Knowledge Centre

Accidents and your car insurance premium – things to know

Published on July 13, 2020  ESTIMATED READ TIME: 5MIN

No matter how perfect your car is and how good a driver you are, accidents cannot be completely avoided. After all, life is full of uncertainties. And this is where a car insurance policy can come in handy, protecting you against unforeseen expenses for repairs and even hospitalisation. And a comprehensive cover not only protects you in case of accidents, but also natural calamities and fires. However, getting car insurance which is the premium. So, this article will explore how accidents can affect premiums and what you can do to keep premiums low.

How does an accident impact premium?

In case you are making a regular claim after an accident, your car insurance premium will shoot up. If you have a history of filing claims, then your profile might get flagged as a risky profile. This implies higher risk associated with your car and a higher premium will be charged in turn. On the contrary, if you are not making claims, then your car insurance premium will not increase rapidly until your insurance provider carries out an inspection of your vehicle before providing the insurance.

Reasons for the increase in premium

  • Premium Loading

    The additional amount of car insurance premium which you will be charged for making claims after accidents is known as premium loading. As stated earlier, this happens because you will be considered as a risky prospect due to your repeated claims. Usually, the amount of premium loading is within the range of 10% to 15% of your previous premium. This percentage mainly depends upon factors such as the IDV of the car, the condition of your car, the category of the claim raised, and the claim settlement amount given.

  • No Claim Bonus

    When you are filing claims in a particular year, you are bound to miss out on the No Claim Bonus. This is the discount offered on the car insurance premium at the time of insurance renewal. If you have not raised claims during the previous year, then the discount you obtain on your car insurance policy will keep your premium amount low.

Ways to reduce your car insurance premium

  • Avoid frequent claims - If your claims are of low value, you can take care of the repairs on your own and avoid making frequent claims . This will help you avoid premium loading and you can also enjoy your NCB.

  • Anti-theft security system - You can install an anti-theft security system certified by the Automotive Research Association of India (ARAI) in your car. This will help protect your car against theft, reduce your likelihood of raising claims, and thus, keep your premium low.

  • No Claim Bonus - You can purchase the No Claim Bonus add-on to enjoy the freedom of raising one or two claims during a year, and keep your NCB active.

  • Voluntary deductible - During the renewal of your car insurance policy, you can increase the voluntary deductible. With this, you will be sharing the burden in case of any damages caused to your car in an accident. This will reduce the amount that the insurance company will pay during settlement, and in turn, reduce the premium as well.

  • Online purchase of car insurance - By purchasing your car insurance policy online, you will be able to explore more options on discount associated with the insurance premium.


All in all, car accidents are unpredictable and the damages caused can burn a big hole in your pocket. While car insurance can protect you against the financial loss as well as physical ramifications, you need to be careful about the terms and conditions of the policy, understand the factors that can increase your premium, and follow the tips discussed here to obtain maximum cover at a nominal premium.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to policy wordings and prospectus before concluding the sales.

This blog has been written by

S. Gopalakrishnan | Motor Insurance Expert | 40+ years of experience in insurance industry

A veteran in insurance industry. S. Gopalakrishnan is a name to reckon with in the field of reinsurance, he has headed the Reinsurance department and has rich experience in other fields of motor insurance. He loves to share his opinion on latest topics in the insurance industry and how he can help people in safeguarding their assets using insurance products.

Mr.S. Gopalakrishnan recommends "HDFC ERGO for your vehicle insurance needs, it has always put customer’s interest at the forefront, with round the clock assistance to deal with emergency breakdown issues and hassle free claims process. You can be assured of complete and reliable guidance through the whole process." 

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