Car Insurance Claim Settlement Ratio

You buy an insurance policy to be financially secure during unfortunate events related to your car. However, when such an unforeseen accident occurs, the last thing you want to experience is your insurer rejecting your claim. If this happens, you will have to pay the entire amount from your pocket. To avoid this, how can you check the probability of your insurer honoring the claim? The Claim Settlement Ratio gives you an insight into the possibility of your insurer settling your claim. However, while a claim settlement ratio gives you an idea about your insurer's credibility, you need to consider other factors also while selecting the insurance company. They are after-sales services, online reviews, etc. A higher claim settlement ratio is one of them.

A No Claim Bonus discourages small claims. If you do not make a claim in an active policy year, you get a No Claim Bonus. Such a bonus entitles you to a discount on your premium amount when you renew your policy. This discount can scale up to 50 percent if you don't raise any claims for five consecutive years.

You can avoid making small claims. This helps you reduce your cost of insurance. However, if the loss is huge, you must do some calculations and then go for the right option. For example, let’s say your premium is Rs. 10,000. Your second year’s NCB is 20%. Meaning, your premium reduces by Rs 2,000. Now, the repairs cost you around Rs 3,500. Of this, you pay a compulsory deductible of Rs 1,000. This means the insurance company will only pay Rs 2,500 if you claim. In this case, you could save Rs 2,000 in the future if you pay Rs 2,500 from your pocket today. But it does not make sense. The cost-benefit does not work out in your favor. Had the discount been higher, then you could have considered paying from your pocket.

You can enhance your car insurance coverage by paying extra. The additional covers that you get on the Comprehensive Plan are known as Add-ons. The most common car insurance add-ons include Zero Depreciation cover, Consumables cover, Roadside Assistance, Engine Protection, etc. Add-on covers affect the number of claims that you make. You are unlikely to pay for the loss from your pocket at the time of the claim. However, adding add-ons will also increase the premium amount. Hence, select add-ons that suit your requirement.