Does it make Sense to File Small Car Insurance Claims?

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Updated on Jul 13, 2022

Insurance policies minimize financial losses caused by unexpected frightening events. The major benefit that motor insurance offers is saving you from the consequences of accidents and harm that might happen to your car. The company also pays for the medical expenses and other associated costs, in addition to coverage towards property damage sustained by another party if the insured car is involved in a collision.

As a result, there are numerous scenarios when you might feel like you should go out of the way to file your insurance claims. However, this is not always the case. This article will explain why you should not 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.

Also Read: What Mis-happenings will be covered in Car Insurance?

Please Note
Let’s suppose a scenario where your parked car gets dented by a neighboring car. You are not at fault in this scenario, yet your insured vehicle was damaged. The prudent course of action will be to seek legal restitution for your property damage from your neighbor. In this case, your neighbor is obligated to pay for your losses, and if he or she has third-party insurance coverage, you will be reimbursed without having to file a claim under your own policy.

Conclusion
Car insurance is supposed to cover the costs of damage or loss incurred in an automobile accident. Yet, when you are in this sort of situation, it is difficult to determine what the best course is for making an informed decision.

While there is no universal guideline on when you should claim under your car insurance policy, there are some rules of thumb that can help you decide if you should pursue the claim or waive it. This blog provides two things that you should keep in mind if you are looking to file minor car insurance claims.

Jan 10, 2022
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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