Article Title Image

Branded Content: How accidents impact your insurance premium and how to reduce it

24th Mar 2021 3:00 pm

Accidents can have an impact on your vehicle's insurance. Here are some of the effects and ways to reduce it.

AD

Motor insurance is an important aspect of responsible vehicle ownership. If you own a car, getting it insured regularly is both a legal requirement and good money management. With more and more people getting new cars on a regular basis, proper knowledge about car insurance policy becomes important. One key thing that everyone must be aware of is the impact of accidents on your car insurance.

Impact of accidents on car Insurance

  • Loss of No Claims Bonus: The first impact is that the No Claims Bonus that you would have otherwise obtained or had collected so far is erased when you make insurance claims. Imagine building up a 50% No Claims Bonus over a long period of five years only to have it evaporate with a single claim of a car accident. Does not seem to be a good deal, does it?
  • Lower IDV: When the car insurance companies notice that you are making repetitive claims on your insurance policy, they will earmark lower Insured Declared Value for your vehicle. The lower the IDV of your car, the less value it retains. Not only does this reduce your overall insurance cover, but it also delivers a considerable hit to the value of your car in the used car market.
  • Higher premium in the form of loading: Loading is a provision that is made by insurance companies to discipline errant vehicle owners who drive carelessly and thus tend to get involved in multiple accidents. When loading is applied, your insurance premium goes up in one shot. This is done for two reasons.
    • The first reason is to recover the extra cost from a person whose insurance policies are becoming a burden on the insurer and thus hurting other, more responsible drivers.
    • The second reason for loading to deter the person from making frivolous claims.

How to reduce the impact?

There are many ways in which you can mitigate the impact that making multiple claims can have on your car insurance policy.

  • Drive safely: The first and most obvious way to reduce claims is to focus on driving in a responsible and safe manner. Do not talk on the phone and keep other distractions away. See if you can join a defensive driving training course to learn safer driving.
  • Do not make frequent claims: Make sure that you do not file another claim immediately after one claim has been processed. Space out the claims as much as the terms and conditions of the policy allow you to.
  • Do not make small claims: See if you can get the smaller repair works done out of pocket. Not every scuff or dent should be a cause for you to file a claim. Even if you have had a major car accident, try to claim only larger expenses from your car insurance policy.
  • Choose a higher deductible with your policy: Choosing a policy with a higher deductible gets you a lower premium amount and strengthens the insurer’s confidence in your driving ability.

Finally, always buy a car insurance policy over the internet. It is cheaper and faster. You should prefer to visit the insurance company website or sales portal when you want to buy car insurance online because that is where you’ll find the best deals.

Copyright (c) Autocar India. All rights reserved.


Tell us what you think.