Car Insurance Secrets That Your Insurer Won’t Tell You:
- Secret 1: The make and model matters in car insurance
- Secret 2: You can get a discount by paying for minor claims
- Secret 3: You can save on car insurance premiums
- Secret 4: Your claim history has an effect on car insurance premiums
- Secret 5: A claim for damage when you were careless about the car can lead to claim rejection
- Secret 6: Car insurance claims are of two types
- Secret 7: You can get the invoice value even for an old car if it gets stolen
- Secret 8: A modified model of a car attracts more insurance premiums
- Secret 9: Cashless claims are not 100% cashless
- Secret 10: Getting a car repaired before informing the insurance company can lead to claim rejection
- Secret 11: You can switch to a different insurance company without losing No Claim Bonus
- Secret 12: You will lose all the NCB if you don’t renew your policy in time
- Secret 13: Higher IDV will increase your premium
- Secret 14: Claim Settlement Ratio cannot be the ultimate parameter to finalize an insurance company
- Secret 15: Your claim will be rejected if you do not carry important documents
- The Bottom Line:
- Frequently Asked Questions
Car Insurance Secrets That Your Insurer Won’t Tell You:
Following are 15 such secrets, take a look:
Secret 1: The make and model matters in car insurance
The model of your car matters the most while determining the cost of your car insurance policy. This is because, insuring a high-end car is a costly affair as compared to insuring a normal one.
In essence, repairing damages on a high-end car like Mercedes requires more money than repairing damages to a TATA Nano. Even the manufacturing year of the car matters as it determines the current market value of the car parts and the depreciation it has suffered over the years.
Secret 2: You can get a discount by paying for minor claims
It is not always a good idea to make a claim against car insurance. It can disrupt your NCB cycle. NCB stands for No Claim Bonus. It is a discount you get for not raising a claim during the entire policy period. This means you get this discount at the time of policy renewal.
Note: When you raise a claim for minor damages it can reset the NCB to zero and you will have to pay a higher cost for insuring your car.
Secret 3: You can save on car insurance premiums
You read that right! There are a few ways in which you can save money while buying a car insurance policy. And no, it does not mean that you should compromise on the coverage and buy a cheap policy. Rather you can get a good car insurance policy with adequate coverage for a lower price when you consider doing certain things.
- First of all, you can get a certified anti-theft device installed on your car and your insurer may offer an additional discount.
- Next, consider setting the right IDV or Insured Declared Value while buying a comprehensive policy. This can have an effect on the cost of the policy.
- Lastly, renew the policy on time, avoid heavy modifications, and drive safely to reduce the cost of the policy.
Secret 4: Your claim history has an effect on car insurance premiums
Raising a lot of claims would directly mean that you are not a safe driver and you keep causing damages on a regular basis. This could increase the premium as the insurance company considers you a high-risk policyholder.
The opposite can happen if you drive safely and raise no claims. This gesture is rewarded with a No Claim Bonus. This is a cumulative discount and it increases with each claim-free year with a maximum of 50% discount. But you have to renew your policy regularly to avail the discount.
Secret 5: A claim for damage when you were careless about the car can lead to claim rejection
An insurance company expects you to first take proper care of your car and if in spite of that a damage occurs then insurance will help you. But if you are careless about handling the car then your insurance company will not have your back. Because then the claim would be completely avoidable.
Imagine you park your car on the side of a busy road and enter a shop to buy something. A perfectly normal scenario, yet when you return you could not find your car and the inevitable has occurred. The car has been stolen. You had forgotten the car keys in the ignition and the car was left unlocked. A perfect case of theft to happen. Such a claim will be outright rejected by the insurance company as the owner acted irresponsibly by not removing the keys.
Secret 6: Car insurance claims are of two types
You can raise one of two types of claims in case of an unfortunate event. Two types of claims are cashless and reimbursement claims. These types depend upon where you get the damaged car repaired. If you get it repaired in a network garage, you can avail a cashless claim. If you get the car repaired in a non-network garage then you first need to pay for the repairs and then get them reimbursed from the insurance company.
Secret 7: You can get the invoice value even for an old car if it gets stolen
This is an amazing car insurance feature that helps you claim the invoice amount of your car even if you had used it for a couple of years before it got stolen or suffered damage beyond repair. This feature can be availed with the help of a Return to Invoice Add-on.
Simply opt for this add-on while buying or renewing your car insurance policy and get the benefit during a major claim. The Return to Invoice or Invoice cover will allow the insurance company to pay a value mentioned on the invoice of your car.
Note: You will also receive the amount you spent on getting the car registered plus the road tax under an Invoice cover.
Secret 8: A modified model of a car attracts more insurance premiums
Modifying your car can increase its aesthetic value or the technological aspect. But this can increase the cost of insurance as well. Your comprehensive policy will only cover accessories that are provided by the car manufacturer and not the ones that you buy to modify the car.
If you separately buy a touch screen infotainment system for your car, then it will not be covered under insurance. You need to specifically ask the insurer to cover it under the policy. This will increase the cost of your car insurance.
Secret 9: Cashless claims are not 100% cashless
A cashless claim is called cashless because the policyholder does not have to pay the entire repair bill in case of damage. He/she only needs to bear the cost of deductibles. First comes the compulsory deductible and the second is a voluntary deductible. A compulsory deductible is a small amount that you need to pay to get the car repaired. This is to discourage minor claims and encourage you to drive safely. Thus, contrary to popular belief, a cashless claim is not 100% cashless.
Secret 10: Getting a car repaired before informing the insurance company can lead to claim rejection
When you buy car insurance, you can rest assured that your insurance company will help you financially if your car gets damaged. This is true only if you are transparent and truthful with the insurer. When you fail to inform them about the damage, you lose the trust factor.
Never get the car repaired before intimating the insurance company if you intend to raise a reimbursement claim. Your insurer will send a surveyor to understand how much damage your car has suffered and then you can get it repaired. Then comes the reimbursement claim.
Secret 11: You can switch to a different insurance company without losing No Claim Bonus
No Claim Bonus is a reward given to the policyholder for not raising a claim i.e. for driving safely through the policy period. This has nothing to do with your car insurance policy or the insurance company. Thus, you can continue to get the benefit even if you switch to a different insurance company. All you have to do is get a transfer letter from your old insurer and send it to the new one. The benefit should reflect on the policy when the transfer process is over.
Tip: Contact your new insurance company to know the exact process of acquiring and submitting the NCB transfer letter.
Secret 12: You will lose all the NCB if you don’t renew your policy in time
By now you must have guessed that NCB is a reward for good behaviour. Drive safely, renew in time, don’t raise claims and get a discount. This will all go down the drain if you fail to renew the policy for a long time, 90 days to be precise. You are not covered under insurance during this time plus you will lose the NCB as well. Not renewing the policy in time is a bad idea.
Secret 13: Higher IDV will increase your premium
IDV depends upon how you value your car while buying a car insurance policy. If you set a lower value, the premium will reduce but this will have a negative effect on the claim amount if your car gets stolen or goes into total loss. On the other hand, setting a higher value will increase the cost of your car insurance plan significantly. The best idea to set the correct IDV is to know the car’s current market value.
Tip: You can set the IDV approximately equal to the current market price.
Secret 14: Claim Settlement Ratio cannot be the ultimate parameter to finalize an insurance company
Claim Settlement Ratio (CSR) is a ratio of number of claims settled to the number of claims received. A low CSR does not necessarily mean bad news. It can be affected due to many reasons beyond the control of the insurance company.
- Fraudulent claims or inadequate information regarding a claimable event.
- A policyholder may have stopped responding to insurer’s queries after raising a claim.
These things can result in an unsettled claim for that particular fiscal year. Thus, CSR cannot be the ultimate factor for choosing or rejecting an insurance company.
Secret 15: Your claim will be rejected if you do not carry important documents
One of the most basic rules of driving a car legally in India is to carry valid documents. These can be demanded by the traffic police or other authorities anytime while you drive. Since this is a rule, your insurer also requires you to follow it. If your car gets damaged when you do not have valid documents like insurance policy, driving license, PUC certificate, and RC of the car then your claim can get rejected.
Note: You can carry the soft copies of these documents on a trusted device and show them to the officer. The authorized app for storing digital documents is DigiLocker.
Car insurance provides a solid financial back up when you face an unfortunate event related to your car. Be it compensating the third party or repairing your damaged vehicle, your insurance company will bear these costs as per the type of policy you purchase. As a policyholder you need to do a bit of research and get to know how car insurance works. Once you are clear about this, you will know that insurance companies are here to help you out of a tight financial situation rather than leaving you to face the crisis. Buy a policy that suits your needs and never hesitate to ask queries when in doubt.
Frequently Asked Questions
Here are answers to some frequently asked questions:
The Policy Wordings of your car insurance plan is like a rule book when it comes to claims. If you are clear about the rules set by your insurer, the company will not reject a claim. Claim rejections are mostly due to fraudulent claims, insufficient evidence about the event, claiming against a situation excluded from the policy, or not raising a claim as per the insurer’s procedure. If the policyholder is thorough during a genuine claim then it would hardly get denied.
No you should not. You as a policyholder need to be completely transparent when it comes to claims. Don’t try to pass off old damage in the current claim. Insurance companies hire a team of experts that can identify recent damage versus older one. The company can deem this as fraud and your policy could get cancelled. Never withhold information from your car insurance company.
When you get the car repaired before telling the insurance company, they will not know how much damage the car has suffered. This needs to be checked by an insurance officer when the damage is still present. Then the company will approve the claim based on the officer’s report. The reimbursement claim comes later. So, the company will reject your reimbursement claim if you get it repaired before intimating the insurance company.
An FIR report incase of an accident claim
>Pictures/video of the damage
>ID proof of the policyholder
>Any other document as requested by the insurance company
Yes, a theft claim can get rejected if the policyholder fails to produce enough evidence that the car is stolen. For example, it is necessary to submit both sets of car keys to the insurance company when sending other claim-related documents. If such items or details are missing, then a theft claim can get rejected.
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