Does a Car Insurance Premium Increase After You Make an Accident Claim?

  • Author :
  • TATA AIG Team
  • Published on :
  • 04/05/2021

Having comprehensive car insurance is highly recommended as it offers numerous benefits to the policyholder. The right insurance for a car undertakes all accident-related financial liabilities on your behalf.

Types of Car Insurance in India

4-wheeler car insurance pays for third-party liabilities, including damages to their person, property, and vehicle, and extends this protective cover to the insured car and the driver.

Types of Car Insurance in India

In India, the 4-wheeler car insurance policies offered are segregated based on the type of cover they provide. There are essentially three kinds of car insurance policies in India, and to ease your buying journey, most insurance providers allow you to buy car insurance online.

Third-party car insurance: This is the mandatory car insurance policy that is expected of every Indian driver. Third-party insurance for car covers accident-related liabilities to the third-party person, property, and vehicle. These liabilities are paid if the accident is caused by the policyholder. However, third-party insurance does not cover damages to the policyholder’s car.

Own-damage car insurance: As the name suggests, own-damage car insurance covers damages to the insured vehicle owing to an accident. The own-damage 4-wheeler car insurance does not pay for third-party liabilities.

Comprehensive car insurance: Comprehensive car insurance policy combines the two policies into an all-inclusive cover. It pays for third-party liabilities as well as damages to the insured vehicle. Additionally, it protects the insured vehicle against natural or man-made disasters and theft. You can further enhance the coverage through a choice of add-on covers or riders.

Will Your Car Insurance Premium be Impacted After Making an Accident Claim?

Regardless of how meticulous a driver you may be, unfavourable road conditions and improper driving on the part of fellow travellers can cause car accidents. Accidents can impact your car insurance premium if you make a claim – your renewal premium goes up. This is because insurance companies offer financial protection in exchange for a premium, and the premium amount is decided by calculating risks.

If your risk profile ranks high, you will be asked to pay a higher car insurance premium. Additionally, if you have made several claims in the past, it can affect your sum assured, and your policy add-on options might also get limited. In some cases, you might be denied comprehensive car insurance altogether.

However, if you pay for your own accidental repairs, your premium amount might not get affected. This might change at the time of car policy renewal when your car is inspected by the insurance provider.

**How is Third-Party Premium Affected After an Accident Claim?**bold text

The third-party car insurance premium is not affected by an accident claim. The reason behind this is that the Insurance Regulatory and Development Authority of India has demanded uniformity across third-party insurance premiums. The increase or decrease of third-party insurance premiums has not been permitted.

The IRDAI announces the third-party car insurance premiums on an annual basis, and insurance companies cannot make any changes to the finalised premiums.

Additionally, third-party insurance does not cover damages to the vehicle of the insurer, and so no loss or damage can be claimed under third-party insurance by the driver.

**What Causes Rise in Premium After Accident Claim? **

There are two primary reasons why making an accident claim results in a higher premium amount:

Premium Loading: As mentioned before, insurance providers undertake an analysis of your risk profile before deciding on the premium amount. If you are an individual who makes repetitive claims against your insurance for a car, you are subjected to what is termed as premium loading. It refers to the additional premium charged to those who often file for an insurance claim. This is because such customers are a greater liability to the insurance provider. The percentage of loading relies on factors such as the Insured Declared Value (IDV), type of claims made in the past, vehicular condition, and the claim settlement amount. Regardless of the reason, the premium loading ranges between 10-15% of the former premium charged.

Losing the No Claim Bonus: Insurance providers reward policyholders with a discounted premium during car policy renewal if they haven’t made any claims. The No Claim Bonus reward is an accumulated bonus under your comprehensive car insurance policy.

The discount is applied to the own-damage component of your car insurance premium. If no claims have been made for five consecutive years, the accumulated premium discount is 50%. However, if you make a single accident-related claim, this bonus is lost, and policyholders have to continue to pay a high premium amount.

How to Prevent the Rise in Premium?

If your car has been in an accident, you can still keep the premium amount low by:

  • Not raising a claim, especially for minor damages, as this will help you protect your no claim bonus and prevent premium loading at the time of car policy renewal.
  • Purchase a No Claim Bonus Protector rider. This will not only keep your premium minimal after an accident claim but also protect your no-claim bonus despite making a claim.
  • Install anti-theft devices in your car as it reduces the liability of the insurance provider, thereby lowering your premium amount.
  • Buy car insurance online as the premium amount is lower for online insurance-seekers.

To conclude

Being involved in an accident increases your premium amount. However, this can be minimised with the purchase of the right insurance cover. Acknowledging the anxiety that comes with making an accident claim, the Tata AIG car insurance claim is a hassle-free process that can be completed by simply filling the online form. It provides insurance-seekers with a choice of 12 unique riders to customise and strengthen their policy.

To help you understand the after-effects of making an accident claim against your car insurance, we have enlisted the commonly asked questions:

Will my insurance go up if I make a claim?

Yes. If you raise an accident claim, your insurance price does increase.

Will my insurance go up if someone hits my parked car?

Making a claim reflects on your risk profile, and so while negligible, your premium amount will increase.

How much does car insurance premium go up after an accident?

The premium amount is decided based on the policyholder’s risk profile. Additionally, whether or not you were the cause of the accident also plays a role in deciding your premium amount. Also, it will also be dependent on the NCB discount you lost after filing the accidental damages claim.

How much will my premium go up if I make a claim?

Under premium loading, if you are an individual who makes repetitive claims, your premium amount increases by 10-15% of the former premium charged. Also, it will increase in proportion to the No Claim Bonus lost due to the claim.

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Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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