Car insurance is a smart way to ensure legal as well as financial protection if you are a car owner. While it is mandatory by law to buy a car insurance policy, why not take full advantage when you are already paying for it? Hence, you should opt for comprehensive insurance that not only protects against third-party legal liabilities but also against the damages to your car. A third-party plan, on the other hand, is the minimum required insurance cover but lacks the coverage it offers.
Your four wheeler insurance
plan can be used to reimburse the loss for damages. This process of notifying the insurer and receiving any compensation is called a claim. So as a policyholder, you might wonder how many times you can make a claim? Continue reading to know more.
How many car insurance claims can be made each year?
The Insurance Regulatory and Development Authority of India (IRDAI) does not place a limit on the number of times you can raise an insurance claim. So, any number of claims can be made with your insurer, and they shall be honored if valid.
However, it isn’t advisable to make frequent insurance claims, especially for minor repairs. Doing so impacts the no-claim bonus, which is an additional benefit that helps to lower the burden of the premium. For instance, a minor repair for damages to your bumper or a broken mirror isn’t a smart choice. Making claims only for a significant value of damages is worthwhile.
What is the impact of making multiple car insurance claims?
As discussed above, there is no limit on how many claims can be raised, but it is judicious to be aware of the times you raise one. Here are some reasons why making frequent claims can have an adverse impact:
· Loss of NCB benefits
No-claim bonus or NCB is the benefit that the insurance companies offer when a claim hasn’t been made. The bonus is available in the form of a markdown in renewal premiums. The percentage of such a markdown starts at 20% of the own-damage premium and scales up to 50% at the end of the 5th
year with each consecutive claim-free policy period. So, when you raise an insurance claim, this amount of renewal benefit nullifies to zero. Please visit the official website of IRDAI for further details.
· Restoration of the premium amount
Another downside of making frequent insurance claims is your comprehensive car insurance premium
being restored to its original amount. While the NCB gets nullified, your premium is restored to its original amount, requiring you to pay more than what you would otherwise.
· Limitations in case of zero-depreciation covers
If you have a zero-depreciation add-on loaded on your standard insurance plan, the policy also provides coverage for any depreciation on the spares during its replacement. Since these add-ons are in addition to the standard policy cover, their terms are defined by the insurance company. Hence, these terms may specify a limit on how many times such an amount of depreciation cover may be provided in the insurance claim.
· Out-of-pocket expenses: Deductibles
When you make an insurance claim, a deductible is something that you need to pay from your pocket. This amount of deductible is further divided into two categories—mandatory and voluntary. Since the mandatory deductible is specified by the IRDAI, and the voluntary deductible is specified in your policy terms, you need to account for such an amount that needs to be paid at the time of raising a claim.
Scenarios where you shouldn’t file a car insurance claim
You may be faced with the dilemma of filing a car insurance claim under certain circumstances. Here are 2 instances when filing a claim would not be the best alternative.
Repair cost is lower than the deductible amount of your policy
The accrued No Claim Bonus (NCB) amount is greater than the expenses of your repairs
To summarize, you can make any number of claims in your car insurance policy, but it is a wise decision to not make frequent claims for the reasons mentioned above.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.