Has Your Premium Gone Up After A Motor Insurance Claim? Here’s Why
Every good driver is uncertain when an accident might occur. Not because of their own fault, but due to someone else. There is no guarantee that your vehicle will remain free from accidents however responsibly and carefully you drive.
Considering this, the law has been implemented making vehicle insurance mandatory in the nation. The Motor Vehicles Act of 1988 makes it compulsory for all vehicles plying on the road to have at least third-party insurance cover. It ensures any damages to another person are covered by your insurer. So depending on the type of registration, you need to appropriately purchase private or commercial vehicle insurance.
Do premiums increase when you make an insurance claim?
Yes, premiums are linked to claims made by you. If you regularly make a claim, the insurer will have to assume higher risk and naturally the premium increases. But on the contrary, if you manage to fix your vehicle without availing your insurance cover, the premium is not likely to increase. The caveat to this situation is when your vehicle insurance company wants to check your vehicle before insuring it.
What are the reasons for the increase in premium after making a claim?
There are two reasons why the premium increases –
#1 Loading of premium
Making frequent motor insurance claims is the leading cause of a spike in premium amount. This incremental premium is called Loading. The frequent claims made by the policyholder increase the risk for the insurance company and thus a loading charge is levied by the insurer. On average, the increase in premium is between the range of 10% to 15%. It further considers the past claim history too.
#2 Withdrawal of No Claim Bonus (NCB)
No-claim bonus is the benefit that is passed to the policyholder for not making any claims during the policy year. This benefit starts at 20% and goes all the way up to 50% for consecutive policy years without any claims.
Is there a way to keep your premiums in check?
Since it remains a perpetual quest to keep the premiums at an affordable cost, you can use the following tips to keep your premium under check after making an insurance claim.
Purchase a no-claim bonus protection add-on
Your no-claim bonus is lost when you make an insurance claim. Using a no-claim protection add-on will ensure the benefits are not lost. This add-on facilitates making insurance claims up to a specified number of times before the no-claim benefits are gone. Since it is an additional feature, you need to additionally opt at the time of purchase or renewal. A motor insurance calculator is a nifty tool that will help you compare the cost against the benefits of your policy.
Opting for Voluntary deductibles
Using deductible wisely, you can ensure the premium of your policy remains in check. Opt for a voluntary deductible that will help you lower the premium substantially.
Make smart insurance claims
It is not always you need to make an insurance claim. If an expense is within affordable limits, avoid filing an insurance claim. Understand the deductible as well as the no-claim benefit of your policy before deciding to make a claim or not.
Note the reasons why your insurance coverage begins to get dearer and take the above-mentioned steps to maintain it at an affordable level. Drive safe and happy investing!