What is the Limit on Filing Car Insurance Claims in a Year?

Posted on: Nov 7, 2022 | 3 mins | Written by: HDFC ERGO Team

What is the Limit on Filing Car Insurance Claims in a Year?

Buying a car is a dream for some and a necessity for many. Whatever the reason may be, it requires a large amount of investment. Having a car insurance policy for your car is mandatory as per Indian law and driving your car without valid third party insurance is illegal and will attract penalties and fines.

Having a comprehensive car insurance policy is always advisable as it gives financial protection to the insured in the event of any damage or loss to the car. In case there is damage to the car due to any of the perils covered, the insured needs to file a car insurance claim and the insurance company will pay for the repair cost as per the coverage and inclusions.

There are many car owners who do not file a claim as they feel they cannot file it more than once or twice a year. This is a misconception and must be clearly understood by a policy owner. In motor insurance , it is important to understand your policy and its terms and conditions and the limit on the number of claims is one of them. Let us discuss in detail:

What is the Maximum Number of Car Insurance Claims That Can Be Filed?

In any motor insurance company, there is normally no limit imposed on the maximum number of claims that can be filed in a year. If you have an insurance policy for your car, you can take as many claims as needed if there is any loss or damage.

The main downside of doing this is that filing too many claims affects the no claim bonus. No claim bonus or NCB is a discount the insurance company offers on the premium of the car in case no claim is filed. An insured can accumulate his no claim bonus if no claims are filed in consecutive policy years. This way the percentage of discount offered increases every year if no claim is filed.

In case you have opted for a zero depreciation insurance add-on cover, the insurance company might have some restrictions on the number of claims that can be filed. This must be checked when buying the policy.

The last point to note here is that if there is a roadside assistance cover that will also come with a restriction on the number of claims that can be filed in a year. There are some insurance companies that see the number of claims filed in a policy year, and then, put a restriction on the number of claims.

Thus, we can say that in a standard policy, there are no restrictions on the number of claims but you must check your policy document and terms and conditions carefully.

How Many Claims Are Too Many?

There is no such number defined by insurance companies. For a car insurance claim, the companies will see the extent of damage and the kind of claim. The thumb rule for any insured should be that they should only file a claim when the damage is severe and they will have financial implications paying for repairs. Minor damages should not be claimed for.

1. Effect of Taking Too Many Claims

Though on paper there are no restrictions on the number of claims that can be filed in a year, it is important to understand how will the insurance policy be impacted by too many car insurance claims.

2. No Claim Bonus

As mentioned earlier, this is a discount that an insurance company offers for not filing a claim in a policy year. if there are no claims filed for 5 consecutive years, the discount can go up to 50%. Thus, making a claim means that the no claim bonus will be lost.

3. Limit Due to Zero Depreciation Cover

With the zero depreciation cover, the insurance company does not factor for the normal wear and tear i.e. the depreciation while settling a claim. Though this add-on is useful it also means that the insurance company can put a restriction on the number of claims and taking small claims can affect a large claim later.

4. Premiums

If you file a claim frequently, the insurance company can charge a higher premium. The claim history of the insured is always seen at the time of renewal and this affects the premium calculation. The simple rule that the motor insurance companies have here is that the risk to insure the car is high and thus, to cover the risk, they charge a higher premium.

5. Deductible

For the unversed, a deductible is an amount in insurance that the insured has to pay from his own pocket at the time of a claim. If the deductible amount as per the policy is slightly higher or lower than the claim amount, it is best not to file a claim. After settlement, the claim amount will be a small amount and it will be counted as a claim.

Factors to Consider While Deciding to File a Claim

A claim should ideally not be filed under the following circumstances:

● When the claim amount is less than the deductible

● The damages are minor and the cost of repair will not be high

● When the no claim bonus is higher than the claim amount

It is advisable to file a claim under the following circumstances:

● The cost of repairs when the car is damaged will be high

● If the claim amount is higher than the IDV i.e. the insured declared value

● If there is a theft, the claim amount up to the IDV can be given by the insurance company

Conclusion

An insurance policy provides financial protection in case of loss or damage to the car. If there is an accident or a theft, the insured can file a car insurance , claim and the expenses are taken care of by the insurance company. Filing a claim is easy and can be done easily. There is no restriction usually on how many times can a car insurance claim be filed. Though such restrictions are not there usually it has their drawbacks that must be kept in mind. Losing out the NCB or if you need to pay a higher premium because you filed too many small claims is not worth it. You will end up spending more money than you save. So decide carefully and file a claim when necessary.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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