When will car insurance not cover you?
For every car owner, his car is a living entity with soul. Everyone is protective about their valued asset. Even with all the safety gadgets installed, your cars safety on the road is unpredictable and any damage to your vehicle can put you under a lot of financial pressure. This is where the role of car insurance comes in. Scope of coverage, exclusions and add-ons are the key points to be considered along with affordable premium rates while buying insurance for your car.
To understand when not to claim car insurance let us understand the scenarios when your car insurance claim can get rejected.
When can your car insurance claim get rejected?
Below are some of the most common situations when your claim gets rejected:
- You were driving the car with expired driving license. Your claim in such situation will be rejected by Insurance companies as they do not cover damages caused due to driving without a valid driving license.
- There is a heavy rainfall in your area. You are driving on waterlogged road. Due to water-logging your car engine gets damaged. You register a claim for repair cost. In this case, your claim gets rejected as consequential losses and electrical breakdowns are not covered in the main policy.
- You have been using your Honda city for 5 years now. Due to more usage engine has weakened and you are getting a scuffing noise from break. In this case, claim would be denied by the insurer as gradual wear and tear is excluded in the policy.
- Insurance companies will not tolerate your claims if an allegation on driver for driving under the influence of alcohol or drugs is proved.
- Your claim for engine damage due to leakage of lubricating oil will be denied by insurer as mechanical failures are excluded from the basic cover.
However, some of the reasons can easily be fixed by opting for some additional riders at an added cost. For example, Zero depreciation rider will give a benefit of cover for wear and tear; engine protector rider will cover mechanical failures and electrical breakdowns.
When doesn’t it make sense to file a car insurance claim?
It’s quite obvious that you think of approaching your insurer for a claim as soon as your car is damaged. But, it’s important to assess the amount of loss as your claim may affect your no claim bonus benefit and future premiums. Get a quick estimate of repair and then decide whether or not to file a claim. Adverse claim history will directly impact your no claim bonus and you will end up paying higher renewal premium. If your car is not damaged badly and getting it repaired would not cost you much then it’s better to forgo the claim.
For an instance, your 4 year old Swift is damaged in a minor accident. The garage people have given an estimation of Rs.4000 for rectifying the damage. Without making a second thought, you register for a claim with your insurer. Suppose, you haven’t made any claims in last four years of the policy, then you would have definitely accumulated good amount of no claim bonus. Let’s say, your no claim bonus is Rs. 6000. In this case, by filing a claim you will lose out Rs. 6000 no claim bonus benefit on the next renewal premium and premium rates would also go up because of the adverse claim history.
There are more frequent chances of tiny accidents in metro cities. Hence it’s advisable to consider the impact of claim on future premiums and compare the quantum of loss with benefits that you have. If the benefit is considerably higher than the estimated cost of repair, then it’s not worth filing a claim. You could save much more by just paying out of your pocket.
When should you go for third party claims?
When your car is damaged in a traffic accident with another vehicle, you will have two options for claim (a) with your own insurer (b) third party claim. You will lose out on NCB benefit (especially if you are in 5th or 6th year of car insurance) by filing a claim from your own insurance company.But, many people do not prefer to go for third party claims, probably because it’s a clumsy and time consuming process. Isn’t it better to file the claim as ‘third party’ instead of loosing on ‘no claim bonus’ benefits?Yes. It’s definitely better to opt for third party insurance claim when you are not at fault in an accident.
Read more Is it worth buying third party car insurance policy?
To sum it up, it’s important to understand the terms of car insurance policy in detail before buying.You should keep in mind that the basic objective of car insurance is to provide financial protection and it does not make any sense to file the small claims which can adversely impact your insurance rates.
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