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Car Insurance FAQs
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Q- Is car insurance mandatory?
A- Yes, under provisions of the India Motor Vehicles Act 1988 car insurance is mandatory in India. Any vehicle used for social, domestic and pleasure purpose and for the insured’s business or profession.

Q- What are the different types of car insurance?
A- Types of car insurance-
• Liability only policy -This covers “Third Party Liability” for bodily injury and/ or death and property damage .Personal accident cover for owner-driver is also included.
• Comprehensive Package Policy – This covers third party liability, damage to own car and has various features as a package.
• Zero Depreciation Policy- This cover helps you to avail full claim without any deduction for depreciation on the value of parts replaced.


Q- What is liability only policy?
A- Liability only Policy covers third party liability for bodily injury and/or death and property damage and personal Accident cover for owner-driver. It is mandatory under provisions of the India Motor Vehicles Act 1988. It can further be combined with fire and theft covers:
• Liability Only Policy with Fire Only Cover.
• Liability Only Policy and Theft.
• Liability Only Policy and Fire & Theft.


Q- What does comprehensive package car insurance cover?
A- Comprehensive car insurance covers damage to own car along with third party liability. It allows safety cover against damage or loss to car against.
• Fire, explosion, self ignition, or lightning.
• Natural disasters like floods, hurricanes and storms, earthquakes, Landslide etc.
• Burglary, housebreaking or theft.
• Riot, strike or terrorist activity.
• Accidents.
• Malicious act.
• Whilst in transit by road, rail, inland, waterway, lift, elevator or air.
Comprehensive cover includes personal accidental benefit for the owner of the car; you can also take personal accident cover for unnamed passengers.


Q- What are add-on covers?
A- Add on covers, as the name suggests, are the added benefits or additional insurance covers. One can buy these on payment of an extra Premium to cover certain additional risks that might not be covered in the insurance Policy otherwise. Some of the add-on covers being offered by various insurance companies are:
• Depreciation cover.
• NCB protection cover.
• Personal belongings cover.
• Daily allowance cover.
• Loss of keys.
• Road assistance cover.


Q- What are exclusions?
A- There are certain conditions and situations where the vehicle is not covered. The list may vary for different companies, general exclusions may be:
• Normal depreciation, wear and tear.
• Mechanical or electrical breakdown failure or breakages.
• Damage to tyres and tubes unless the vehicle is also damaged..
• Car driven under the influence of intoxicating liquor or drugs at the time of loss.
• Damage by person driving without a valid driving licence.
• Damage due to war or nuclear crises.
• Use of vehicle other than it is meant for.
• Use of vehicle beyond specified geographical area.
• Consequential loss.
• Compulsory deductibles.


Q- For what duration is a motor insurance issued?
A- Motor insurance is issued for duration of one year and needs to be renewed every year.

Q- Does my vehicle need to be inspected before insurance?
A- The vehicle might need to be inspected by the insurance company representative if
• There is a break in insurance.
• There is a change in type of policy.
• There is a change in policy ownership.
• You have added accessories that you want insured.
• If your are installing CNG/LPG kit in your vehicle, one has to get the kit endorsed in his Rc (Registration Certificate) book by the RTO (Road transport office). Additional premium is payable for the vehicle with LPG/CNG kit.


Q- How is my car evaluated by insurance companies?
A- The Premium of vehicle insurance depends upon
• Insured Declared Value (IDV).
• Vehicle Make & Model.
• Place of registration (Zone).
• Additional covers taken.
• Registration year of the vehicle.


Q- What is IDV or insured declared value?
A- IDV or the insured declared value of the vehicle is the value of the vehicle that it is insured for. It is fixed every year at the commencement of each policy period. It is arrived at taking into account the manufacturer’s listed selling price of the brand and model, accessories if any that are not included in the manufacturers list and annual depreciation.

Age of Vehicle (Private Car) % of Depreciation
Not exceeding 6 months 5%
Exceeding 6 months but not exceeding 1 year 15%
Exceeding 1year but not exceeding 2 years 20%
Exceeding 2year but not exceeding 3 years 30%
Exceeding 3year but not exceeding 4 years 40%
Exceeding 4year but not exceeding 5 years 50%

For vehicles aged over 5 years of age and of obsolete models the IDV is a value agreed upon between the owner and insurance company.


Q- How does place of registration affect the premium paid?
A- As per The Indian Motor Tariff Act, for the purpose of vehicle insurance, India has been divided in two zones by and the Premium rates vary according to them:
• Zone A - Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi and Pune.
• Zone B - Rest of India.


Q- Why does premium charged by different companies vary for same IDV and zone?
A- The difference in premium may be because of some additional covers included. Insurance companies give tariff discounts on vehicles which may vary on vehicle model, driver, and territory of use. For example an insurance company may give 30% discount and on the same vehicle for which another insurance company may be giving only 10% discount.

Q- Which discounts can I avail for car insurance?
A- Discounts available for the Premium of car insurance
• Voluntary Deductible.
• No Claim Bonus.
• Automobile Association Membership.
• Installing anti theft devices.
• Discount for Vintage Cars.


Q- What is a deductible?
A- Deductible is the damage repair charges that the insured has to pay from his own pocket in case of the claim after which the insurance company releases the claim fund. It is the amount that is not covered under the policy.
• Compulsory Deductible is the mandatory pre determined amount that the policyholder has to pay in case of accident or damages. For Private Cars (not exceeding 1500 CC) compulsory deductible is Rs. 1000 and for Private Cars (exceeding 1500 CC) it is Rs. 2000.
• Voluntary Deductible is the pre determined amount that the policyholder accepts to pay on his own in case of damage or accident.


Q- What is NCB or No Claim Bonus in car insurance?
A- The owner of the vehicle (Insured) is entitled for a No Claim Bonus discount on the Own Damage section of the policy, if no Claim is made or pending during the preceding year(s), as per the following table:

Period of Insurance % of NCB
The preceding year 20 %
Preceding Two consecutive years 25 %
Preceding Three consecutive years 35 %
Preceding Four consecutive years 45 %
Preceding Five consecutive years 50 %


Q- Can the no claim accumulated over my old car be transferred to my new car?
A- Yes, the no claim accumulated over your old car can be transferred to your new car. You need to obtain No claim bonus certificate from your company at the time you sell your old car and can get it transferred to your new car within next three years.

Q- If I am changing my insurance company, will my no claim bonus be transferred?
A- No Claim Bonus can be transferred to another insurance company if you change your insurer. You need to provide a renewal notice or a letter confirming the “No Claim Bonus” entitlement from the previous insurer. In case of non-availability of renewal notice or Insurer letter, NCB may be permitted after obtaining a declaration from you in prescribed format.

Q- Can my no claim bonus lapse?
A- Your no claim bonus can lapse if you make a claim or if there is a break in vehicle insurance for more than 90 days.

Q- What is Automobile Association Membership discount?
A- If you are a member of a recognised automobile association, you are eligible for a Premium discount on the own damage part of vehicle insurance.

Q- What is anti theft device installation discount?
A- If you install an anti theft device approved by ARAI in your car, you are eligible for a discount in own damage part in the premium.

Q- What happens to my vehicle insurance if I sell my car?
A- The vehicle insurance needs to be transferred in the name of the new owner or surrendered within fifteen days of the sale of the car. You also need to obtain a no Claim Bonus certificate from the insurance company if you have accumulated any.

Q- What documents do I need for insurance renewal?
A- If you want to renew policy with your existing insurer you don’t need any documents for car insurance renewal provided you do it within the validity period of the insurance. In case you switch insurer then you need to provide a copy of RC and copy of existing insurance policy.

Q- Can I cancel my vehicle insurance?
A- Yes, you can cancel your insurance Policy but only if you show that your vehicle has been Insured elsewhere, or your vehicle registration has been legally cancelled by the RTO. Once the Policy has been cancelled, the balance of the Premium (on short period scale rate) will be refunded to you if you have not made any Claim during the Policy period.

Q- Can I pay premium in instalments?
A- As per the Insurance Act, 1938 insurance payment cannot be done in instalments.

Q- What if I don’t receive the Insurance Certificate immediately?
A- At the time of insurance, you are usually given a cover note against the Premium paid that certifies that you have paid the Premium for insurance. It is valid for 60 days and you must receive your insurance certificate during that time, if not you need to contact your insurance company and follow-up accordingly.

Q- What documents do I need to file a claim?
A- Accident claims
• Claim form.
• Copy of vehicle insurance policy.
• Copy of vehicle registration.
• Copy of driving licence of the person driving at the time of accident.
• Repairs estimate.
• Repairs invoice or payment receipt.
• RTO transfer papers ( in case of total loss).

Third party claims.
• Claim form.
• Copy of vehicle registration.
• Copy of driving licence of the person driving at the time.
• Copy of FIR.
• Copy of vehicle insurance policy.
.
Theft claims.
• RTO transfer papers.
• Original registration papers of the vehicle.
• Copy of driving licence.
• Original Insurance papers.
• Original keys.


Q- What is total loss?
A- The Insured vehicle shall be treated as a Constructive Total Loss if the aggregate cost of retrieval and / or repair of the vehicle, subject to terms and conditions of the policy, exceeds 75% of the IDV of the vehicle. In this case the insurance company pays for the car loss and the ownership of the vehicle is transferred to the insurance company.

Q- What are cashless claims?
A- Cashless claim is when you take the vehicle to a service centre authorised by the insurance company (network garage or service centre), the claim is settled by the insurance company directly with the service centre. You just have to pay the deductible and the amount other than what your insurance covers.

Q- What if my car is stolen along with original policy documents?
A- Lodge an FIR for the theft of your vehicle and inform the insurance company accordingly.

Q- What happens if someone else is driving at the time of the accident?
A- If the driver has a valid driving licence and is not driving under the influence of drugs or alcohol, the vehicle insurance remains valid for the claims.

Q- Are my car accessories also covered in car insurance?
A- Accessories provided by the manufacturer are covered under car insurance based on the depreciating value as specified, for other accessories, you have to inform your insurance company and get them insured.

Q- I am being suggested varying IDVs for my vehicle. Which is better for me, the lowest or the highest?
A- IDVs vary because insurance companies have varying methods to arrive at the vehicle value, e.g. current ex-showroom price, ex-showroom price at the time of purchase, or IDV as mentioned in the previous policy document. Although a lower IDV results in a lower premium, a higher IDV may prove beneficial in the case of total loss or theft of the vehicle as you get higher value for the loss. Furthermore, choosing a lower IDV depreciates the value of your vehicle faster than it otherwise would.

Q- Under what circumstances Ncb can be allowed
A- No Claim Bonus is a reward for filing no Claim in the previous year. It can be accumulated over a period of insurance. NCB starts with 20% and goes up to 50%

• NCB becomes nil in case of a Claim.
• NCB follows the fortunes of the customer and not the vehicle.
• The validity period to reclaim NCB is 90 days from the date of Expiry of the policy.
• NCB can be utilized within 3 years (in case if the existing vehicle is sold and a new car is purchased).
• NCB recovery to be done in case of a Name Transfer.
• NCB gets transferred to the legal heir in case of Death of customer.
• NCB can be transferred to a new vehicle in case of Substitution of vehicle of the same class.
• NCB earned in abroad can be given in India.


Q- What is break-in-insurance? What should I do if I have a break-in-insurance?
A- Break-in-insurance is when the Policy lapses due to non-renewal of the Policy on time. As per the law, an owner should cover his/her car with at least third party insurance at all times.
In case you have a break in your car insurance, you can-
• Approach another insurance company to renew policy-if it has been less than 90 days since the Policy lapsed. In this case, you may be able to retain your No Claim Bonus.
• Obtain a new Insurance Policy-if it has been more than 90 days since the Policy lapsed.
• In either case, you have to get your car re-inspected


Q- I plan to add an LPG/CNG kit in my car. Will it be covered by the Insurance?
A- The Cng Kit can be covered in your Premium in case you have a comprehensive Policy.
Before CNG inclusion, one has to get Lpg/Cng Kit endorsed in his Rc(Registration Certificate)book by the RTO(Road transport office).


Q- When is an endorsement required?
A- An endorsement is a written evidence of an agreed change to a policy. It is a document that incorporates changes in the terms of the policy. If there are any alterations to be done in the policy the customer needs to approach the Insurance Company to effect the change in the policy. This is done by way of an endorsement.

An endorsement can be of two types
1)Premium bearing endorsement-Endorsement for which additional premium is charged.

Some of the examples are:-

• Transfer of ownership
• Addition of LPG/CNG Kit
• Change of RTO Location
2)Non –premium bearing endorsement-Endorsement for which no additional premium is charged.

Some of the examples are:-

• Rectification in contact details and address.
• Rectification in chasis/engine number.


Q- What are electrical/electronic and non-electrical/non electronic accessories in a private car?
A- Electrical/electronic items which are not supplied by the vehicle manufacturer along with the vehicle are called electrical/electronic accessories. E.g., Music system, LCD mini TV, Fog lights, etc do not come along with the vehicle.

Non-electrical fittings include CNG-kit, interior fittings, alloy wheels, etc.


 
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