Not claiming for minor damage in car accident can save you money

You recently purchased a car and were very happy with the new buy until a loved one of yours got into a minor accident involving the new car. While thankfully your loved one didn't get a scratch, the same can't be said about your car, which got quite a few dents and scratches. If not for your car insurance policy, the accident would also make a big dent in your wallet. 

Now, the next obvious step is to make claim for these damages, right? Your well-meaning neighbour doesn't seem to think so. He is of the opinion that there is no point in making small car insurance claims, especially since you can get the minor damages fixed from your pocket. “But what is the use of a car insurance policy then?” you reason with him. He tells you there are a few situations he can think of for not doing so. Let's take a look at some instances when you might choose not to make a car insurance claim.

Only a third-party insurance:

There are two types of car insurance policies available in the market - Third-party cover and comprehensive car insurance. While third-party (or TP) car insurance covers damages to third party property/vehicles and bodily injuries or death to the third party, comprehensive car insurance covers damages to the policyholder's vehicle (own damage) and offers third-party coverage as well. If you only have a third-party insurance cover, and your car has been damaged, you cannot file a claim to cover the latter's damage as it will be rejected. To ensure complete coverage, you should opt for a comprehensive policy.

Protecting the no claim bonus

Believe it not, the easiest way to get a discount from your car insurance provider on car insurance policy renewal is through no claim bonus. You can get discounts of 20% and above if you do not make claims for one year and more. These discounts keep increasing with every claim-free year and can go up to 50%. However, even if you make one small claim, you stand to lose all the benefits you have accrued over the years. So as long as you exhibit good driving behaviour, you keep earning rewards from your car insurance provider, but you might end up losing them all with one mistake. An excellent way to determine whether you should retain the no claim bonus is to check whether the discount earned as a result of NCB would be as much as or more than the claim amount.

As you might be aware, every motor insurance policy has a compulsory deductible. For two-wheelers, it is Rs 100. For private four-wheelers, it is Rs 1,000 for cars up to 1500cc and Rs 2,000 for cars above 1500cc. Now, let's consider an example: The compulsory deductible for your insurance policy is, say, Rs 2,000 and the NCB discount you have accrued over the years amounts to Rs 4,000. You want to claim Rs 6,000. Of this, you will not only have to pay Rs 2,000 yourself (compulsory deductible) but also lose the NCB discount for next year, which will be approximately Rs 4,000. You will lose around Rs 6,000 in this case. This is where you have to check if the cost of repairs is less than Rs 6,000. If it is, it might make sense to get the car fixed at your own cost and retain the NCB discount.

However, there's a way you can protect your NCB even after making a claim. It is by purchasing the NCB secure add-on cover with your comprehensive car insurance policy. This add-on cover allows you to make one claim during the policy period while keeping your NCB secure.

Damage caused due to third party's fault

In a scenario where your car was involved in an accident but was not due to your loved one's fault, instead it was due to a third-party's fault, you can file a third party insurance claim. While this process could be more cumbersome than filing a claim with your car insurance provider, you at least won't lose your NCB benefits. To ensure the claim is processed smoothly, you will have to file a First Information Report (FIR) with the police and prove that the accident was not due to your fault.

There are no hard and fast rules as to when you should or should not make a claim. However, before making a claim, always assess the situation and decide whether making a claim will be worth it or not.

The writer MD and CEO of COCO by DHFL General Insurance