Car Insurance: Should You File a Claim for Minor Damages or Pay from Your Own Pocket?

New Delhi, September 23, 2025 – One of the most common dilemmas faced by car owners after a small accident is whether to file an insurance claim or pay for the repair costs themselves. While car insurance policies are designed to protect vehicle owners from financial losses in the event of accidents or theft, experts advise that claiming insurance for minor damages may not always be the best decision.

The Purpose of Car Insurance

Car insurance exists to safeguard policyholders against significant financial setbacks that arise due to accidents, theft, or damage to the vehicle. When a claim is filed, the insurance company compensates the policyholder for the repair expenses. However, not all situations demand an insurance claim—especially when the damage is minor and repair costs are low.

Why Minor Claims Can Be a Disadvantage

Experts caution that filing claims for small damages, such as scratches, dents, or a broken bumper, can actually result in financial losses in the long run. This is because filing a claim affects your No-Claim Bonus (NCB)—a discount offered on your insurance premium during policy renewal if no claims are made in the previous year.

• For instance, if your NCB is between 20–50%, you can enjoy significant savings on your renewal premium.

• Filing a claim for minor damages means you lose this discount, leading to higher insurance premiums in the future.

• In many cases, the cost of minor repairs is far lower than the premium hike caused by losing the NCB benefit.

Additionally, insurance companies keep track of a customer’s claim history. Those who frequently file claims are often denied discounts during renewal and may even face higher premiums.

When Should You Consider Filing a Claim?

According to financial advisors, you should carefully evaluate the type and extent of damage before filing a claim. Filing a claim makes sense in the following cases:

1. High Repair Costs – If expensive parts such as headlights, windshields, or advanced sensors are damaged, repair costs can be substantial. In such cases, filing a claim is advisable.

2. Third-Party Liability – If the accident damages another person’s vehicle or property, filing a claim becomes mandatory under third-party liability laws. In these cases, you cannot avoid claiming insurance.

3. Major Accidents – In cases of serious accidents involving structural damage to the car, insurance claims ensure that you do not face an overwhelming financial burden.

When It’s Better to Pay Out-of-Pocket

If your car sustains minor scratches, dents, or a broken bumper, experts recommend paying for the repairs directly instead of filing a claim. Spending a few thousand rupees from your pocket can often save you much more in the long run by preserving your NCB and keeping renewal premiums lower.

For example, if your annual premium is ₹20,000 and you have an NCB of 25%, you save ₹5,000 at renewal. Losing that discount for a repair costing just ₹3,000 would not make financial sense.

Balancing Savings and Protection

The decision to file a claim or pay from your own pocket depends largely on the cost of repairs versus the value of your NCB discount. It’s important for car owners to evaluate both immediate expenses and long-term insurance benefits before making a decision.

Experts emphasize that car insurance should ideally be reserved for major damages, costly repairs, or third-party liabilities, while smaller damages should be managed independently whenever possible.

Final Word

Car insurance is a financial safety net, but making unnecessary claims for minor damages can backfire by increasing future premiums and eliminating valuable discounts.

• Use your own funds for small repairs like scratches, dents, or minor part replacements.

• File an insurance claim if the damage is significant, expensive, or involves third-party liability.

• Always weigh the cost of repairs against the potential loss of No-Claim Bonus.

By taking a balanced approach, you can maximize the benefits of your insurance policy while keeping your future premiums affordable.