Does it make sense to file your car insurance claim frequently?

It is a human tendency to rush for an insurance claim every time something untoward happens. This holds true in case of car insurance also. True, making a car insurance claim in case of any accident or damage to your vehicle is your right, and you should definitely exercise it. After all, that is the main purpose of getting one’s car insured. However, does it make sense to make a claim on your car insurance frequently or every time something happens?

According to industry experts, there is no hard and fast rule for filing an insurance claim. However, before making a claim, keeping some basic facts in mind and doing some calculations may help someone take the right decision.

“Insurance acts as a financial shield against any unforeseen accidental damage, which can make your vehicle not fit for use. However, you can avoid making frequent claims for smaller damages to the vehicle, especially when they don’t affect the vehicle’s performance. Frequent claims will pay for your repair expenses, but will also affect your No Claim Bonus (NCB) and possibly will make your insurance premium higher at times of renewal,” says Sasikumar Adidamu, Chief Technical Officer, Bajaj Allianz General Insurance.

Rajiv Kumar, MD & CEO, Universal Sompo General Insurance, also says that sometimes, raising a claim on your car insurance policy might not be the best option as the insurance policy attaches great significance to the number of claims you raise.

For instance, “damages where the repairs are minute with lesser monetary inputs like a broken headlight or a mirror damage etc. should not be claimed under the policy as the cost of repairs involving your vehicle is substantially lesser than the applicable NCB (No Claim Bonus), which you will enjoy after every claim-free renewal,” he says.

Similarly, you should avoid making claims for small dents and scratches, whereas, for a bigger expense like front collision, you should take the insurance benefit. “With this approach you can get the best of your motor insurance, and at the same time you can ensure that the premium is not high too,” says Adidamu.

You also need to keep this fact in mind that most car insurance policies come with ‘deductible’ or ‘excess’, which is the portion of any claim amount that the insured will have to compulsorily bear himself on account of any claim under the policy, leading to less benefit for smaller claims. Even if a single claim is made, the NCB goes back to zero. Therefore, it is advisable to make a claim in the event of a big loss and avoid filing it in case of little mishaps.

For instance, if the claim amount is Rs 3000 and the applicable deductible is Rs 1000, then the amount payable by the insurer towards the claim will be only Rs 2000. Here the policyholder is not getting the full claim amount as well as he is going to lose his applicable NCB — which helps one avail a discount ranging from 20-50% on the own damage premium — on renewal premium. Hence he should avoid filing such claims.

What to keep in mind while filing a claim?

There is, thus, no well-defined criteria/rules to decide whether to file a motor OD (own damage) claim or not. However, a few points you should have in mind to decide on raising a claim are the quantum of loss, the impact it would have on NCB (no claim bonus) and applicable deductibles.

You should also be aware that frequent smaller claims put the insured at a higher risk level and, thus, the renewal premium will surely be high. Therefore, it is advisable to avoid smaller claims like a minor dent on the bumper or minor paintwork on the body of your car, etc.

It is a fact that “insurance companies cannot reject a claim based on the extent of the damage, unless the damage to the vehicle is caused due to events which are not covered under the policy. However, avoiding smaller claims can help in the event of a big loss and save your accrued NCB,” advises Kumar.

7 tips for taking out car insurance

Having a car involves many expenses: maintenance, road tax, repairs, parking expenses… and of course, car insurance. In Spain, by law, all vehicles must have insurance that covers at least mandatory civil liability, which takes care of any damage that may be caused to third parties. However, there is a wide variety of car insurance policies on the market from which you can choose more or less coverages, and at a higher or lower price. Here are some things to consider before deciding on a specific policy.

Cancel your previous insurance one month in advance
If you have found a car insurance policy that is more suitable for you and you want to cancel your previous one, you must notify your insurer one month before the end of your contract, according to the Insurance Contract Law. If you do not notify us in advance, your current insurance will be automatically renewed. The best way to do this is to send a written statement to the company by telegram, bureaufax or traditional mail. In this way you will avoid later problems if the company claims that you did not communicate with the necessary time.

Adjust the coverage to your needs
The type of insurance, as well as the coverages to be taken out are the most important factor when choosing a Car policy, over and above the price. It is not a question of having the best ones, but of choosing the most appropriate ones in each case. For example, for new cars up to 3 years old, it is advisable to take out an all-risk insurance policy, as it has its own damage cover. In this way, if the vehicle suffers any damage, such as rubbing against a column when parking, the insurance company will assume the cost of repairing the damage. In addition, in the event of total loss, the compensation usually corresponds to the new value of the vehicle. On the other hand, in the case of cars more than 3 years old, it is usually more advisable to take out an insurance policy with Extended Third Parties, or even a basic one, since the value of the vehicle is considerably reduced once that period has elapsed since it was purchased. In any case, you may qualify for complementary cover depending on the risk you face. For example, if your vehicle sleeps on the street, it is recommended that you hire theft coverage, while if you do so in a private garage, you can save that coverage. Consider your specific situation to choose the coverages you need, without hiring more than necessary. </li>

Check coverage limits
In addition to the coverages that you have decided to take out, it is very important that you look at the limit that each one has. One that can cause some problems is roadside assistance. Although most insurers offer this coverage from kilometer 0, there are others that can establish a minimum distance from home to provide this service, so if you suffer a breakdown 5 kilometers from your home, it is likely that this incidence is not covered by your policy. Another example may be compensation in case of total loss of the vehicle. Some insurers may offer you compensation for the market value of the vehicle, while others do so for the new value, which can make a difference of hundreds of euros. Pay attention to these aspects in the specific conditions of each policy to be aware of the specific coverage you have in each case.

All parts count
Road safety comes first and that’s why you should pay close attention when driving your car. Also, it’s important to know that the more parts you give to insurance, the more expensive your policy will be the following year. In this way, if in one year you have given two parts, for example for a rear impact and a broken glass, the following year the insurer will penalize you by increasing your premium or not applying bonuses, even if the claims did not occur because of you.

with or without franchise?
If you want to save some money on your insurance premium, you have the option of taking out an insurance policy with excess. This implies that if, for example, you take out a policy with a $500 deductible, in the event of a loss you will have to pay for the expenses incurred up to that limit ($500) and the rest will be borne by the insurer. In return, the premium payable will be lower than if the policy had no franchise. The insurance policies that are most often “franchised” are the All Risks, since they are those that have the most expensive coverages, such as own damages. However, third-party insurance can also include coverage with excess cover, such as theft, although this is very unusual. In this way, it is possible to pay less for the insurance premium, while at the same time being protected in the event of a high-cost claim.

The single payment, the cheapest option
When it comes to paying for insurance, most companies give you the option of paying a one-time or installment payment, which can be monthly, quarterly or semi-annual. If it’s possible, pay it all at once, since it’s usually the cheapest option, and even some companies offer discounts if you pay the fee in a single payment. Conversely, some insurers may charge surcharges if you decide to pay the premium in different installments, and the more you split the premium, the higher the surcharge is usually.

Compare
The current car insurance offer is very numerous, so numerous that sometimes finding a policy can be very complicated. Comparing prices and coverages and choosing the right insurance can involve a long and difficult search if you don’t have the right tools.