When You Claim for an Accident, This Is What Happens to Your Premium
When You Claim for an Accident, This Is What Happens to Your Premium
Whether you are a careful and experienced driver or not, driving always poses a risk and requires you to take enough precautions to stay safe. While accidents and hits are unavoidable sometimes, you can keep yourself financially covered by spending on a suitable car insurance policy at a nominal premium. The premium amount is, however, dependent on various factors, especially when you are going for a policy renewal. You must thus calculate car insurance premium carefully before moving on with the renewal. Make sure to factor in a previous accident claim you made, as such claims have a significant impact on the next premium amount payable to your insurance provider.
Does Car Insurance Cover Accidents?
When you are looking for accident claim coverage under car insurance policy, it is wise to define the nature of damage. Not all car insurance plans are designed to cover accident claims for damages sustained by the car owner.
For instance, if you have purchased third party liability coverage, its benefits are limited to damages sustained by a third party in case your insured car gets involved in an accident. When seeking coverage for personal injury in the case of the insured car’s accident, it is ideal to look for a comprehensive car insurance policy. Accordingly, you will need to understand how car insurance premium is calculated when renewing your existing car insurance policy after an accident claim is made.
Does Car Insurance Premium Increase After Claiming for an Accident?
The premium payable for any insurance policy purchase is determined based on the risk associated with the individual involved. As in the case of car insurance policies, accidents are one of the most probable risks associated with the insured, and so they impact the premium.
So, does car insurance premium increase after a claim in India? Well, yes it does. Let us understand how:
• Premium Loading: The additional amount of car insurance premium that a policyholder is charged for claiming post an accident is known as premium loading. This happens because the policyholder is considered a risky prospect due to repeated claims. Usually, the amount of premium loading is within the range of 10% to 15% of the previous premium. This percentage depends upon factors such as the IDV of the car, the condition of your car, the category of the claim raised, and the claim settlement amount given.
• No Claim Bonus:
When you are filing claims in a particular year, you are bound to miss the No Claim Bonus. This is the discount offered on the car insurance premium at the time of insurance renewal. If you have not raised claims during the previous year, then the discount you obtain on your car insurance policy will keep your premium amount low.
Does Third Party Premium Get Impacted due to Accident Claims?
Third party car insurance premiums are determined by the Insurance Regulatory Development Authority of India. Thus, the answer to “does car insurance premium increase after claim in India for third party liability coverage is” a no.
Do Accidents Impact Overall Premium Calculation?
Yes, any accident met by the insured car is bound to impact the premium amount for a new or renewable car insurance policy. You must, however, know how car insurance premium is calculated based on the coverage selected.
- Age of the individual: Individuals of different age groups get involved in car accidents differently. Do note that maximum incidents involve young men. Thus, car insurance premiums are usually high for young men purchasing coverage than any other age group.
- Location: The vehicle’s location also determines the premium amount, with areas involved in high number of accidents attracting the largest premiums.
- Engine type: Whether your car runs on diesel or petrol also impacts its price and thus the IDV or Insured Declared Value, thus impacting the premium amount.
- Safety fittings: Damage sustained by a vehicle and the driver is also impacted by safety fittings available and impacts the premium value.
Ways to Reduce Car Insurance Premium
- Avoid frequent claims: If your claims are of low value, it is advised that you take care of the repairs at your end and avoid making frequent claims. This will avoid the premium loading and you can enjoy the NCB benefit.
- Increase Voluntary Deductible: During the renewal of your car insurance policy, increase the voluntary deductible. With this, you will share the burden in case of any damages caused to the car in an accident. It will also reduce the amount the insurance company will pay during settlement, thereby reducing the overall premium amount.
- Avail No Claim Bonus benefit: By avoiding frequent claims, you can accumulate No Claim Bonus which can be availed at the time of policy renewal or purchase. Additionally, if you opt for comprehensive car insurance policy, you can purchase the No Claim Bonus add-on cover to enjoy the freedom of raising a few claims during your policy period without disturbing your accumulated NCB.
- Purchase car insurance online: Purchasing your car insurance policy online, you will be able to explore more options on discount associated with the insurance premium.
Key Takeaway
Remember that in case you file a claim, you will miss the No-Claim Bonus benefits. Given that the NCB earned helps bring down the premium amount significantly, missing your NCB can increase your policy renewal cost. So, drive safe and take all precautions to minimise accidents. This will help you enjoy improved policy benefits.
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.
This blog has been written by:
S. Gopalakrishnan | Motor Insurance Expert | 40+ years of experience in insurance industry
A veteran in insurance industry. S. Gopalakrishnan is a name to reckon with in the field of reinsurance, he has headed the Reinsurance department and has rich experience in other fields of motor insurance. He loves to share his opinion on latest topics in the insurance industry and how he can help people in safeguarding their assets using insurance products.
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