Does it make Sense to File Small Car Insurance Claims

Why is filing a minor car accident insurance claim a bad idea?

If your car suffered minor damages from a mishap – for example, your car got a long scratch on the side or the backside got a dent while parking – it makes sense to not file a car insurance claim.

The difficult part is the determination of whether the mishap is indeed serious or it can be considered as a “minor” accident. If an accident resulted in death, injuries, or even some sort of property damage to a third party, the mishap will not be considered as ‘minor’ and it needs to be reported to your respective insurance company. But, minor bumps on your four-wheeled beauty’s exterior do not necessitate filing a car insurance claim. Filing small car accident insurance claims would almost certainly cost you money in the long run.

Let’s dive into the reasons:

No –Claim Bonus: If you own a car and insure it with an insurance policy, you might be familiar with the term “No Claim Bonus”. Its meaning is really simple. People owning cars but not claiming any amount under their insurance policy can enjoy a renewal premium discount. This discount varies from one insurance provider to another but generally, policyholders are offered around 20% for the first year which increases to a maximum of 50% in the fifth consecutive year of not raising any car insurance claim. However, if they claim anything during or beyond this timeframe, their NCB will be reset.

Now, the question for you stands – Is this discount worth it over the claim amount? It is generally a smart idea not to file a claim if the amount is equal to or less than your No-Claim bonus amount. However, if the claim amount exceeds the discount, it is critical to consider the next year’s NCB amount before making a decision.

Deductibles: When filing a car accident insurance claim, you’ll be obliged to spend a certain sum based on your car. This is known as the mandatory deductible in car insurance claims. There is also an optional deductible option, which you choose during the insurance purchase. When filing a claim, you’ll be required to spend the optional deductible amount and your insurance provider will compensate the remaining claim sum once you have paid the deductible.

Car insurance deductibles exist so that you, as the insurer, take some sort of responsibility for your vehicle. By paying a deductible upon filing a claim, you acknowledge the legitimacy of the damage and its addition to your vehicle. If there was no deductible attached to car insurance, then there would be no incentive for you to properly maintain your vehicle and reduce the likelihood of getting into an accident in the first place.

Again, the question arises – Is it worth it to file a claim over the deductibles? In the event of claim insurance for a car, only the amount remaining after deducting the ‘deductible’ value is reimbursed to the policyholder. Consequently, claiming small sums that are equal to or lower than the ‘deductible’ value set in your auto insurance plan is fruitless since you will receive almost nothing and will also miss out on the NCB bonus.