Bumps, scrapes and prangs – when is the right time to make a claim on your car insurance?

With Car Insurance premiums becoming increasingly expensive with each passing year, it pays to be prudent and ensure that you do what you can to ensure that your car insurance premiums do not go up needlessly. A common strategy for ensuring that the cost of your policy is reigned in is to protect your no claims bonus by not claiming unless it is necessarily.

While this is the minimum amount of cover the law expects of you, it doesn't cover very much – for example, if your car is in an accident and gets written off, you would lose the value of your car.

The next level of cover s third party, fire and theft – In addition to covering third parties in the event of an accident this level of cover also protect you against the theft of your car and the event of the car being set alight. This cover would not cover you for the any personal possessions or extras that you have added to the car.

Most people opt for a fully comprehensive cover – this covers third party, fire and theft as well as damage to your car (whether its caused by you or someone else) and the damage, loss or theft of any possessions carried in your car.

The first step to consider when making any kind of claim on your car insurance is what's covered? The specific details of the policy and the nature of the claim are dictated by the type of cover.

For example, does your insurance include replacement locks? Can you claim for personal possessions and if so what items are covered and to what value?

It's worth noting that many people these days have home contents insurance which covers items carried in your car – check the difference in policy to see which insurance policy is more cost effective to claim with.

There are two primary factors to consider when making a claim – your excess charge and your no-claims bonus.

- Excess

The excess charge is how much you are willing to pay in the event of an accident. Your insurance provider may set a compulsory excess charge or the excess charge may be voluntary – whichever the case, the golden rule is the more excess you are willing to pay the lower your premium.

The relative impact of the excess charge should play a major part in deciding whether or not one should make a claim.

In the hypothetical situation that you have an accident that results in £400 worth of damage, the first £200 would be covered by your excess and the remaining £200 would be covered by the insurance company. If your claim is less than £200 then the insurance company will not pay anything.

So, as long as the claim is more than the excess you should make a claim, right?

Not necessarily – that brings us on to our next major factor:

- No claims bonus

To some people the thought of losing their no-claims bonus is the stuff of nightmares. It's no surprise – some no claims bonus policies can save you 65% on your premium if you have five years or more of no claims.

The particular details of your no-claims bonus vary from policy to policy – with some there is no quarter: if you make a claim, you lose your bonus. With others there is a system of "three strikes and you're out" whereby you are allowed to make two claims within a certain time period but a third would result in your losing your bonus.

There are also protected no claims bonus policies where you can pay an extra premium to protect your no claims bonus so even if you have to make a claim you save money.

Far from being straightforward, making a claim can become a careful balancing act of costs. To make the right decision you need to weigh up, not just the cost of the claim but the effect that claim will have on your premium.

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