Car accidents are never speculated; they can leave you dazed and shocked by their unpredictability. It may not even be your fault, but the road is full of irresponsible drivers. Therefore, it is smart to know all the possibilities of driving a car on the street and its insurance. As a policyholder, you might think about how car accidents can affect your insurance plan. Here’s all that you need to know.
Accidents and Insurance Premium
If you have even been in an accident, your premium is sure to shoot up. Insurance companies cover the risks and, therefore, charge you the premium. But if you constantly get into accidents, you become a risk factor to them. And so as to provide a high-risk car insurance, they will surely charge you more for their losses. However, there are a few ways to avoid it and we have got you all covered.
Why does the premium increase after a car accident?
There are two main reasons which contribute to an increase in interest premium after facing an accident, as follows:
● No Claim Bonus
When you raise a claim, you lose the No Claim Bonus benefits. The bonus increases every five years when no claim is raised. Yearly calculations are different for long-term and short-term policies, depending upon the provider. However, if you claim your damage, your premium rate will be higher than what it would have been if you hadn’t raised the claim.
● Premium Loading
If you have raised claims regularly, you will be charged more premium. This is because someone with a history of accidents is seen as a risk factor, and high risk equals a high premium. The amount of Loading can vary from 10% to 15% of the previous premium. It depends on a lot of factors, like the type of claim and amount provided in the claim.
How Can You Lower The Premium Despite Car Damage?
You can easily avoid a massive hike in the car insurance premium despite the damages incurred, by following ways:
● Avoid Claim
If the claim is very low, repair the car on your own. This way, your No Claim Bonus stays intact, and you can avoid Loading.
● Protection of No Claim Bonus
With a No Claim Bonus Add-on, you can claim a bonus and still avail all the No Claim Bonus benefits. You can raise one or two claims throughout the year and still facilitate the benefits with a little cost of buying the add-on.
● Anti-theft Device
Installing a government-approved anti-theft device can decrease the car premium to a great extent.
● Increasing the Voluntary Deductible
This means that you can share the load with the company, in case the car faces any damage. A lower claim settlement will be provided, but the premium charged for it will also be very less. However, expert advice is needed before you opt for this option.
● Digital Insurers
If your current insurer is charging a high premium, you can switch to the digital service providers. The online insurers provide you equivalent services with lesser premium levied.