Getting started would mean acknowledging that car insurance is such a big issue. Be sure not to worry; we will break this down for you. This guide is for people with new cars or those seeking a better understanding of car insurance and will take you through everything you need to do in terms of insuring your car in India.
Why Do I Need Car Insurance?
It is available not only in India but in any country as a statutory requirement. It helps in providing protection, financially, from loss which occurred due to accidents, thefts, natural disasters, and other reasons. Otherwise, you need to shell out a lot of money in the absence of insurance to make good the cost of repairs or replacement.
At least third-party liability insurance is mandatory in India under the Motor Vehicles Act of 1988. The third-party will compensate in case another is injured due to the car being involved in an accident, leading to damage or, in worse cases, destruction. Although third-party insurance does not cover your car in damages, most people will often buy comprehensive insurance.
Basically, there exist two kinds of motor insurance available in the market. These are:
Third-Party Liability Insurance
What It Covers: This is the most basic type, which is a must according to the state law. It safeguards an individual against all legal liabilities he or she incurs in case of damaging another person’s property or an accidental injury to someone else. Therefore, the insurance firm will cover the cost of damages caused or injuries done to the third party.
What It Doesn’t Cover: It doesn’t include damages to your vehicle, or the injury that you might sustain from the accident.
Comprehensive Car Insurance
What It Covers:
In other words, comprehensive insurance policies offer more comprehensive coverage. In other words, comprehensive insurance policies offer more extensive coverage. They include third-party liability and cover damages to your own vehicle as well as damages to other people’s vehicles due to accidents, theft, natural disasters, fire, and vandalism. Some policies also cover personal accident coverage for the driver and passengers.
What It Doesn’t Cover:
However comprehensive a policy may be, there are a few exclusions. These can include damage caused while driving under the influence of alcohol or other intoxicants, damages due to war or nuclear risks, electrical or mechanical breakdowns, etc.
Add-ons and riders
The best advantage of having a comprehensive insurance policy is that you can have add-ons or riders added to your policy. Such add-ons give much more additional coverage and can be availed according to your preferences:
- Zero Depreciation Cover: The insurance company will normally take depreciation into account while settling a claim and, in the process, bring down the final payment to a certain extent. Under this cover, you can claim the full amount of the claim without any deduction in respect of depreciation.
- Engine Protection Cover: This rider indemnifies the losses a car engine suffers due to water ingression, oil leakage, or any other reason. It is beneficial, especially in areas prone to experiences of such nature.
- Roadside Assistance: Through this rider, one gets help in case of a vehicle just breaking down on the road. It includes services like towing, assistance in a flat tire, fuel delivery, and more.
- NCB (No Claim Bonus) Protect: It is a kind of reward for making no claims during a policy year. This is an add-on that will ensure this NCB remains unaffected even during those points in time when you could be at fault in a car accident.
- Passenger Cover: While a normal policy covers the driver, this add-on provides insurance coverage for the riders traveling in the car in case of an accident.
How to Find the Right Car Insurance Policy
It could become fairly confusing in choosing the right car insurance policy, so here’s some good advice to help you make a better decision:
Thoroughly Evaluate Your Needs:
Consider what you want from your car insurance. In case you are driving a brand-new car, go in for comprehensive insurance with add-ons such as zero depreciation. If the car is older, maybe only third-party insurance will do.
Comparing Policies:
Do not buy the very first policy that crosses your way. on line aggregators help to compare the policies, prevention, and coverage options amongst several insurers. Check customer reviews, the claim settlement ratio, and the reputation of the insurer before you buy it.
Know your Exclusions:
Know what is excluded under your policy that saves you from getting shocked when about to claim it.
Cross-Check the Insured Declared Value:
It is the maximum value that can be claimed if your car is stolen or damaged beyond recognition. The correctness of IDV is definitely a matter of concern since your premium directly depends on it.
Discount Check:
Some insurers offer a discount on the premium if you have installed antitheft devices, are a member of certain automobile associations, or have a higher voluntary deductible.
Procedure to File a Car Insurance Claim in India
Starting with, the procedure for filing a car insurance claim is very cumbersome in nature, though going to be very easy if followed in the right manner.
- Inform Your Insurer: In the event of an accident, you need to immediately notify your insurer. You should inform your insurance company immediately once an accident occurs, preferably within the first 24 hours.
- File an FIR: In the case of major accidents and theft, it is necessary to file a First Information Report (FIR) at the local police station.
- Document the damages: Click images of damage on your car and other cars. This will serve as proof when you raise the claim.
- Submission of the Required Documents: Among the documents you must submit to the insurer are a copy of your insurance policy, FIR, duly filled claim form, and your driver’s license.
- Survey and Assessment: You shall be intimated about the appointment of a surveyor by the insurance company for assessing the extent of damage. Your claim will be settled as per his report.
- Settlement: If the claim is approved, the repair amount shall be settled either directly by the insurer with the garage (cashless claim) or you can get reimbursement of the amount that you incur for the same.
Renewal of Car Insurance Policy
Most car insurance policies are valid for one year in India and must be necessarily renewed annually. Here is a list of some of the stuff you are to remember at the time of renewal of your car insurance policy:
Renew Early:
Your policy may be nearing its expiry. Renew it early to ensure you have continuous coverage. Motor insurance is a must, and driving vehicles without motor insurance is considered illegal. It may also attract penalties.
Review Coverage:
Your insurance requirements have changed since you bought the policy and hence, need a review before deciding to renew the policy. You might even need an increase or decrease in the offered coverage or a change in the add-ons.
NCB or No Claim Bonus Check:
If you have not filed any claim throughout the tenure of the policy, then you are liable for an NCB that shall reduce your premium to quite an extent.
How Car Insurance Premium Works
Car insurance premiums are determined by quite a number of factors. Of course, it is helpful to know this so that you understand your premium and why it is priced that way. This way you also get an idea of how you can bring your premium down.
Factors Affecting Car Insurance Premiums in India
Nature of Coverage:
I have already said that comprehensive insurance is having wider coverage than that of the third-party liability insurance. Quite naturally, the premium for comprehensive insurance is more as it covers more risks.
Insured Declared Value (IDV):
The maximum compensation is received when the vehicle is stolen or cannot be repaired anymore. If a higher IDV results in a higher premium, lowering your IDV to reduce premium costs could leave you with insufficient coverage in the event of a total loss.
Types of vehicles:
Typically, the older the vehicle, the lower the IDV, and therefore the premium. Nevertheless, such vehicles are more likely to suffer damage or break down, which raises questions about the premium versus potential repair costs. Locality, particularly where you drive the car, primarily influences the premium. So, the cars driven in metro cities like Mumbai, Delhi, or Bangalore stand at higher premiums because of a higher incidence of risks of accidents or theft compared to those used in smaller towns and rural areas.
Make and Model of the Car:
High-performance and luxury vehicles typically will levy high premiums because the repairing and replacement costs involve a handsome amount. However, decent safety features in the car will earn you a discount.
Driving Record:
One major factor that could have affected your rates is your driving record. In this manner, if you are more accident-prone or have more traffic offenses, you will be perceived as a higher risk—thereby increasing the chance that you will need to pay higher premiums.
Voluntary Deductible:
A deductible is what you agree to pay out of pocket before the insurance kicks in. Together with an electing of a higher voluntary deductible, it brings the premium down; however, this also means that in the event of an accident, a bigger chunk of the cost will be yours to bear.
No Claim Bonus (NCB):
When you don’t make a claim under the policy during a policy period, you earn an NCB. It can bring your premium down substantially in the next renewal. There will be an increase in the credit on NCB for every year that doesn’t register a claim up to a maximum limit.
Bundle Insurance Policies:
Insurers offer a premium discount if a customer buys various types of policies, such as home and car, from the same company.
Install anti-theft devices in your car:
To reduce the possibility of any theft, one should install security devices and this may reduce the premium payment as well.
Have a clean driving record:
Always try to avoid traffic violation as well as accidents because it will keep the cost of your premium lower. Higher deductibles will lower your premium, but make sure you are ready to pay the out-of-pocket expenses through the deductibles if you make a claim.
Renew in time:
Do not let any policy lapse, or you will lose the benefits of no claims and face an increase in premiums.
Look out for ‘Pay-As-You-Drive’ Insurance:
Some insurance companies can provide this new, innovative insurance policy, based on ‘unit of distance’ approach. Accept it, in case you are not using the car much.
Top Myths About Car Insurance
There are plenty of myths about car insurance, but a few of them are :
Myth 1: The color of the car may impact the insurance premium.
Reality: This is actually not true. Most people do believe that, but the color of the automobile doesn’t even count for insurance. Make, model, size of the engine, and certain safety gadgets in the car are some of the factors.
Myth 2: You Cannot Shift Insurers Before Policy is Over.
Fact: There is No Policy Renewal Lapse. You can switch the insurer in any specific point of time regardless of the existing policy’s expiry. In case you’re dissatisfied with an existing insurer or finding a better deal somewhere else, it’s easy to port your policy without loss of add-on features like NCB.
Myth 3: Older Cars Don’t Need Insurance
Reality: While indeed older cars mean cheaper insurance rates, they still have to be insured for at least third-party liability, if not fully comp. As such, having full insurance can also be handy in case the car actually has decent value or you just wouldn’t prefer to spend out of pocket expenses for the repairs.
Myth 4: Claiming Will Always Increase Your Premiums
Reality: Every claim is not attached with your higher premiums. Your premium may not increase at all if your claim amount is small, and your bonus is protected. Conversely, of claim frequency is high, your premiums will increase.
Impact of Technology on Motor Insurance
Motor insurance is taking new turns in India. Technology is getting integrated by the day to ensure transparency and speed of operations/ customer needs. Eg,
Online Purchase and Renewal of Policy
Those days are gone when you had to go for rounds in an insurance office to purchase or renew a policy. On the contrary, most want you to utilize the web. This helped save not only your time but also in the comparison of the policies, reading reviews, and possibly making an informed decision.
Few of the policies are telematics based or even usage. In these systems, the relevant premium is based on the driving habit. There is a telematics device installed in the car, which evaluates many factors, such as speed, the nature of your braking, and what time of the day do you drive. Less risk leads to lower premiums, therefore good driving habits mean lower premiums.
Immediate Claims Settlement
With AI and ML, a few insurers have started to provide settlement services for immediate claims as well. In the case of minor damages, you can even upload pictures of the damages from the mobile app itself, and the damage amount gets credited to your account without any physical surveys .
Paperless Transactions
Most insurers nowadays support paperless transactions for all processes, starting from buying a policy to claim settlement. This, therefore, means added speed not only from the mode of the transaction but also a reduction in errors and risks of fraud.
Final Thoughts
Car insurance thus becomes a part of owning a vehicle in India. This would help them to meet the legal requirement and also for the owner to protect himself against many types of risks. Understanding the different types of covers, add-ons, and the claim process will help you make an informed decision to ensure you are well protected for your car.
Remember, while affordability is one of the principles you need to have in mind, it will not all the time be the cheapest of covers. Instead, focus on getting the right cover and enjoying peace of mind every time you hit the road.
For any information on car insurance or while just comparing policies, AapkaPolicyWala will be right beside you. Drive safe!