It is a common understanding that if you buy a car insurance policy, you will get compensated in case of damage if it is covered in the terms of the policy. This is the basic reason why one should buy a car insurance policy. In insurance parlance, this compensation can be received by raising a “Claim”. The dictionary definition of claim is roughly stated as an application for compensation under the terms of an insurance policy. Because an insurance company sells insurance policies, they also receive a lot of claims. The IRDAI claim settlement ratio depends upon whether these claims are settled successfully or not.

IRDAI Car Insurance Claim Settlement: Ratio And Process - Acko

Here is an example of understanding this concept of claims and claim settlement ratio in a better manner:

Example:

A car insurance policy is a legal contract between you and your insurance company. It says that the insurer will pay a compensation if you suffer a loss, provided the loss you suffered is covered under the terms and conditions of the insurance policy (contract). In return for this compensation, you pay a certain amount of money as a premium for buying the policy. 

  • Consider your car meets with an accident and it got damaged. 
  • As promised by your insurance company, you are expecting to get paid for the monetary loss you suffered due to the damaged car. 
  • Here you need to file a claim in order to get paid by the insurance company. 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. 
  • One of the methods to understand the reliability of the insurance company is through the company’s Claim Settlement Ratio.

What Is Claim Settlement Ratio?

Claim settlement ratio is an important yardstick to measure the trustworthiness of an insurance company. It is the ratio of total claims settled to the number of claims received in one financial year.

What Is Claim Settlement Ratio?

Claim settlement ratio thus helps you understand the likelihood of the insurer paying or compensating you for your loss. However, you must consider various other factors before selecting your insurer. There could be several reasons why the claim settlement ratio of an insurer is low.

What Is IRDA Car Insurance Claim Settlement Ratio?:

Each year the IRDAI (Insurance Regulatory and Development Authority of India) releases an annual report. This is an extensive report and it covers the entire details and reports related to the Indian insurance sector. IRDA mentions details like car insurance claim settlement ratio or motor insurance claim settlement ratio in the annual report. IRDA Car Insurance Claim Settlement Ratio simply means the ratio released by the IRDAI on their official website.

Important Factors For Choosing An Insurance Company:

Buying a suitable motor insurance policy is necessary however, buying it from a good insurance company is of more importance. Looking for an insurance company with the best claim settlement ratio may not always be the most accurate option. Always remember that choosing a company based on the claim settlement ratio is only one of the methods to select a good insurer. Here are all the factors that you need to consider while looking for an insurance company:

Claim Settlement Ratio By IRDAI: 

Taking a look at the IRDAI car insurance claim 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 being settled with a particular insurance company.

Financial Stability: 

Having a basic idea of how financially stable an insurer is, will be helpful in case of claims involving larger amounts of money.

After Sales Services:

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

Online Reviews: 

Thanks to technology and social media, it is nowadays easily possible to know what people think about a particular service. Every insurance company has a digital presence and a dedicated page on social media channels where people can share the experience they had with the company. Check online reviews and ratings of an insurance company to know if their customers are happy with the overall experience.

Word Of Mouth: 

This is the old school method of understanding the quality of services offered by the insurance company. Get in touch with relatives, friends, or people you know who have bought an insurance policy from that particular insurance company and then decide for yourself.

Types of Claim Settlement:

There are two types of claims in car insurance, cashless and reimbursement claims. The nature of a claim will depend upon whether the policyholder chooses to get his/her car repaired at a network garage or not. Every car insurance company will have a network of garages, simply put these garages have tie-ups with the insurer to offer services to the policyholders. Here are the main 2 types of claims:

1. Cashless Car Insurance Policy 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.

2. 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.

Process: How To Claim Car Insurance?

One should get in touch with the insurance company and intimate them about the damage as soon as possible. There could be a delay in intimation in case of an accident claim, this is understandable to an extent. However, other types of damages, for example, third-party damage, damages due to a tree falling on the car, theft of the car, etc. should be brought to the insurer’s notice immediately.

Third-Party:

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, note down the insurance details of the third-party vehicle. You will then have to inform their insurer. The insurer will transfer the matter to a tribunal. The tribunal decides the amount compensation for the loss occurred. The insurance company then pays money as compensation accordingly.

Own-Damage:

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.

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, they issue 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 market price of the car. If you have taken a Return to Invoice cover for a new car, then the amount will be equal to the car’s purchase value.

Total loss:

A total loss claim can be raised in two situations, either when the car is stolen or when it suffers irreparable damage. If the policyholder has bought a Return to Invoice add-on cover, he/she can claim the invoice amount of the car in case of the total loss. Else, the claimable amount is approximately equal to the Insured Declared Value of the vehicle.

Documents Required To File A Claim:

While it is possible to buy an insurance policy in a paperless manner, you will require a certain set of documents while filing a car insurance claim. You may require the following set of documents irrespective of the type of claim raised: 

1. The Registration Certificate (RC):

These days smart cards are issued that contain the information in an encrypted manner. You will require a copy of the RC for raising a claim.

2. First Information Report (FIR):

The copy of an FIR may be required while filing an accident claim. 

3. Car Insurance Policy:

Policy number and other details are required.

4. Driving License:

The copy of the owner/driver’s driving license is necessary.

5. Repair Bill:

The repair bill will be required if you got the car repaired at a non-network garage. The policyholder should always wait for the insurer survey to take place before getting the car repaired.

Common Reasons For Claim Rejection:

Every car insurance claim that is raised by the policyholder may not be settled. Some claims get rejected. 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 the policyholder in the application form are incorrect or false.
  • The accident took place while the owner/driver was driving under the influence of intoxicating substances.
  • The owner/driver was driving without a valid driving license.
  • The owner/driver owns a second-hand car and the insurance is still in the name of the seller.
  • The policyholder failed to inform your insurer, about the accident, within the stipulated time frame.
  • The policyholder got the car repaired before a surveyor could inspect it.
  • The damages occur due to the owner/driver’s carelessness.
  • The insurer observes that the repair fee will be higher than the depreciated value of the car. The policyholder will then be given an amount equal to the Insured Declared Value.
  • The owner/driver uses the car for purposes other than those mentioned in the policy.

Also, read: Third-Party Car Insurance – Benefits, Buy/Renew Online

Steps To File A Car Insurance Claim Successfully:

In order to get compensation for the damage of the car or in case of injury, the policyholder needs to file a vehicle insurance claim successfully. You can follow the same steps given below if you are looking for an answer to how to claim insurance for car accidents. Here are the steps:

Step 1: Claim Intimation

Any type of contingency related to the car should be brought to the insurer’s notice as soon as possible. You need to intimate them about the incident that took place. All types of insurance companies have an active helpline number. You can call the insurer and ask for the particular process of claim intimation that the company follows. Carry out the necessary action to intimate the company about the damage or injury.

Step 2: Arranging the Documents

After claim intimation, the insurance company might assign a dedicated customer relationship manager to help you with the claim process. He/she will communicate the list of documents that you need to submit for raising a claim. Arrange all the required documents as required. 

Step 3: Applying for a Claim

You can apply for a claim with the help of a claim form. Fill it with correct information because this is a crucial step of raising a claim. The claim form is an official communication that you send to the insurer. The claim will be investigated with the help of this claim form. 

Step 4: Claim Status

Each car insurance company might have a different way of displaying the claim status. Some might ask you to log in to the company’s website and then check the status, others might offer to send regular updates via your mobile number. Remember to ask the customer relationship manager about checking the status of the claim.

Car Insurance Companies With Claim Settlement Ratio In India FY 2018-2019:

For the FY 2018-2019, instead of releasing IRDAI claim settlement ratio, the regulator released the incurred claim ratio of insurance companies. Claim settlement ratio 2019 may not be available. These figures were released in the annual report published on IRDAI website. The difference between claim settlement ratio (CSR) and incurred claim ratio (ICR) is that CSR is related to the number of claims whereas ICR is about the profitability of an insurance company.

Why Is Comparing Claim Settlement Ratio Important?

Comparing the claim settlement ratio of car insurance companies 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.

How To Choose The Best Car Insurance Company In India?

As mentioned earlier, there are multiple parameters for deciding which car insurance company is best. Only one factor cannot be taken into account when hunting for the best insurer. Here are the parameters you should consider while looking for a car insurance company:

1. Online

Consider buying car insurance online as you may find a cheaper policy that offers similar benefits as compared to an offline plan.

2. Compare Premium

You will find many car insurance comparison tools online. Make use of them to compare policies from various insurance companies and then choose the most suitable one.

3. Compare Coverage

Along with comparing premiums, you should also consider comparing the coverage offered on car insurance plans. In this way, you can find the best policy at the lowest cost for auto insurance.

4. Value-Added Services

Check if the car insurance company offers any value-added services on their car insurance plans. You can look for services like for free inspection, 24×7 customer services, etc.

5. Discounts

A car insurance company may sometimes offer an additional discount on their car insurance plans. Keep an eye out for such discounts.

Frequently Asked Questions:

What is meant by 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.

Why is it important to know the claim settlement ratio of various insurers before buying a car insurance policy?

You buy an insurance policy to be financially secure during unfortunate events related to 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.

Is there a limit on the number of claims that can be raised?

No, a genuine claim can be raised unlimited times. However, this would be the rarest of the rare case.

What is the role of No Claim Bonus in claim settlement?

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.

What is the role of Add-ons in claim settlement?

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 Depreciation cover, Return to Invoice, Consumables Expenses, Passenger Cover, etc. Add-on covers affect the number of claims that you make. You are unlikely to pay for the loss from your pocket at the time of claim.

Why is it a good idea to avoid claiming for minor damages?

Car insurance should be used as a backup financial option for major claims and minor claims should be paid from the pocket. This is because if you have a Comprehensive car insurance policy that covers the “own damage” component of the policy, you will be liable to get a discount called No Claim Bonus. You can get a flat discount of 50% when you do not raise any claims for 5 consecutive policy years. Hence, it is a good idea to avoid making a claim for minor damages.

I recently got the paint of my car changed from white to blue. Now the car suffered damage, can I still claim for the damages?

It is necessary that you inform your car insurance company after making heavy aesthetic changes to the car. This is because the vehicle will be inspected for damages and the details will be verified. These details should match with the ones mentioned on the car insurance policy. There are high chances that the claim will be rejected if you do not inform the insurance company about the paint job.

Is it okay if I get my car repaired first and then raise a claim for damages?

No, your claim will be rejected if you get the car repaired without informing the insurance company about the damages suffered. This is because the insurer will arrange for an inspection. The estimator will assess the extent of damage suffered by the car. You should always repair the car after getting a green signal from your car insurance company.

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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