A car insurance premium usually increases after a vehicle owner makes a claim. The insurer may view the owner as a riskier client, especially if a claim is filed within a year. In fact, car insurance calculators show how frequent claims can raise your premium.
Accidents can happen at any time, and vehicle owners are not always at fault. However, the consequences of accidental damage don’t end with repair bills. They can also affect insurance premiums, similar to an accidental scratch.
Read this article to understand how insurance premiums change after a claim and how to deal with it.
How Does a Claim Affect Third Party Insurance Premium?
The Insurance Regulatory and Development Authority of India (IRDAI) sets third-party car insurance premiums based on the vehicle’s engine capacity. Therefore, an accidental claim does not affect third-party insurance premiums. After all, the claim is for third-party damage, not damage to your own vehicle.
Suppose Mr A. has a third-party insurance policy with a premium of ₹5000. He caused an accident damaging the tea stall. The insurer will pay the tea stall owner’s repair costs, not Mr A. Therefore, next year, when renewing the policy, he has to pay only ₹5000. The claim does not affect the base rate.
How Does a Claim Affect Comprehensive Insurance Premium?
The claim will affect the comprehensive insurance premium significantly, as it will lose the No-Claim Bonus (NCB) and incur a loading premium for a regular claimant.
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No-Claim Bonus (NCB)
Curious to know how NCB affect insurance premium? You may consider the no-claim bonus as a reward for safe driving that reduces the premium up to a certain limit for each claim-free year. You may earn up to 50% of discount in premium for 5 consecutive claim-free years. After a claim, your NCB will be lost, and your premium will increase significantly.
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Premium Loading for Regular Claimers
If you claim your car insurance almost every year, your premium loading will be significantly high. The term “premium loading” defines the additional charges on the premium when a policyholder makes frequent claims. The insurer identifies these policyholders as higher risk.
However, consider choosing a car insurer that clearly explains its terms and conditions, including how claims may influence future premiums. This helps policyholders understand potential costs and make informed decisions when choosing a policy. For example, Bajaj General Insurance provides details of its policy terms and conditions for customers to review before deciding.
How to Keep Your Car Insurance Premium Low?
To keep your car insurance premium low, avoid claiming for minor damages and choose an NCB protection add-on. Do you know what the tips are to keep your car insurance premium low? Purchasing insurance online and choosing safety devices for your car can reduce the premium.
- Do Not Claim Minor Damage: Do not file claims for minor issues like flat tyres or broken headlights. It will increase your premium in consecutive years.
- Choose NCB Protection Add-on: You can buy an NCB protection add-on to safeguard your premium discounts. It can reduce your premium by up to 50% as an NCB bonus.
- Choose Voluntary Deductibles: You can choose a voluntary deductible to share repair costs with your insurer. A shared-cost structure may lower your premium.
- Install Safety Devices: Policyholders can opt for additional devices such as Automotive Research Association of India (ARAI)-approved anti-theft devices to reduce theft risk. A secure car attracts lower premiums.
- Choose Online Policy Purchase: Some insurers offer premium discounts for online purchases. Policyholders can renew car insurance online to get additional premium discounts.
Comparing policy terms, coverage, and applicable premiums helps you choose an option that suits your needs. Bajaj General Insurance is one option policyholders can consider while comparing car insurance policies and reviewing the applicable terms and benefits.
Final Thought
Just like accidents leave scars, an accidental damage claim leaves a footprint on insurance premiums. Claiming does not affect your third-party insurance, but it will impact your NCB and premium loading under comprehensive insurance. However, policyholders can reduce the premium by installing safety devices and choosing add-ons.
Never compromise your car insurance with hidden terms and conditions. Choose your insurer only after thorough research.