4 Smart reasons you should avoid making small car insurance claims

Minor scratches while parking or a little dent in heavy traffic are a daily occurrence for many drivers around the country. But that doesn’t mean that every time a little something happens, you’ll rush to your insurance provider or agent and claim damages. Wondering why we say so, given that car insurance is there to protect you against such financial liabilities? Well, that’s because there are a few consequences of filing a claim that amounts to a few hundred pesos. Many Filipinos don’t realise that filing small claims can cost them more than paying for repairs from their pocket.

It is therefore essential that you understand why you should avoid making small car insurance claims. This practice will help save money, keep your premium stable, and protect long-term benefits like No-Claim Bonus.

In this article, we’ll help you understand small claims in a simple, clear way so that you can make better decisions when it comes to insurance.

Car insurance in the Philippines: Understanding the working

In the Philippines, car insurance is divided into two main categories - CTPL and comprehensive. While the former is mandatory and affordable, it offers limited coverage (third-party bodily injuries or death). Latter, on the other hand, is optional and highly recommended, for its broad protection scope (theft, fire, flood).

As for small claims, they usually fall under the scope of comprehensive insurance, which adds to your premium substantially.

What is the participation fee?

If you are a car owner with insurance, it is essential to learn about the participation fee. It is an unavoidable charge that every policyholder must pay before insurance settlement kicks in. It is a way to make car owners feel responsible for the damage caused.

Participation fee = Deductible cost + Depreciation

Note that depreciation cost is determined by multiplying your car's repair or replacement cost by the relevant rate in the depreciation table. This calculation does not apply to vehicles that are 3 years old or younger.

For a minor claim involving a minor scratch or dent, the deductible might cover the repair cost.

Also Read: Most asked questions about car insurance participation fees in the Philippines — Answered!

Small car insurance claim

Above, we discussed small car insurance claims, but what exactly counts as a small claim? It usually refers to a situation in which the policyholder files a claim for minor damage, such as light scratches, small dents, paint retouching, a damaged side mirror, and similar issues.

Why do car owners file small claims?

Most policyholders file small claims because they think "It's okay to claim as the premium is already paid” or “why should I pay for small damages when all it's covered under the policy”.

But this mindset usually backfires because of the consequences of filing such petty claims.

Top 4 reasons to avoid filing small claims

Here’s why a policyholder should avoid small car insurance claims in the Philippines -

Reason 1: Premium hike at policy renewal
It is common practice among insurance providers to consider a policyholder's claim frequency when calculating the renewal premium.

Usually, more claims = higher premium

Reason 2: Loss of No-Claim Bonus

Do you know that No-Claim Bonus can save you thousands of pesos? This particular discount is zero when a claim is filed, even a tiny one.

Reason 3: The claim process is tedious and time-consuming

Filing a claim is not as simple as it sounds; no matter how reputable or swift the provider is, the basic formalities take time. This includes sending an adjuster to inspect the damage, verifying documents and the claim form, waiting for approval, and more.

For a small scratch, all this is too much of a headache.

Reason 4: Deprecation may make repair costlier

The depreciation fee applies to vehicles and is added to the participation fee. In total, this additional change can exceed the actual repair cost, making filing a claim completely useless.

Also Read: Essential rights and duties every car insurance policyholder in the Philippines should know

Financial impact of filing small claims

While we can advise you not to file a small claims case, you should understand the implications yourself. The best way to do so is via example -

Let’s say your car was involved in a minor collision that left a small bump, with repair costs around PHP 4000. In such a situation, if you decide to file a claim, you’ll first need to pay a deductible or participation fee. Say if that’s around PHP 3,000, the insurer will end up paying only a small portion of the repair (PHP 1000).

In some cases, you may even end up paying for everything and still losing the No-Claim Bonus.

When to file a claim: A quick checklist

Here’s how to decide whether or not to file a claim. Only file a claim if -

• The damage is expensive
• Your car needs a primary part replacement
• There is involvement of third-party liability
• Your safety is in question, and medical assistance is needed

In short, filing a claim makes sense when high repair costs are involved, and another person is involved (injury or death). In such situations, filing a claim is the better option and necessary to avoid legal issues.

Also Read: Don’t buy insurance without knowing these 10 key facts

Practical tips to reduce repair costs (without filing claims)

Tip 1: Choose affordable and trusted repair shops
You can easily save money by getting car repair done at local shops with good reviews and certified & approved mechanics.

Tip 2: Regular car care & maintenance
Simple habits like parking in approved spots, regular car cleaning & service, and practising passive driving will reduce minor damage.

Bottom line

A car owner needs to understand when to avoid making claims. Why? This knowledge will help you make wise monetary decisions and protect your financial interests. While it might feel tempting at first to file a claim for even the smallest of things, is it the right thing to do? No, filing a small claim has long-term costs, such as a premium hike, a participation fee, and the loss of the no-claim bonus.

In most cases, handling minor repairs out of pocket is the wiser and more practical decision. Remember, with the proper knowledge and careful driving practices, you can maximise your insurance potential and keep your car in excellent condition without unnecessary expenses.

Also Read: Difference between basic car insurance and add-ons: Insights for Filipino drivers