Categorized | Car Insurance

Facts About Car Insurance in India

To have the best insurance Policy for your car you need to know some facts about car insurance in India. The knowledgeable buyer makes prudent choices and saves money. Knowledge regarding the subject can be acquired either by discussing with concerned agent or through internet, insurance journals etc. This article is intended to provide basic but important information to a car insurance buyer.
The top 10 Car Insurance Facts in India, which can be very handy for car insurance buyers are discussed below.

1 As per Motor Vehicles Act, 1998 getting Third Party Liability Insurance is obligatory in India for driving your car; otherwise you can be fined by the traffic police if they catch you driving in an uninsured vehicle. It covers the cost of loss suffered by the third party because of Accident by your vehicle.

2 Your options are two; either go for third party insurance only policy or a Comprehensive insurance policy. A comprehensive car insurance policy covers the financial losses suffered by you as well. To make your comprehensive car insurance policy stronger you may attach several add-ons or extra benefits by paying extra premium. The list of add-ons is quite long, some popular ones are Zero-dep, engine protector, roadside assistance, invoice cover, NCB protector etc. Your car Insurance Agent must be able to explain these to you in detail and also suggest you what all add-ons you should take.

3 Car insurance can easily be compared, studied and bought online. Online transactions are transparent and policies sourced through internet are cheap as no involvement of middlemen saves upon commission. There are many insurance web aggregator websites available on which car plans can be compared very conveniently in an unbiased way and that too free of cost.

4 Validity of car insurance is only for a year and has to be renewed before expiry. Even a day’s delay can cause your Insurer to reject your renewal or demand fresh inspection of the vehicle. That is the reason your insurer and various other agents start calling you from one month before your insurance expiry date to ensure you get it done on time.

5 The Premium is decided by many factors like location, make, model, engine type, current condition, IDV (Insured Declared Value), gender, age and marital status of the car owner etc. Based on these factors the Risk to the car can be estimated and based on that the premium is calculated. For example location of the vehicle can impact its possibility of getting damaged to a great extent; a car which runs in a village with scant traffic is less likely to meet an accident in a busy metropolitan city. Similarly, married people generally drive more carefully than singles.

6 In the event of accident, the car owner should immediately inform the insurer about the incidence and file FIR in case of severe damage to the car by third party. Such prompt action is required to start the Claim process. 

7 Accidental claims are settled through cashless or Reimbursement mode. The settlement mode depends on your insurer and its tie-ups with the motor garages. Just like in case of Health Insurance policy, if you get your car repaired from a network garage you are likely to get cashless settlement of your claim. A wider and stronger network is a big selling point for car insurers. However, you must ensure that car garages in which you frequently get your car repaired falls in the network of your car insurer.

8 For every claim free year, the insurance company gives you a discount in premium called No Claim Bonus or simply NCB to encourage you to drive carefully and avoid claims. At the time of renewal you get this discount on premium. You can also ask for No claim bonus even when you are switching insurers. In other words your NVB earned is not harmed even when you change the insurer. You can get up to 50% or even more discount on premium under NCB if you have 5 or more consecutive claim free years.

9 The Insurance Company holds the right to reject or disallow the claim, if the accident falls under the exclusion category, there are geographical limitations in your policy, if the accident happens out of those boundaries, and the insurance company can reject the claim.

10 Installation of LPG/CNG kits should be declared and intimated to the RTO or RTA and the insurer. Installation of such kits can affect the inherent risk to the car. Thus, subsequent permission should be taken from the insurer to have smooth claim process.