Know What Happens to Your Car Insurance Premium When You File an Accident Claim

How a Car Accident Can Impact Your Car Insurance Rate - Experian

Even if you are a careful and experienced driver, you should always take appropriate precautions to ensure that driving is safe and secure. While accidents are sometimes unavoidable, you can cover yourself financially by spending on an appropriate car insurance policy with a nominal premium. However, the amount of the premium depends on various factors, especially when you are going for a policy renewal. Therefore, you should carefully calculate the car insurance premium before proceeding with the renewal. Be sure to consider any previous accident claims you may have made, as such claims can have a significant impact on the amount of subsequent premium payable to your insurance provider. Here is a look into how an accident can affect your car insurance premium:

Does car insurance cover accidents?

When you are looking for accident claim coverage under a car insurance policy, it is wise to define the nature of the loss. Hence, when you buy car insurance online, you should know that not all car insurance plans are designed to cover accident claims for damages caused by a car owner.

For example, if you purchase third party liability coverage, its benefits are limited to the damages caused to a third party in the event of an accident with your insured car. When seeking coverage for personal injury in the event of a car accident, it is best to look for a comprehensive car insurance policy. Accordingly, you need to understand how the car insurance premium is calculated when renewing your current car insurance policy after an accident claim. * Standard T&C Apply

Will car insurance premium increase after accident claim?

The premium to be paid to purchase any insurance policy is determined based on the risk to the person concerned. As in the case of car insurance policies, accidents are one of the biggest risks associated with the insured person, so they have an impact on the premium. After an accident occurs, the risk of an accident becomes a reality. This also means that there is a strong possibility that an accident might happen again, thus increasing the risk factor more. Here are two ways that your car insurance premium might increase after an accident:

  • Premium loading

The increase in car insurance prices that a policyholder experiences upon claiming after an accident is called premium loading. Due to repeated claims, the policyholder is considered to be a risky prospect. Generally, the premium loading amount is between 10% and 15% of the previous premium. This percentage depends on factors such as the IDV of the car, your car condition, type of claim, and the claim settlement amount. *

  • Loss of NCB 

If you have purchased the NCB add-on, you will receive concessions on car insurance premium for each consecutive claim-free year. This is a reduction in the car insurance premium at the time of insurance renewal. If you did not make a claim in the previous year, the deduction you receive on your car insurance policy will keep your premium amount low. However, when you file a claim, you will lose the No Claim Bonus.

Keep in mind that if you file a claim, you will lose the no-claim bonus benefits. Considering that the NCB earned will help to significantly reduce the amount of premium, the loss of your NCB will increase the cost of renewing your policy. So, drive safely and take all precautions to minimize accidents. This will help you to enjoy better policy benefits. *

* Standard T&C Apply

To compute your car insurance premium at the time of renewing your policy, you can use a nifty tool called the car insurance calculator. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.