We buy motor insurance to claim when there is damage. But when we claim, the premium will be higher during renewal. This is why people tend to hide their claim history upon renewal.
But hiding the claim details will not help. Because there is a common database with IRDA where all the motor claims from all the insurance companies are registered.
I got a thought: if insurance companies can directly check the database, then why do they impose this on the insured to declare? The problem is that the database is not updated on a daily basis. It is updated periodically. All the insurance companies have to send their motor claims details to IRDA.
The data from all the insurers are consolidated and placed in the IIB (Insurance Information Bureau).
Hence, it will take up to 2 months to get complete details on IIB for that particular vehicle. This is why the insurance company cannot verify the claims history before the issuance of the policy itself.
But within 2 months, the company will verify and send a notice to the insured upon tracing a misrepresentation or non-disclosure.
The insured has to then pay back the discounted amount of NCB to the insurance company to continue the policy.
If there is a claim before tracing it from the IIB, it will be verified with the previous insurance company and the claim will be disqualified if there is a misrepresentation or non-disclosure. Even if there is a claim under Third Party Liability, it will be disqualified.
Sometimes the insured will not claim and get it repaired at his own cost. The insured will do so when the claim amount is lower than the sum of the deductible and the eligible NCB at the time of renewal.
Such repairs will not be registered in the IIB database. Well, this cannot be counted as non-disclosure or misrepresentation.