Car Claim & Claim Settlement Ratio

Your 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, was Rs 15,428.54 crore, as per IRDAI. This is a sum total of the paid claims and the estimate of unpaid liabilities during that 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 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 company to take the 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?

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

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

It is an important yardstick to measure the reliability of an insurance company. However, you must consider various other factors before selecting your insurer. Here’s a look:

Types Of Claims:

There are two types of claims:

  • Cashless 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, 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. You 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

You make either of the three claims:

  • 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 any other loss, then note 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 decides the compensation for a loss. T insurance company 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 non-traceable certificate. Such a certificate allows your insurer to proceed towards the settlement of your claim.

The insurer will then pay you the current price of the car If you have taken an invoice cover, then the amount will be equal to the car’s purchase value.

Claim Rejections

An insurance policy is a safety net.

However, this net may not be of any use if your insurer rejects your claim.

Your claim can be rejected in any of the following cases:

  • 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 drugs or alcohol.
  • 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 do not inform your insurer about the accident within the stipulated time frame.
  • You get your car repaired before a surveyor inspects the car.
  • 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 coverages 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.

Things People Often Ask Us

Q) 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 reasonable. In such a case, your claim may not be rejected, but partially settled.

To avoid such circumstances, you must read the policy document carefully.

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

You buy an insurance policy to be protected during unfortunate events. 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.

Q) 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. Check which helps you save more.

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, your 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.

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

You can enhance your safety net 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.

%d bloggers like this: