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When Not To Claim Car Insurance Policy

Team AckoAug 17, 2022

The cost of repairing or replacing vehicle parts can be expensive. Here’s where four-wheeler insurance is beneficial. It is an excellent financial blanket to mitigate your out-of-pocket expenses since it covers the cost of repairs or replacement parts. While this is beneficial, there are instances when not to claim a car insurance policy. They are also productive. So, which are the instances when you should not submit a claim? Read on to learn as we list them in this article.

When Not To Claim Car Insurance Policy

2 vital factors to consider before raising a claim

Filing a car insurance claim needs a thorough understanding of the pros and cons of the action. Here are some important factors to consider before submitting your claim.

1. Deductibles

Deductibles is the portion of the claim amount that you must pay from your pocket. Most car insurance policies have deductibles, and they are categorised as Compulsory and Voluntary. In both cases, you must pay a portion of the claim amount.

Before you submit a claim, find out how much of the claim amount you might have to pay and then decide if it is beneficial to go ahead with the claim. 

For instance, if your Voluntary and Compulsory Deductibles put together amounts to Rs. 10,000. And, if you raise a claim for Rs. 9,000, you have to pay this amount. The insurer will not contribute towards this claim as the entire Rs. 9,000 falls under deductibles. Thus, there’s no point in raising such a claim. It can also lead to losing out on any accumulated No Claim Bonus (NCB), a potential discount on the car insurance renewal.

2. No Claim Bonus

No Claim Bonus is a discount you receive for not filing claims during the policy period. Hence, you will lose the accumulated bonus if you file a claim. As mentioned above, you lose a discount on the car insurance renewal if you raise a claim. Thus, avoid raising claims for minor damages and only do so if the repair cost is substantial.

For example, your car’s mirror is broken, and the repair cost is Rs. 2,000. Here, it is wise not to raise a claim for such minor damages (considering your Deductible amount is 1,500) as it will impact your NCB. However, if there is considerable damage to your car and the repair cost is Rs. 40,000, you can consider submitting a claim for such significant repairs.

When not to file a car insurance claim

Here are scenarios when raising a car insurance claim is not the most beneficial option.

1. In case of minor damage

The possibilities of minor damage, such as scratches, dents, broken mirrors, etc., are common, especially in urban areas and places with higher traffic density. These minor damages can be repaired easily without spending a lot of money on your own. 

Why?

If it's minor damage of Rs. 500, why spend energy on raising a claim when it can be resolved at your end easily? Besides, your NCB stays intact. 

2. When deductibles are higher

Deductibles is an amount that you have to pay from your pocket during claims. The rest of the repair cost is paid by the insurer as per policy terms. There are two types of deductibles in car insurance: Compulsory and Voluntary. As per the Insurance Regulatory and Development Authority of India (IRDAI) regulations, the Compulsory Deductible component is Rs. 1,000 for cars with less than 1500cc and Rs. 2,000 for cars above 1500cc (subject to changes). 

Why?

When you raise a claim, you must pay the Compulsory and Voluntary Deductible, if any. If the repair cost is less than the deductibles, then it is not advisable to file a claim. You also lose out on the NCB in such a case.

For example, Ms G owns a Maruti Brezza and primarily uses it for completing errands. During one such drive to a supermarket, a coconut fell on her car’s windshield and damaged it. The cost to replace the windshield is Rs. 5,500. The deductible of her car insurance policy amounts to Rs. 6,000. In this situation, it is best not to raise a car insurance claim for Rs. 5,500.

3. Mutual settlement

If another car or vehicle crashes into your parked four-wheeler and the vehicle owner is ready to pay for the damages, you can consider it and not raise a claim. 

Why?

Claim settlement may take time depending on the severity of the damages. Besides, you must follow specific procedures such as informing the insurer, filing a First Information Report (FIR), etc. This involves some effort, which can be avoided by settling the issue directly with the person at fault. In such a scenario, settling the dispute amicably without raising a claim can be prudent.

For example, Mr C met with an accident with Mr D that resulted in damages to Mr D’s Maruti Swift driver-side door. Since Mr C was at fault, he agreed to pay for the repair cost and Mr D did not raise a claim against his car insurance policy.

4. Your accumulated NCB is higher

You can get up to a 50% policy renewal discount (on the Own Damage component) for not raising claims against your Comprehensive Car Insurance Policy for five consecutive years. And raising a claim can have a negative impact (for you) on your car insurance renewal premium.

Why?

Since NCB is a discount and reduces the renewal premium of your car insurance premiums, it is ideal to protect it by not filing claims unnecessarily.

Note that the examples and scenarios shared in this article are meant for explanatory purposes. The actual calculation can differ on a case-by-case basis as per policy terms.

Frequently asked questions

Is it wise to claim car insurance?

It is ideal to claim car insurance only in case of a substantial loss. Ensure you don’t file claims for insignificant damages to your car, as it can be counterproductive during car insurance renewal due to the negative impact of raising a claim on the NCB component.

Does Comprehensive Car Insurance cover dents and scratches?

Yes, it covers such minor damages. However, it is wise to raise claims for such damages if the repair cost is substantial and over and above your out-of-pocket expenses.

Is it better to use car insurance or pay out-of-pocket?

It depends on the severity of the damages to your car. You should choose the out-of-pocket option if the repair costs are less than the deductibles and choose to raise a car insurance claim if the repair costs are significantly higher.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions.

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