Should We Take the Small Car Damage Payment or Keep the Insurance Discount?

Receiving Partial Car Damage Compensation or Keeping the Insurance Discount: Which Is More Cost-Effective? Should We Take the Small Car Damage or Keep the Insurance Discount?

According to Ambassador Arjan, receiving partial car damage is not the most cost-effective decision; Because in some cases, the use of insurance can reduce the no-claims discount and increase the cost of renewing the insurance policy in future years.

First, it should be determined from which insurance the damage will be paid. The damage caused to the insured car, which is compensated from the body insurance, is different from the financial damage paid from the third party insurance. Also, if another driver is to blame for the accident and the damage is paid from his third party insurance, the third party insurance discount of the injured person will not be reduced.

Effect of receipt of damages on third party discount

According to the rules presented in this report, one time use of third-party insurance to compensate for financial loss reduces 20 percent of the no-damage discount. For paying damages twice, this amount reaches 30% units and for three times or more, it reaches 40% units. These calculations are related to the number of claims in a policy period.

For example, a 70% discount will be reduced to 50% after receiving financial damage once.

A cost that continues in the following years

Reducing the discount does not only affect the next year's premium, but it can also increase the cost of renewing the insurance policy in the following years. If there is no new damage, the reduced discount will increase according to the annual process until it reaches the prescribed limit again. Therefore, the calculation of the cost of this decision should include several insurance policy renewal periods.

How to make a more economical decision?

To evaluate economic efficiency, compare the amount of claim receivable with the difference in insurance premiums in the two cases of using insurance and keeping the discount.

In body insurance, the deductible and other deductions must be deducted from the confirmed damage amount, and the specific conditions of the insurer regarding discounts should be checked; Because third party insurance provisions cannot be directly extended to body insurance.

Do not forget the deadline for reporting the incident

In considering the economic efficiency, the deadline for declaring the damage and the conditions of the insurer's handling should not be ignored. The general conditions of the body insurance foresee the notification of the accident within five working days at the most from the time of notification of its occurrence. Also, repairing the car without coordination and agreement of the insurer may affect the claim process.

Summary: Calculate the net amount payable, the amount of the discount and the cost of subsequent renewals to determine whether it is more cost-effective to use insurance or pay for repairs out of pocket before receiving minor damages.