Does Accidental Risk Impact Your Car Insurance Premium?

Buying a car involves a lot of money and pricing such an expensive asset won’t be a cake walk. It would involve considering a lot of parameters. However, it is made easier with installments, car loans and other financial offers, which customers can use to buy the car they wish for.

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New India Assurance

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Above-mentioned prices are for a 7-year-old Maruti WAGON R AVANCE LXI (998 CC) registered in Gurgaon and 15 days before expiry of previous policy

After purchasing the car, the next mandatory step is to buy the car insurance policy. This covers you from any physical damages, as well as financial loss – both man-made and natural disasters including accidents. Under any unforeseen destructive circumstances, it’s always better if you keep a safety cover, in the form of car insurance policy - third party insurance or comprehensive insurance plan. The benefit of third party liability insurance is that, it covers your from damages caused by your vehicle to other vehicle/ person who is not insured. In such cases, it will save you off the extra time and money, and the legal troubles it may impose on you. This is a mandatory clause in your car insurance policy, to cover the policy holder or car driver it, if both are same.

If you wondering what if there is a road accident will it affect the premium? An accident can be challenging for both the injured and the person responsible. Nobody can predict accidents; however, necessary steps can be taken to ensure safety while driving on the road. With car insurance you can get the required assistance, however an accidental claim does affect your car insurance premium.

The premium is increased a bit at the time of renewal when the insurer files an accidental claim. Here we would learn how car insurance premiums are affected in case of an accident during the policy term and the ways you can reduce it:

Impact of accident on car insurance premium

Accidental claim requests are alarming for insurers, and if you have frequent claim history for accidents then your profile can be considered as a risky profile, and the premium will be increased at the time of next renewal as you would lose your No-claim-bonus after a claim.  And people with risky profile increase the probability of filing a claim, which would mean an additional cost for the insurance company. The higher the risk factor, the higher is the premium.

Issues which Can Influence your Car Insurance Premiums

Before the premium amount is decided, it in influenced by a number of below mentioned factors including accidents-

  • The car model, year of manufacturing and the type of car – whether it’s a sedan or hatchback or SUV, depreciating or current value of the car. All these factors influence your car premium. The newer the car, the lesser is the premium and vice versa.
  • In case of frequent accidental claims the insurers charge extra premium, called as loading
  • If you file claims and too much claims, then you lose out on your No-claim-bonus the subsequent year
  • If you have anti-theft devices installed in your car, then you will have to pay a lesser premium amount
  • The premium amount will be less if the engine capacity of your car is less
  • Insured Declared value or the current value of the car is an important deciding factor
  • The area or the city from which the car is purchased, also makes the difference
  • If you have out on some extra car accessories, then you would need to pay extra premium

Ways to Reduce your Car Insurance Premium

If you wish to reduce your car insurance policy premium then here are certain important suggestions that you can save you from a higher premium:

  • Renew Car Insurance before it Lapses

    If you fail to renew your car insurance policy before it getting lapsed, you need to buy it all over again. At the time of policy purchase your car will be inspected again – the insurer might ask you to pay for it. Imagine, your car insurance premium will be calculated all over again and you even need to pay a higher premium. And if it has a history of accidental claims you will lose your No-claim-bonus! It’s just one hassle over another. If you do not want to pay extra premium, renew your policy before it getting lapsed.

  • Opt for Higher Voluntary Deductibles

    Another way of reducing your car insurance premium is to ask for higher deductibles at the time of purchasing the policy. It is the amount that you need to pay from your own pocket at the time of an accidental claim.
    It is one of the simplest ways to reduce your car insurance premium. The cost of premium can be reduced by 30 percent with voluntary deductibles.
    However, opt for deductibles as per your financial capabilities. Going overboard can put a financial strain on your pocket. At the time of policy renewal, there is also an option to change the number of deductibles.

  • Install anti-theft devices in your car

    Anti-theft devices reduce the possibility of your car being stolen. If you install any device that reduces the risk of theft or damage, it will reduce the possibility of you making a claim. And any step that you take towards protecting your car like airbags, antilock brakes, and immobilizers, could convert into a good discount i.e. a smaller premium.

  • No-Claim-Discount 

    The more, the years without claiming your bonus, higher will be the No-claim-bonus; of course with an upper limit to it. If you are planning to buy a new car and sell your old one, then you can also transfer your No-claim-bonus from the previous policy. You need to give the NCB certificate to the new insurer to transfer your NCB.

  • Don’t Claim Insurance for Small Repairs

    For all the years that you have not made any claims, you become eligible for a no-claims-discount or bonus. You will be surprised to know that it can reduce your car insurance premium by 50 percent?

    Those who make claims for small damage end up losing their No-claim-bonus.

    The thumb rule to keep your premium low is to pay from your own pocket for small repairs. Make sure that the cost of these small repairs does not exceed the savings you get from your No-claim-discount!

Add-on Benefits that Can Reduce your out of Pocket Expenses in Case of Accidental Claims

Always look for add-on covers that help enhance your coverage and also reduce the expenses at time of claim, by paying a nominal amount of premium:

  • Vehicle Towing Assistance- In the event of an accident or collision, you can seek towing assistance from the insurer. Your car will be towed to the nearest garage where you can get the repair work done. Usually, the towing charges are covered, but this depends on the insurer.
  • Removal and Extraction of Car - In case of an accident, the insurer will provide crane assistance for extraction of the car from the area of damage.
  • Agency Repairs - When buying a new car especially if it is a luxury car, then you should opt for agency repair cover. When there is a road emergency your car will be repaired at any of the authorized workshops. This will save you a lot of money and ensure timely repair.
  • Emergency Vehicle Transportation Assistance - If your car is immobilized or is in the workshop for repair after an accident or collision then with this add-on benefit you will be provided transportation assistance to help you travel back home.
  • Repairing Assistance - In case your car breaks down in the middle of the road, you can get immediate on-site repair support from the insurer. The insurer may compensate the fees charged by the mechanic depending on the plan that you have purchased. But the cost of the replacement of the parts shall be borne by you.
  • Dead Battery - In a scenario where your car’s battery runs down in the middle of the road then you can seek assistance from your insurer to jump-start the engine. Then, you can easily get your car repaired at the nearest garage.
  • Assistance for Flat Tyres - In case the tyres of your car go flat while driving then assistance will be provided to replace the tyres. It is suggested that you carry a repair kit in your new car.
  • Refilling - Imagine your new car running out of fuel in the middle of the road and there is no petrol pumps nearby. What will you do? If you buy this add-on cover, you can get emergency fuel assistance from your insurance provider. The cost of the fuel will be covered or not that will depend on the insurer.
  • Zero Depreciation- if you have a nil depreciation policy the insurer will pay the complete cost incurred due to accidental damage.

Call for Emergency Roadside Assistance in Case you Meet with an Accident

If you have a comprehensive car insurance policy always opt for roadside assistance add-on cover. The insurer will offer immediate roadside assistance on the spot of incident. Also, there are certain steps that you must follow -

  • Move your vehicle to a less crowded location
  • Immediately call the insurer and inform them about the location
  • Even if you have car insurance, you should keep the contact information of towing services with you
  • Share your car details and description with them
  • They will send the necessary help to you at the spot of incident

To Conclude

Maintaining your safety is in your own hands, it is imperative to have a car insurance policy, but it will be follow safety measures while driving on the roads. Drive safely not just to avoid paying higher car insurance premiums but to ensure your safety and safety of your loves ones. Also, make sure that you buy a comprehensive car insurance policy to get immediate help in case of an accident.

Written By: PolicyBazaar - Updated: 15 July 2021
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