Even after taking all the precautionary measures, you may meet with a car accident. It is unpredictable and can happen to you at any time. Apart from this, an accident is not always your fault. Rash drivers and road obstructions are often the causes of accidents. While a car accident won’t be in your control, being prepared to face the consequences of an accident surely is. The unpredictable nature of a car accident is what four wheelers insurance will protect you from.
Car insurance will help you take care of the expenses incurred from the damage caused to the car from the accident. If the accident was your fault, then the insurance policy will cover the cost of the damages to your car as well as any third-party damages. If some other person has caused the accident, they will be liable to pay for the damages. To get the insurance coverage from a policy, you will have to make regular and timely premium payments to the insurance company.
Does car insurance premium increase after filing an accident claim?
Several factors determine the premium amount, like age, car type, driving history etc. However, one significant factor that may affect the premium amount is if you have filed for a claim. An insurance company will look at you as a risk if you have made an accident claim. This will increase the premium. Once you have an accident claim in your policy history, the insurance company will charge you a larger car insurance renewal premium. If you have made multiple claims, it can affect the car insurance cover as well. Some companies may decrease the coverage you can get from the policy and provide you with a small cover. Some companies may reduce the number of add-ons to the plan instead of all the important add-ons.
Filing a claim also resets your No Claim Bonus (NCB) to zero, and you do not get any discounts on your renewal premium, thereby increasing the premium. NCB is the discount you receive from the car insurance company on the renewal premium if you do not file a single claim in a year. NCB is a progressive bonus, i.e., for the first claim-free year, you will get a discount of 20% on the renewal premium. The discount will go up to 50% after 5 claim-free years. However, if you file a claim at any point, the NCB will reset to zero.
If you wish to maintain the premium amount as it is and not let it be affected by an accident claim, you can fix the car’s damages from your own pocket. However, this will only be helpful if the car does not undergo a full inspection at the time of renewal of the policy.
Effect of filing claim on comprehensive car insurance:
A claim for an accident will be included as a part of the coverage provided from the policy in comprehensive car insurance. The premiums for this policy will be based on the vehicle’s risk factor as assessed by the insurance company. If you increase the claim for the accident, then it will be possible that the insurance company may look at you as a risky policyholder and consequently increase the policy’s premium at the time of renewal. It can also reduce coverage from the policy or allow a low number of add-ons in the policy.
Effect of filing claim on third party insurance:
In a third-party insurance policy, the premiums will not get affected by a filed claim. This can be credited to the fact that the IRDAI decides the policy on a third party premium. They are same for all the automobile insurance providers in India. Insurance companies are not allowed to control the premiums on third party insurance for any policy. This is because you cannot claim any damage caused to your car from an accident in a third-party insurance policy.
Why do car insurance premiums increase after filing claims?
- Premium loading:
If you have filed multiple claims, then you will face premium loading. In insurance terms, loading is called the extra premium charged to a policyholder if they file claims often. This happens because an individual with a high number of claims is considered a liability for the company. Premium loading percentage will depend on different factors like Insured Declared Value (IDV), claim type, condition of car and claim settlement amount. Premium loading generally ranges between 10% – 15% of the previous premium.
- Cannot gain from NCB:
If you filed a claim under a comprehensive car insurance policy, you would miss out on the No Claim Bonus.
It will always bode well for you if you read up on the policy and its coverage before buying one. An excellent way of learning about the policies is to buy car insurance online. You can make an informed decision when you have all the facts available in front of you. You also have the provision of using a car insurance calculator. Apart from this, insurance companies have now provided the provision of carrying out online car insurance renewal. It makes the process much simpler and time-efficient.
Hence, you cannot predict the possibility of being involved in a car accident, but you can take steps towards protecting yourself from the cost of damages. If you do file for a claim, you can expect a rise in the premiums you pay after the renewal of the policy. Multiple claims on the policy will make you seem like a risky liability to the company. This can lead to reduced coverage or low add-ons to the policy.