Why should you avoid making small car insurance claims in the Philippines?

It is a known fact that if you own a car, you need to get insurance—it is a two-way street. You see, car insurance is mandatory in the country, at least CTPL. Why? It makes the road safer and acts as a safety net for everyone on it. In case anything goes wrong, for example, you hit someone driving or walking on the road, CTPL insurance will cover the damages, even death. All you need to do is file a claim with your provider. But is it enough?

Obviously not, CTPL insurance does not cover your car, you, and your passengers. Comprehensive insurance offers broader protection, including damage to the insured vehicle, theft, and fire. If you are looking for more protection, add-ons such as Acts of God, roadside assistance, and personal accident coverage offer options tailored to your requirements.

What’s common, however, is the claim-filing process, wherein you need to notify the insurer about the incident asap, contact the police (if required), click photos of the damage, fill out the claim form, and submit it along with the required documents.

Do all accidents require you to file a claim?

The goal of getting car insurance is to obtain financial protection against unexpected events. However, not all car damage or loss requires filing a claim, as some minor, affordable incidents can be handled on the personal end.

Broadly speaking, there are two types of claims: small and large. While the former concerns minor damage or repairs, the latter involves significant damage requiring high repair costs.

Also Read: Top car insurance picks in the Philippines; know which one is right for you

Small car insurance claim - A basic understanding

What are small car insurance claims? It is no different from a standard claim, except that here the damage is minor and/or the repair cost is less than or significantly closer to the deductible amount. Damage in such cases usually consists of small dents, minor bumps, or scratches.

Usually, policyholders file claims for minor accidents, thinking they have insurance and that they don’t have to deal with such issues. But in reality, such a habit often backfires due to the hidden cost involved.

Common small claims examples filed by policyholders -

• Cracked headlights
• Minor side mirror damage
• Slight scratch while parking

Car insurance claim: When to file and to pay out of pocket?

When to file a car insurance claim?

 Here are a few scenarios when a policyholder is recommended to file a car insurance claim -

• Third-party involvement: If the accident results in injuries or damage to a third party, including their person or property, a claim must be filed.
• Legal liability: Cases involving legal liability require the policyholder to file a claim.
• Major accidents & severe damage: Such cases account for high repair costs that exceed your deductible substantially, and therefore, it is wise to file a claim.
• Theft, vandalism, and Acts of Nature: Incidents like fire, theft, and flood damage always require filing a claim—in fact, insurance is designed for such incidents.

Also Read: How to claim CTPL Insurance? Here’s what you need to know

When is it better to pay from the pocket?

Repair cost vs. deductibles
If the repair cost is lower or close to your policy deductible, it is advisable to pay for the damage out of pocket. Doing so will ensure no loss of the no-claim bonus and prevent a future premium hike.

Here are a few examples when filing a claim is just not worth it -

• No third party (in-person or property) was harmed in the accident.
• The repair cost is cheaper than the deductible.
• Minor dent or scratches.

The hidden cost of filing a small car insurance claim

If you aren’t aware, then we are happy to break it down for you. You see, while filing a claim might seem convenient, it comes with a cost, especially for small claims. The list includes -

Financial implications: Policyholders filing small claims are categorised as high-risk clients by providers, leading to increased premiums or, in some cases, non-renewal.

Administrative & processing delays: Paperwork, inspection, and processing time remain common, whether it is a small or a big claim. The settlement could take days or even weeks, leaving you without a vehicle or delaying repair.

Loss of NCB: NCB, aka No-Claim Bonus, is a reward that providers offer to policyholders for not filing a claim for an entire term. Filing even a small claim can make you lose this benefit.

Also Read: No car insurance? Here’s what all wrong can happen in the Philippines

Benefits of maintaining a no-claim record

Here’s why you should not file minor claims and continue to maintain a no-claim bonus record -

• Discounted renewal rates. Yes, a no-claim bonus, if applied, can lower your policy renewal premium by 10-20%, depending on the insurer.
• Faster claim processing. It is a fact that a policyholder with a clean record usually enjoys faster and smoother claim processing. Meaning you get the necessary help when it is most required.
• Enhanced credibility with the provider. The insurance companies favour policyholders with a clean record. As a reward, they receive special perks.

Practical tips to manage your car insurance policy

Review your policy regularly: Make it a point to review your insurance policy and ensure you understand coverage limits, policy inclusions & exclusions, deductibles, and no-claim bonus terms before renewal.

Emergency funds for minor repairs: It is a good idea to keep small savings on hand for minor maintenance to help you avoid small claims.

Partner with a reliable provider: It is advisable to partner with a trusted insurance provider that offers 24/7 customer support, a hassle-free claim process, an online presence, and a strong claim settlement record.

Also Read: Passenger safety: What does your car insurance cover in an accident?

Bottom line

Buying a car, choosing an insurance provider & coverage plan, and even filing a car insurance claim are all strategic decisions. In this article, we have discussed the latter in depth; you see, while insurance is there to protect car owners/policyholders, using it for every minor issue can actually cost you more in the long run. By taking care of minor repairs on your own, you not only keep your no-claim bonus intact, but also enjoy a low renewal premium. Further, it also strengthens your relationship with your insurance provider. In short, try to avoid making small claims and save big.

However, it is essential to notify the insurance provider whenever there is a serious accident or incident, such as fire, theft, or damage due to Acts of God.

Also Read: Here’s how to resolve a dispute with your insurance provider