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When do I make a claim on my car insurance?

Two toy cars having an accident, denoting when to claim on car insuranceIf you’re involved in an accident and your car is damaged, your insurer will foot the bill, right? Well, there are options to weigh up.

No-one should submit a claim on their car insurance lightly. Whatever money you receive from your insurer, there's always likely to be some cost to you as a result. If you're considering making a claim on your car insurance policy, you need to weigh up the pros and cons of doing so.

After a claim, remember that your insurance is still in force. You won't need to take out temporary or alternative insurance if your vehicle's still roadworthy.

Here’s what you need to take into account:

Your policy excess

Whenever your insurer agrees to pay out a claim, the customer will have to contribute at least something towards it. Every motor policy comes with two types of excess: one compulsory and one voluntary. If there were no excesses, drivers would be able to claim for every little thing without any financial repercussions: this would mean insurers paying out much more, and premiums soaring as a result.

When you take out insurance, you can choose how much voluntary excess you’ll pay in the event of a claim. This could be as high as £1,000. The higher your voluntary excess, the lower your premiums, because your insurer knows its payouts will be lower. If you’re thinking of making a claim, check what your total excess payment will be.

If the claim value doesn’t exceed the total excess, then there's clearly no point in making it. But even when the claim is worth more than the excesses you’d be charged, the decision about whether to proceed is far from cut and dried. There are other consequences of claiming:

No-claims bonus

Insurers like customers who don't claim, so they're rewarded with no-claims bonuses. You can usually amass up to five years' worth of bonus, which can reduce your insurance prices rather nicely. If you make any sort of claim, however, you'll lose your no-claims bonus – which could mean much higher premiums when your cover next comes up for renewal.

Say you make a claim for some minor damage to your car’s bodywork worth £500. If your excesses are £400 in total, you’ll get £100 towards the cost of the repairs. But if this means losing your no-claims bonus – even if it’s just a year’s worth – you could see the cost of your insurance rise by considerably more than the amount you’ve claimed when your policy next comes up for renewal.

If you're in doubt as to how much it could cost you, try getting a quote with your no-claims bonus set to zero to compare and contrast.

A busy motorwayRising premiums

Even if you haven’t got a no-claims bonus, the cost of renewing your insurance will probably increase as the result of you making a claim. The statistics collected by insurers suggest that anyone who has claimed before is more likely to claim again in future. This means there's an increased risk of a payout for the insurer, so it will charge you higher premiums. This applies even if you're claiming for a no-fault accident. And if someone claims against you for an accident that was your fault, this will also push future premiums up.

What’s the point of insurance?

You might be thinking: if it's barely worth making a claim in so many circumstances, why should I even bother paying for an insurance policy?

Well, it's a legal requirement. But, just as importantly, insurance gives you the peace of mind that your potential financial losses from causing or being involved in an accident are limited. If you're responsible for a serious accident in which other vehicles are damaged and other drivers and road users are injured, the cost of repairs and compensation can run into tens (or even hundreds) of thousands of pounds. Car insurance is largely about fixing people, not property.

Provided you weren’t driving in a way that could invalidate your policy – for example if you were over the alcohol limit – your insurer will cover these costs, after deducting your excess.

Comprehensive insurance will also cover damage to your own vehicle, or pay for a replacement if it's written off. Insurance is certainly worth having... But think hard before submitting a claim that could leave you out of pocket further down the line.

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