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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- There are two 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.


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.


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.


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. The difference may also arise because basic method of calculation may vary for different companies. 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- 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- 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 Policy holder has to pay in case of Accident or damages. For Private Cars (not exceeding 1500 CC) compulsory Deductible is Rs. 500 and for Private Cars (Exceeding 1500 CC) it is Rs. 1000.
• Voluntary Deductible is the pre determined amount that the Policy holder 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.

 
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