When Not to File for a Car Insurance Claim

Let’s say that you are faced with an embarrassing situation of having a minor car accident. You are fine, but your beloved car is not. There are considerable damages.

You are upset, and the first thing that comes to mind is what to do now. Despite the damages, you want to pay for the damages yourself? You have thought of filing for the car insurance coverage, but what prevents you from doing that is the hike in insurance premium.

You are confused, and are in a dilemma.

In this article, we will not be saying when you should file for your car insurance, and when not. Instead, we’ll focus on when not to file for it. That way, you can prevent considerable monetary loss and peace of mind.

Not reporting such minor accidents to your insurer does make sense if the vehicle has been the only vehicle involved. For instance, you run into a tree during a rainy night, or backed straight into a thick electric pole. In such cases, you don’t have to report. But if there is more than one vehicle involved where a third-party has suffered injuries, property damage and death, then as you can guess, the mishap won’t be a minor one anymore. In times like these, it is important to report to your insurance company.

In short, small dents and minor scratches don’t warrant a claim, but an accident involving injury, property damage, and death does. Thus, in the former case, it is best to not file for the claim. You can otherwise lose a whole lot of money.

And that’s not something you want, right?

Let’s look at this in a little more detail.

Third-party liability insurance claims

It is a bright clear morning. You’ve just had your healthy breakfast made by your wife. Everything is going your way, and you are thinking of the presentation to give in office today. And that’s when you hear it.

It started with a shrill screech, and ended with a resounding bang. The kind of noise that makes you cup your ears and look around wildly. You rush out, and see your neighbor had rammed into your car, which now sadly shows an ugly dent. 

In this case, you are evidently not at fault. You can straightaway claim insurance under the Third Party Liability insurance since your neighbor is at fault. But wait, in this circumstance, why file for your own insurance claim? Since your neighbor did all the ramming, the cost should legally be paid by him or her, for all the damage your beloved car now sports.

But we won’t lie. Raising insurance claims under third party liability takes a long time, is tedious and cumbersome. But in circumstances as in the example above, you should file for it. Also remember that you should file an FIR too, as it shall give you a stronger ground in case the matter goes to the court. An FIR is also needed in case of getting your insurance claim.

Protecting your NCB

You know you have an NCB, right?

What’s an NCB?

NCB stands for ‘No Claim Bonus’. It is a benefit car owners are given by insurance companies if they do not raise any claims in a policy year. For instance, if you don’t file for a damage claim for 5 years straight, you’ll get a huge 50% discount on renewal premium! But if you raise a claim after that, the NCB earned goes right back to its previous value.

All this means that when you are going to raise a car insurance claim, think for a moment if you’ll face losses by doing so. Loss can include the total loss of the accrued NCB, and the following hike in renewal premium. Also think if you should pay for the loss yourself. Weigh all your options and choose the one that gives you the least loss. 

Deductibles

Here’s another factor you should be aware of: deductibles or excesses. When making a car insurance claim, you’ll have to pay a specific amount depending on your vehicle’s engine capacity. This is called Compulsory Deductible.

Other excess, like voluntary deductible, is the one that you yourself pick during policy inception. This amount needs to be paid at the time of the claim. You’ll get the insurance amount only after paying this sum.

In short

Add the excesses that you’ll pay with the NCB you may lose. This shows your loss from the accident.

Check if this loss is more than the actual claim. If so, it is best to pay for the damages yourself. If not, claim for the insurance.

To conclude, follow this rule of thumb when you are raising car insurance claims. Only make claims when the loss is large.