Importance of Declaring Claims Details in Motor Insurance


Importance of Declaring Claims Details in Motor Insurance

We all buy motor insurance to have financial protection in case our vehicle is damaged in an accident. However, making a claim can often lead to higher renewal premiums with our insurer. This is why some people are tempted to hide past claims from their insurance company when renewing their policy. But as we’ll explore below, failing to disclose accurate claims history is never a good idea.

Claims Data is Shared Between Insurers

There exists a common database managed by the Insurance Regulatory and Development Authority of India (IRDA) that contains motor insurance claim details submitted by all insurance companies. This Insurance Information Bureau (IIB) consolidates claims data from across the industry to give insurers a complete picture of an individual’s claims history.

Checking the Database Directly

If insurers have direct access to check the IIB database, then why do they require policyholders to declare their claims history themselves? The issue is that the IIB database needs to be updated on a daily basis by all insurers simultaneously. Insurance companies need to submit their motor periodic claims data to the central repository. This means it can take up to two months for a new claim to be fully reflected in the IIB records. During this interim period, an insurer cannot independently verify claims details before issuing a new policy.

Tracing Misrepresentation After Policy Issuance

Within the first two months, an insurer will check the IIB and contact any customer found to have misrepresented or failed to disclose a prior claim on their renewal application. The policyholder would then need to pay back any No Claim Bonus (NCB) discount received to continue coverage. If a claim arises before the insurer traces it from the IIB, the previous insurer will be contacted to validate details. Any misrepresentation will result in claim rejection, even for third-party liability claims.

Repairs Without a Claim

Sometimes, a policyholder chooses to repair minor damage out of pocket rather than make a claim if the repair cost is lower than the deductible amount plus loss of NCB on renewal. Such self-paid repairs would not be recorded on the IIB. However, failing to disclose such incidents cannot be considered non-disclosure or misrepresentation either.

The Importance of Honest Disclosure with Ethika Insurance Broking

At Ethika Insurance Broking, customers are best served through honest, transparent interactions. While the temptation to hide claims may exist due to renewal costs, the risks of being discovered far outweigh any short-term savings. Our advisors can help evaluate options beyond simply claiming or not claiming to minimize future impacts. Overall, honest disclosure of your accurate vehicle and claims history ensures the best coverage tailored specifically to your needs over the long run. Please get in touch with an Ethika Insurance Broking representative today to discuss how we can help you get the right motor insurance plan.

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Susheel Agarwal

Susheel is the CEO of Ethika Insurance Broking P Ltd. This company, which has a current value of 10 million dollars, was bootstrapped by him and two of his friends. He attributes his success to his ability to inspire others to seek happiness at work.