Before we answer this question, we like you to know some of the key components of the auto insurance.

Premium Amount - An auto insurance premium generally consists of 2 components - Third Party Insurance Premium and Own Damage Insurance Premium. Third Party premium covers damages caused to third parties, this is mandatory under Indian Motor Vehicle Act. Own Damage premium covers damages caused to your own Car.

No Claim Bonus - Your insurance company normally pay you back each year in the form of reduced premiums. On an average, this is 10% of your own damage premium after one year and it subsequently increase by 10% each year and goes up to 50% of the own damage premium. This benefit will cease the moment the insurance company pay one of your claims.

Deductible - A minimum amount, approximately Rs. 2,000/-, that must be borne by you when you make an auto insurance claim. This amount is prefixed irrespective of the claim amount.

Depreciation - The decrease in the valuation of different components of your Car by your auto insurance company, year over year. For example, the front bumper of your Car which is valued at Rs. 10,000/- on the first year will be valued at Rs. 5,000/- by the end of 5th year.

Bumper-to-bumper or 0% depreciation Insurance - A more expensive insurance policy where the Depreciation factor as discussed above do not apply. This type of policy only cover Cars that are less than 5 years old.

IDV (Insured Declared Value) - The amount of insurance coverage you need on your Car, based on your best estimate of its worth. This is normally 95% of the Car's ex-showroom price on the first year and will reduce by about 10% each year. You will have the ability to increase the IDV to a certain limit (this is generally capped at a certain percentage) by paying an additional premium.

Now that you know the components, let us identify how to determine if you should claim insurance.

When you claim an insurance, which do not come under the 0% depreciation category, you will incur the below expenses.

• Deductible, you need to pay this amount
• Any depreciation, based on the year of Car's age
• No Claim Bonus. Your premium will increase by the percentage of your NCB next year. This applies even when you switch your insurance company

In order to determine if you should claim your insurance, please use the calculator below: