Having to make a claim with your car insurance provider can sometimes be inevitable, but that doesn't mean you have to overpay.
Insurance exists to help protect you financially from the effects of certain risks. Whether it’s insurance for your life, your home, or your car, having a policy in place can give you peace of mind should the unthinkable happen.
When it comes to driving in Ireland, car insurance is a legal obligation for motorists and primarily exists to protect you and others in the event of an accident.
However, sometimes making a claim with your insurance company could end up costing you more in the long run than by simply taking on the cost yourself.
Here are some of the things to consider before making a claim on your car insurance.
Honesty is the best policy
When it comes to making a claim it’s important to remember that all incidents, both big and small, should be reported to your insurer, regardless of whether you choose to eventually claim or not.
When applying for car insurance, or any insurance policy for that matter, each applicant is expected to uphold the principle of ‘utmost good faith’ and not withhold any important information that could have an influence over what you pay.
Your insurance company keeps a record of your driving profile and manages your overall risk to them. Reporting an incident won’t necessarily affect the cost of your premium, especially if no claim is made. However, the higher risk you are, the higher your premium will likely be.
This does not mean you shouldn’t report a small bump or scrape. By not reporting you risk having to pay a higher premium retroactively, and at the worst have your insurance policy invalidated.
At the same time, it’s possible that many people won’t want to claim immediately after an accident but could file a claim down the line. This could affect both your premium and no claims bonus if you didn’t inform your insurer from the get go. Insurance companies routinely cross reference databases, so even if you don’t report but the third party you were involved with does, the likelihood is your insurer will still find out.
Before ever making a claim with your insurance provider, remember that honesty is always the best policy.
Excess
Determining how much the excess on your policy is should be one of the first things you do before making a claim with your insurer, not least before taking out a policy in the first place.
When setting up your policy an excess would have been agreed upon, usually between €200 and €500. This is the amount that would then be deducted from the claim amount should one be made by you.
Being aware of your excess is important for a couple of reasons when it comes to making a claim. The first being that your excess might be more than the cost of a given repair.
For example, if your excess is €400 and the cost of repairs only comes to €300 it would be easier to simply settle the bill yourself rather than having to go through your insurer directly.
The second reason being that any claim you make on your policy is likely to affect your premium down the line, especially if the claim is considerable. As we’ve outlined above, logging an incident report can still have an impact on the premium you’re charged, but it won’t be as much as registering a formal claim, especially if it’s lower than your excess.
The excess you pay generally depends on the car insurance cover you’ve taken out, be it third party or fully comprehensive. You can usually arrange to increase the voluntary amount you pay towards your excess with your insurer in exchange for a lower premium.
No claims bonus
It should be stated that making a claim on your policy will naturally have an impact on your no claims bonus, depending on the type of cover you have, as well as any add-ons.
In most instances it’s best advised to preserve your no claims bonus by not claiming, where possible, as by doing so would adversely affect your discount. Drivers can help to protect their discount by purchasing bonus protection or step-back cover.
If you are paying for full no claims bonus protection you are entitled to one unlimited claim without it affecting your no claims discount, but only over a given period of time, three years, for example.
If you do make more than one claim within this time period your no claims discount may be reduced and this will in turn affect your premium. This could also affect your ability to buy full bonus protection under your current policy until a certain time has passed. You will also have to request this as an add-on when the time comes as this cover isn’t renewed automatically.
Step back bonus protection on the other hand will only cover one claim but will reduce your no claims discount immediately, depending on your step back rate. For example, a step back rate may be three years. Similarly, if more than one claim is made in a given time period your no claims may well be reduced to zero.
We would always advise to double check the cover you’re paying for, as well as the level of discount protection on your current policy.
Shopping around
One aspect of making a claim that many people overlook is the knock-on effect this can have when looking to get insured under another policy or with a different insurer when renewal time comes around.
When it comes to getting the best value on your car insurance, not having a no claims discount as a result of making a claim could negatively impact your ability to find the best deal.
Sometimes taking the hit for small damage can work out best in the long run, rather than claiming on your existing policy.
The cost of your premium
As we’ve discussed in part above, making a claim on your existing car insurance policy can also have a direct and indirect knock-on effect with regard to the price of your yearly insurance premium.
Regardless of whether a claim is recorded as your fault or that of a third party, your premium will likely increase as a result.
That being said, a claim registered as a non-fault won’t raise your premium as much as the former. At the same time, choosing not to claim for smaller problems will also help to keep premium costs down every year.
Previous claims
Making a claim on your policy will also depend on your claims history and how many you’ve made within a given period of time.
If you go to make a claim for the first time it won’t be likely to have an impact. However, if you’re claiming for the second time or more you will likely see an increase or additional premium applied, especially if multiple claims are made within the space of only a year.
Reporting a claim
If you’re involved in an accident and as a rule of thumb it’s best practice to contact your insurer within 24 hours of the incident occurring. To reiterate, this is regardless of whether or not you’re planning on making a claim.
You should also make sure and familiarise yourself with your insurers policy when it comes to reporting a claim as many insurers will include a time frame within which you must inform them if you’ve been involved in an accident. This can range from 24 to 48 hours, even 72 hours after in some instances.
Read your policy
If you haven’t read your insurance policy in full we would advise you to do so in advance of making a claim.
Familiarising yourself with the conditions laid out in your policy that state what it is you’re allowed and not allowed to claim for can go a long way in terms of saving you both time and money.
If you’re unsure about anything outlined in your policy be sure to get in contact with your insurance provider to help clarify any issues around making a claim, making sure you have the right cover where and when you need it.
