Drawbacks of filing multiple car insurance claims in a Policy Period
Car insurance claims are an official request to the insurance company seeking compensation for the damages incurred by your vehicle. Thus, you will be financially secure in case of any losses that may be incurred due to unforeseen events including theft of car.
If you file too many claims in a short period of time, it may have impact the policy premium at the time of renewal. It is important to understand the cons of multiple car insurance claims so that you can provide financial protection to your vehicle at all times. Read on to know the disadvantages for making multiple car insurance claims in a year.
What happens when you make multiple insurance claims?
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Increased premiums:
When you file multiple insurance claims in a year, the insurance company will increase the premium the next time you renew the policy. Multiple claims indicate that you pose an increased risk to the insurance company. Therefore, your premium is increased to cover that risk.
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Deductibles:
If the repair charge is lower or slightly higher than the deductibles in your policy, you should try to pay for it from your own pocket. If you file a claim, you will receive insufficient compensation because of the deductibles and also miss your NCB.
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No Claim Bonus:
Your car insurance provider offers a discount on the premium if you don’t make any claims during the last policy period. The percentage of the discount grows every year for not making a claim and can be as high as 50% if no claim is made for 5 consecutive years. However, you lose your NCB discount with just one claim in a year. So it is better to avoid making claims if the NCB is higher than the damage cost.
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Depreciation Cover:
The insurance provider does not consider the depreciation rate during claim settlement when you opt for a depreciation optional cover. But there are restrictions to the number of claims you can make under this cover. Claim will be paid without applying material wise and age wise depreciations only for the first 2 partial loss paid claim in a policy year.
How is IDV affected by insurance claims?
IDV (Insured Declared Value) is the maximum sum assured by the insurer that a policyholder is supposed to receive in terms of compensation at the event of total damage or loss occurred to the insured vehicle. The IDV of the vehicle (and accessories if any fitted to the vehicle) is to be fixed on the basis of the manufacturer's listed selling price of the brand and model as the vehicle insured at the commencement of insurance/renewal and adjusted for depreciation. However, you will have to bear the compulsory deductibles for the replaced parts.
When should you refrain yourself from making an Insurance Claim?
Here are two scenarios where it would be prudent not to make a car insurance claim:
• When the repair expenses aren't higher than the No Claim Bonus
• When the deductible amount mentioned in your automobile insurance policy is greater than the repair expenses
Therefore making multiple claims has its drawbacks, and you should always make it after considering the terms. Buying a comprehensive insurance plan like Kotak Car Secure safeguards your vehicle from any damages and also covers any third-party liabilities.
Disclaimer: The content provided is for education and informational purpose only, none of the information contained in our blog amounts to any form of opinion or advice. Please go through policy related documents carefully or consult an expert before making any insurance-related decisions.