May 18, 2024

Car Insurance: Does It Make Sense To File Small Claims?

We frequently find ourselves in a situation where our vehicles are damaged. So when should you file a Bajaj Allianz car insurance claim, and when should you not?

According to industry experts, no absolute rule exists for submitting a claim. When deciding regarding filing an insurance claim, it is in one’s best interest to perform a few calculations and bear in mind a few basic facts.

Insurance is predicated on the concept of risk, and higher risk will inevitably result in a higher premium. Claim history is one of the factors influencing premium car insurance prices. For instance, it impacts the no-claim bonus for auto insurance directly, which is reduced to zero, resulting in higher premiums in the future. Before claiming, assess the loss, deductibles, NCB impact, and potential future premiums.

Most automobile insurance policies stipulate a ‘deductible’ or ‘excess’ amount, the portion of any claim amount that the insured must endure personally. In the case of a claim, only the remaining balance after paying for the deductible is subject to other markdowns such as depreciation, etc. Therefore, claiming tiny amounts close to or less than the ‘deductible’ amount specified in your car insurance policy is pointless, as you would gain little. *

A No Claim Bonus (NCB) is a concession insurers give on the renewal premium following a year without a claim. This NCB begins at 20% after the first claim-free year and gradually increases to a maximum of 50% for each claim-free year after that. Even a single claim resets the NCB to zero, another reason minor claims should be avoided.*

However, it should be remembered that the NCB is only availed on the ‘Own Damage’ portion and not on the ‘Liability’ portion of the premium when performing calculations using a car insurance calculator.*

In addition, registering insurance claims frequently hurts your claim history.

According to experts, registering one or two claims over several years is unlikely to have a significant impact. However, in addition to increasing the premium rates, insurers can deny the renewal of your policy if there are repeated losses on the insured risk year after year or if the insured does not exercise reasonable care to prevent repeated failures.*

The premium rate increase resulting from repeated claims depends on the reason for the claims and varies from insurer to insurer. The ‘nature of the claim’ refers to whether the injury to your vehicle was caused by you or by a third party. If someone rear-ends your car, causing you to submit a claim, your insurance rates will be unlikely to increase under normal circumstances.

A good rule to follow is to only file a Bajaj Allianz car insurance claim in the event of a significant loss and avoid doing so in trivial mishaps, such as a small dent on your car’s bumper or body.

It’s important to weigh the pros and cons, considering your individual circumstances and the value of your coverage. Sometimes, paying for minor repairs out of pocket can be a more prudent financial choice reserving your insurance for significant or unforeseen events.

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* Standard T&C Apply

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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