How avoiding small claims can reduce your car insurance premium


06 Oct 2022

Claim history can directly impact NCB resulting to pay higher premiums. Kotak General Insurance suggests some measures for this. To know more visit us!

The idea of car insurance comes from the need to cover the damages that occur to your car during an accident, theft, fire, or any other natural or man-made disaster, that can happen anywhere at any point in time. Car insurance follows the concept of risk, and simply put, higher risk increases the premium amount. Adverse claim history is one of the factors that influence premium rates. In the case of car insurance, the claim history can directly impact the no claim bonus, which becomes zero, resulting in a person having to pay higher premium amounts in the future.

Avoiding small claims keeps NCB intact:

NCB or a No Claim Bonus is a crucial factor to keep in mind while you are thinking of filing a small claim. NCB is a reward you get from the insurance provider for not making any claims throughout the policy year. This discount is offered to the policy owner by the insurance provider on the premium at the time of renewal of the policy. This means for each claim-free year, you collect discounts under No Claim Bonus, starting from 20% up to a maximum of 50% for a period of 5 years. However, you can lose this benefit if you make a claim; hence, it is advisable to avoid making small claims, especially when the amount is lower than your premium. Another benefit of having the NCB intact is that you can transfer it from an old vehicle insurance policy to a new one, as it gets accumulated for the policy owner, not the vehicle. In case you are not buying any vehicle immediately, NCB can be reserved for 3 years.

What are some measures you can take to avoid filing small claims:

• Add safety features to your car:

In order to keep your car safe from car theft or petty thieves who steal car parts or accessories, you can install safety features in your car and avoid filing theft claims for a stolen car, car parts or accessories. By installing safety devices, you also save some amount on your premium, as the cost of the premium is determined based on the liability that a car poses to the car insurance company. The greater is the liability, the higher will be the car insurance premium. However, when you install safety features to your car such as anti-theft devices, you can lower your car insurance premium by some margin. In this way, the liability of the car insurance company reduces and in turn, they offer you a lower car insurance premium.

• Avoid additional fittings and modifications:

The car insurance premium is generally computed based on vehicle value, vehicle age, engine type, fuel type, etc. While any addition such as a high-end music system, navigation system which doesn’t come as factory fitted attracts a higher premium. These added features and modifications add to the value of the car and increase the premium. Hence, if you don’t want the premium to go up, you should avoid doing modifications to the car.

• Avoid lapses in the policy:

One should always renew their car insurance before the expiry or between the grace period and try to avoid policy lapse. When the policy lapses, you lose your coverage, and it indicates carelessness and unreliability on the part of the car owner, which could lead to disqualification of the discounts and benefits by the insurer, such as the No Claim Bonus that you may receive at the time of renewing your policy.

Taking the above factors into consideration, it seems that when you carefully use your car insurance policy and make some changes to your outlook towards avoiding small claims, you can ultimately reduce your car insurance premium.

Kotak General Insurance offers you various car insurance products and services to protect yourself and your car from the burden of financial loss and damages and fulfil all your car insurance needs.

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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.