Making insurance claims for body/paint repairs on your car

Making insurance claims for body/paint repairs on your car

 

It’s inevitable to accumulate minor (and sometimes major) scratches and dents on your car body during the course of driving in city traffic and one always wants to get his/her car back in shape and look good without spending a bomb. The purpose of this blog is to help car owners decide on whether to make an insurance claim on body/paint repairs for their car and how to actually go about making one.

 

[Disclaimer: While we have tried to be comprehensive in our analysis, the final decision to make a claim rests with the car owner and the actual claim would be subject to the terms and conditions of his/her motor insurance policy]

 

Types of policies

 

It is useful to broadly understand the different types of insurance policies and what “liability” will be covered under each of these insurance types.

 

[“Liability” in layman’s terms is what one has to pay, “Customer liability” is what the car owner has to pay, “Insurance liability” refers to what the insurance company will pay]

 

The primary purpose of vehicle insurance is to provide financial protection for the car owner against damages to the car, injuries to the inhabitants and against any ‘liability’ that would arise as a result of any incident involving the car.

 

While purchasing a vehicle, a customer can choose from (broadly)

  1. Third party insurance cover – covers only damages to a third party and does not cover your own car
  2. Comprehensive Insurance Policy  – covers damages to third parties as well as your own car
  3. Zero Depreciation Insurance Policy (“Zero dep”) – to cover for repair or replacement of expensive parts  (glass, plastic parts, etc) which are otherwise not fully covered in the above policies

 

The scope of liability coverage of each of these policies is as follows –

 

“Comprehensive” Policy “Zero Dep” Policy
Customer pays Insurer pays Customer pays Insurer pays
Painting charges Approx 20% Approx 80% 0% 100%
Tinkering or repair charges 0% 100% 0% 100%
Parts replacement
Metal parts1 0-50% depending on age of car 0-50% depending on age of car 0% 100%
Plastic, Rubber parts, Tyres 50% 50% 0% 100%
Consulables, Oil, etc. 100% 0% 100% 0%
Fibre parts 30% 70% 0% 100%
Windshield / Glass2 Approx 10-15% 85-90% 0% 100%
Claim charges (aka  “Compulsory deductible”)
Engine <1500cc 1000 1000
Engine>1500cc 2000 2000

 

Note 1 – Customer liability for metal parts – Depending on how old the car is, one will be liable to pay a predetermined % of the cost of the part as per the following schedule

        1. 0 – 6 months : 0%
        2. 6 months – 1 year : 5%
        3. 1 year – 2 years : 10%
        4. 2 years – 3 years : 15%
        5. 3 years – 4 years : 25%
        6. 4 years – 5 years : 35%
        7. 5 years – 10 years : 40%
        8. 10  years and above : 50%

 

Note 2 – In the case of windshield or glass replacement under a Comprehensive insurance policy,  the insurer pays for the windshield completely, the customer has to pay 50% of for sealant and rubber beading. Overall customer liability would be around 10-15% of the windshield replacement cost

 

Note 3 – Up to 5% of cost of scrapped parts to be paid by customer

 

In addition to these two types of insurance policies, the customer has an option of paying premiums for additional policies to protect against total loss (complete damage of the car in an accident or flood etc.), cover against engine damage etc.


To claim or not to claim?

 

Various factors go into deciding whether you can or should claim insurance on your car body/paint repairs namely:

  1. Extent of damage: as a thumb rule, consider insurance claims only if repair and painting is needed for more than 2 body panels (or Rs 6000+ in repair charges)
  2. No Claim Bonus: Every time an car/insurance owner renews the policy without having claimed insurance during the previous year, his/her premium value is discounted by virtue of a “No Claim Bonus” or NCB. Therefore it’s advised to save these claims for major accidental damages
  3. Incidents: Each insurance claim is possible only for damages that are caused due to a single “incident”, i.e. you cannot claim insurance for damages sustained in multiple accidents or crashes. At the time of claiming insurance you will have to submit a written description of how the accident took place. This description will be compared to the damage sustained on the vehicle and if there is a mismatch, it is highly likely that the claim will be rejected!

 

Do the math

 

To determine if it makes financial sense to claim insurance for your car body/paint repair, we have some simple worked examples to illustrate the above point:

 

Vehicle: Skoda Octavia (2012),

Policy type: Comprehensive cover

Workshop type: Multibrand

Annual premium cost: Rs 12000

 

Situation 1

Damages: one body panel – tinkering/repair and painting

NCB: 2 years of no claims (25% discount on next renewal premium i.e. Rs 3000)

 

If the owner decides to claim insurance, the following would be the calculated net outflow

  • Total Cost of Repair and painting
  • Repair/tinkering charges (incl. tax) Rs 1000
  • Painting charges (incl. tax) Rs 4000
  • TOTAL (incl. tax) Rs 5000

 

  • Customer would have to pay
  • Claim Charges / Compulsory Deductible Rs 2000
  • Painting Depreciation (20% of Painting cost) Rs   800
  • TOTAL (incl. tax) Rs 2800
  • NCB loss (approx) Rs 3000
  • “Outflow” from the customer Rs 5800

 

In this case it’s clear that it would make more sense for the customer to get the work done without the insurance claim and not give up his/her No Claim Bonus (NCB).

 

Situation 2

       

Damages: three body panels – tinkering/repair and painting

NCB: 2 years of no claims (25% discount on next renewal premium i.e. Rs 3000)

 

If the owner decides to claim insurance, the following would be the calculated net outflow

  • Total Cost of Repair and painting
  • Repair/tinkering charges (incl. tax) Rs   3000
  • Painting charges (incl. tax) Rs 12000
  • TOTAL (incl. tax) Rs 15000

 

  • Customer would have to pay
  • Claim Charges / Compulsory Deductible Rs 2000
  • Painting Depreciation (20% of Painting cost) Rs 2400
  • TOTAL (incl. tax) Rs 4400
  • NCB loss (approx) Rs 3000
  • “Outflow” from the customer Rs 7400

 

Verdict – When comparing this cost to the total cost the customer would have incurred if he had not claimed insurance, it is clear that claiming insurance was the better option.

 

Situation 3

       

Damages: one body panel – tinkering/repair and painting, bumper (plastic part) to be replaced

NCB: 5 years of no claims (50% discount on next renewal premium i.e. Rs 6000)

 

If the owner decides to claim insurance, the following would be the calculated net outflow

  • Total Cost of Repair and painting
  • Repair/tinkering charges (incl. tax) Rs   1000
  • Painting charges (incl. tax) Rs   4000
  • Bumper replacement (approx incl. tax) Rs 10000
  • TOTAL (incl. tax) Rs 15000

 

  • Customer would have to pay
  • Claim Charges / Compulsory Deductible Rs   2000
  • Painting Depreciation (20% of Painting cost) Rs     800
  • Bumper depreciation / Customer liability (30%) Rs   5000
  • TOTAL (incl. tax) Rs   7800
  • NCB loss (approx) Rs   6000 
  • “Outflow” from the customer Rs 13800

 

Verdict – claim insurance!
Does the workshop matter?

 

The usual suspects when it comes to which workshop to get your car body repair and paint work done – Multibrand workshops vs. Authorized workshops. These are the factors we would recommend

 

  1. Cash-less insurance claims – this is a no brainer, go only to workshops that your insurer has an affiliation with. This will help you avail “cashless” insurance facility (explained in greater detail below). Also, the turnaround time for insurance survey and claim approvals is faster.
  2. Quality of work – choose a workshop that offers high quality paint work and warranty on paint work (will rectify any paint color mismatches, bubbles, etc. at no cost)
  3. Cost – It is a common misconception that since you are anyways claiming insurance, why not go to an “authorized” workshop? Well, the decision is clearly justified if you have a Zero Depreciation policy. However in the case of a Comprehensive cover, the amount of customer liability might be higher in an authorized workshop as they tend to replace (rather than repair parts). For e.g. in case of damage to door panels etc, there is a high likelihood an authorized workshop will replace the door panel as against repair. In which case, as a customer, you will end up paying up to 50% of the part cost!

 

Payment methods for insurance claims

 

Depending on the Insurer and the workshop, a customer will be able to make “cashless” or “cash-payment” insurance claims.

    1. Cashless insurance – The customer is required to only pay his/her portion of the liability. The remaining amount will be paid by the insurance company directly to the workshop.
    2. Cash payment – The customer will have to pay the entire cost of repair to the workshop. The total amount minus the calculated customer liability will be credited to the customer’s bank account within 7-10 working days.

 

Clearly from a cashflow point of view, a car owner would prefer to use the cashless facility and hence workshop selection becomes critical.

 

How to actually make a claim?

 

  1. It is recommended to claim insurance within 24 hours of an accident having occurred
  2. Register a claim with your insurer or broker online
  3. Your insurer will advise you of which workshop(s) to go to for repair work
  4. Book an appointment with the workshop and arrange a time for pickup / drop off of the car
  5. The following are the documents that need to be handed over to the Service adviser / workshop at the time of subjecting the vehicle to an insurance claim
    1. Copy of Registration Certificate
    2. Copy of Drivers Licence
    3. Insurance Claim form of the respective insurance company
    4. Copy of Insurance Policy
    5. Cancelled Cheque (in case non cashless arrangement)
  6. Once the vehicle reaches the workshop, these documents are verified, the workshop will then raise a claim with the insurance company
  7. Usually within 24 hours of raising the claim, a surveyor from the insurance company will visit the workshop to inspect damages on the vehicle
  8. The workshop will also raise an estimate for the repairs depending on what the surveyor states as claimable under insurance
  9. The surveyor will give a confirmation to the workshop to begin repair work on the car
  10. Once the work is completed, the surveyor will be called to assess the work that is done on the vehicle. If the work is deemed satisfactory, a liability letter will be released which will determine the final amount payable by the customer and the insurance company
  11. The car owner will be required to make a payment to the workshop of the customer liability (in case of cashless facility being available) or the entire liability (in case of no cash less facility being available)
  12. The vehicle can then be driven out by the customer

Alternately, you can skip all of the running around by simply sending a few pictures of the damage to Cartisan through cartisan.in/app and sit back and relax while our service team take over and find the best way to get your car back into shape and deliver it back to you in quick time. All it takes is a few taps…