You may be thinking that it is wise
to make the best use of the resources provided to you and take insurance
whenever you get the chance so that you do not have to pay out of your own
pocket. Normally, this type of thinking is the correct move financially;
however, it is not the case with insurance. It is especially true with car
insurance. Here are the reasons why.
- Deductibles
Deductibles are also known as an
excess. These are a very important reason why not to file small claims with
your car insurance. This is because deductibles or excess is the amount that
the client will have to pay by himself or herself. This means that if the
damage to the car is very little, the client will have to pay the full amount
himself or herself. Therefore, the client must be sure he has no deductibles
when making small claims as otherwise he will have little or no help.
- NCB
An NCB is a no claim bonus. These
are basically the discounts that a car
insurance company gives at the end of a year if you have not filed
insurance. It can be understood that if you take car insurance for small claims
you cannot avail this benefit for big claims. Normally, you get a 20% discount
at the end of your first claim-free year after which you get more and more.
However, the maximum discount which you can get is 50%, albeit this is a pretty
large discount.
- Risk of losing renewal
Sometimes if you have filed small
claims many times, this will make the insurance company think you are a risk to
them and thus they may deny the renewal of your policy. This is because
insurance companies will be making losses from the insurance package they
offered you. Therefore, you should not keep filing small claims especially if
you want to keep your insurance.
Finally, note that it is not a hard
and fast rule to not take car insurance with small claims. These are only some
of the reasons why to not file small claims with car insurance. You must make
sure that you do not neglect your circumstances. For example, if there is a
third party which was completely at fault for the accident, insurance companies
are generally more forgiving and do not stop renewal. You could even talk to an
insurance agent to find out whether it is wise or not to file small claims with
car insurance.
