There are numerous factors that one must consider before making a motor insurance claim in order to enjoy maximum benefits.
By Sajja Praveen Chowdary
Among all other accidents, road accidents are the most common in India. In 2017, there were around 4,66,000 road accidents in which 147,913 persons died. With a population of a little over 1.33 billion and 182.45 million registered vehicles, India has a traffic collision rate of about 0.8 per 1000 registered vehicles. As per a survey finding, a majority of road accidents (78%) are due to the driver’s fault which includes incidents like overspeeding, hit and run cases and driving under the influence of alcohol.
In order to protect yourself against unexpected financial expenses due to damage to your vehicle, the best thing to buy is a comprehensive motor insurance for your vehicle. A motor insurance vehicle consists of two major components— Third Party (TP) Damage and Own Damage (OD). While TP insurance provides cover to third parties which include other person’s vehicle and property, OD insurance covers for damage to your own vehicle.
In any road accident, the very first thing that comes to the vehicle owner’s mind is motor insurance unless there is any casualty. Anyone would think of making a claim with the insurer to get the vehicle repaired. However, making a claim with the insurer after an accident is not always a great idea. There are numerous factors that one must consider before making a claim in order to enjoy maximum benefits.
Whether to file a claim or not mostly depends on —impact on no-claim bonus (NCB), quantum of loss and deductibles. However, it is always advisable to avoid filling a claim in case the amount is low. Here’s what role all these factors play in the claim filing process.
Impact on No-Claim Bonus The no-claim bonus (NCB) is usually a discount that the insurer gives on the following year’s premium if the policyholder does not file any claim in the current policy year or at end of a claim-free year. Usually, the NCB starts at 20% for the first claim-free year and steadily increases with every claim-free year moving forward. The maximum discount that one can claim is 50%. However, one must learn that if any claim is made in any of the years, the NCB becomes zero.
Motor insurance has a ‘deductible’ element or clause under which a portion of any claim amount has to be paid by the policyholder. During any claim which you have filed, the deductible amount has to be paid by the policyholder and the remaining is paid by the insurer. This is the reason why it is considered better not to file claim for a smaller amount as at times you might end up paying more than the amount paid by the insurer due to the deductible clause.
Quantum of loss
Quantum of loss means the nature of the claim wherein the insurer verifies whether the damage to the car is due to fault of the driver or the third party. For instance, if someone hits your car from behind, chances are that the insurer will approve the claim. However, if the fault is yours and such claims are quite frequent, the insurer attaches high charges and approves only a partial amount of the claim. It is therefore advisable to get the proper calculations before filing a claim.
(The writer is business head, Motor Insurance, Policybazaar.com. Views are personal.)