Car Insurance Claims: How Many Can You File in a Year?

When Priyanka Sharma’s new car met with an accident, she was quite unhappy but kept calm because she knew that she has a comprehensive car insurance policy and the uncalled-for damage to her car would not bother her financial budget for the month.

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However, her friend put her in a dilemma by advising her to avoid making any claim and pay the repair amount out of her pocket as it wouldn't cost her much.

The Dilemma of Filing a Car Insurance Claim

Priyanka wasn’t quite convinced as her car was fully insured and she felt that the best thing was to make a claim. However, was still skeptical as she was informed that raising a claim would hurt her no-claim bonus, claim history, as well as the future premium amount.

Irrespective of the type of cover we have, third party car insurance or a comprehensive one, this kind of dilemma is faced by many of us landing us in a situation where it gets difficult to settle on whether we should make a car insurance claim or not.

This article will help us make sensible choices when it comes to choosing between claiming insurance or skipping it.

Is There a Limit on the Number of Claims You Can Make?

As per industry experts, there is no restriction to the number of claims you can file under your car insurance policy in a year. In cases of frequent damage to your vehicle due to accidents, you can file as many claims as you want.

However, please note that your insurance provider can add such a clause in your policy while renewing it if the claims are too many in any given financial year. So, ensure reading your policy wordings thoroughly while renewing it.

How Many Car Insurance Claims are Too Many Claims?

There is no hard and fast rule when it comes to the number of claims that you can register. Though, it is always beneficial for an individual to do prior calculations and keep in mind the fundamentals before deciding whether to raise a car insurance claim or not.

However, there can be certain exceptions where the number of claims you can make in your car insurance is limited.

For example: In the case of a zero depreciation add-on cover, the number of times you can claim during a year is restricted and its count can vary from one insurer to the other.

Is it Sensible to File Claims for Small Amounts?

It is generally not advised to claim for small damages such as minor dents, scratches, or broken rear-view mirrors. It is better to file claims for damages that are severe, and require a considerable amount of repair or even replacement of car parts.

To assess this, before filing for a car insurance claim, you should comprehensively assess factors such as the actual amount of loss/damage to the vehicle, the number of applicable deductibles in the insurance policy as well as the impact the claim will make on the no claim bonus.  

Will Multiple Claims Impact Your Car Insurance Policy?

Even though there are not any restrictions on the number of claims that you can file in a financial year, frequent claims do put a negative impact on your car insurance policy. Here are some of the things you should keep in mind and try to avoid filing multiple claims in a year:

Impact on No Claim Bonus(NCB): As the name suggests, a no claim bonus is a percentage of discount you get on the premium that you pay for not making any insurance claim during the previous year/period of your policy. This percentage keeps on increasing every consecutive year when you do not claim your car insurance policy. The amount can go up to as much as 50% if you have 5 consecutive claim-free years.

Making multiple claims in a policy period brings you no claim bonus back to zero and you would have to start again by paying a higher premium amount.

Higher Premium Every Year: If you file multiple car insurance claims or have a similar history, the amount of premium you would have to pay in the future gets severely impacted. This happens because an adverse history of filing claims suggests a higher risk, which directly impacts the risk of insurance and in turn, the premium.

Hence, the next time when you are thinking of filing a claim more than once, get ready to pay a much higher premium for renewing your policy in the future.

Is There a Rule of Thumb for Deciding Whether to Make a Car Insurance Claim or Not?

Following are a couple of standard rules you can follow to make a sensible choice when filing for a car insurance claim:

• Repair amount should be more than the amount of ‘deductibles’: Deductibles refer to the compulsory amount to be paid by the insured whenever one claims insurance. In case the repair amount is lower than the deductible amount, one would not get any amount from the insurer with the claim as only the balance amount after subtracting the deductible is given by the insured and what you have to pay is already higher than the compulsory amount.
• No claim bonus should be lower than the total repair cost: The no claim bonus starts at 20% for the first claim-free period and goes up to a maximum of 50%. This amount will directly go back to zero with a single claim. Hence, claiming small repairs where the no claim bonus is lower than the total repair cost is not advisable as it would offer you little to no gains.

Conclusion

With increasing digital adoption and the introduction of cashless claims, filing an insurance claim for your damaged vehicle is an extremely simple process nowadays.

Car insurance ensures protection against unplanned financial liabilities in the case of an unfortunate accident. In such incidents, you can file multiple claims during the policy period; however, it also comes with its drawbacks, which, if not used wisely, can make you suffer more losses than being financially protected.

Make sure you always read the terms and conditions of your car insurance policy as well as file your claims judiciously.