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Accidents are unfortunately very frequent in our country. With hardly anyone following traffic rules, damages are very common resulting in both – a financial loss and loss of mobility. Although the Indian law makes it compulsory to insure your vehicle against third party liability, but prudence also suggests a comprehensive cover for your vehicles
Motor insurance is a contract between a vehicle owner and the insurance company where the insurance company compensates for the loss arising from accidents, burglary, or third party injuries/death. It can also cover any personal injury, to you or to your passengers due to a mishap.
There are two types of motor insurance –
- Comprehensive Cover
- Third Party Cover.
Comprehensive cover covers risk arising out of the following:
- Physical damage to the vehicle
- Death of the driver and/or passengers in the vehicle
- Damage caused by the vehicle to other people or property
Third party insurance covers only damage caused by the vehicle to other people or property. The liability is covered for an unlimited amount in case of death or injury. Damage to third party property is covered by the insurance policy as follows – up to Rs. 1 lakh for private vehicles, scooters, and motorcycles and up to Rs.7.5 lakh for commercial vehicles. The India Motor Vehicles Act, 1938 has made it mandatory for every owner of a vehicle to obtain a motor insurance policy, either a comprehensive or a third party insurance. As evidence, a Certificate of Insurance must be carried at all times in the vehicle.
The Policy Covers:
The policy is convenient and easy to understand, with easy documentation and hassle free claims service The policy can be issued to cover all types of private cars, Commercial vehicle, two wheelers etc
- A comprehensive Car Insurance protects you against any loss or damage caused to the vehicle and its insured accessories as a result of natural and man-made calamities, such as:
Natural calamities: Fire, Explosion, Self-ignition or lightning, Flood, typhoon/ hurricane/ storm/ tempest/ inundation/ cyclone/ hailstorm/ frost, Landslide/rockslide, Fire and shock damage due to earthquakes.
- Man-made calamities: Burglary, Housebreaking or theft, Riots or strikes, Accidents by external means, Malicious acts, Terrorist activity, Damage whilst in transit by road, rail, inland-waterway, lift/elevator, or air
- Legal liability of insured towards third party personal injury and property damage arising out of an accident involving the insured vehicle
- Personal accident cover: The motor insurance plan compulsorily provides personal accident cover for individual owners of a vehicle while driving. The owner can also opt for personal accident cover for passengers in the vehicle
- Undertakes to reimburse the expenses incurred :
– Towards repair/replacement of parts of the vehicle, or
– To pay the market value of the vehicle in case of a total loss, provided that the originating cause of such damage is an accident, including theft.
- Any accidents outside the geographical area of India
- Consequential loss, normal wear and tear, Mechanical/electrical breakdown
- Driving without valid license for that class of vehicle.
- Driving under the influence of liquor / drugs
- Vehicle not being used as per the regulations of registration.
1) What is the amount I need to insure my vehicle? / What is IDV?
Motor vehicles are insured for a fixed value referred to as Insured’s Declared Value (IDV). If the vehicle is stolen or the vehicle is totally damaged and beyond repairs in an accident, the claim amount payable is determined on the basis of the IDV.
The IDV is estimated on the basis of the manufacturer’s listed selling price of the brand and model of the vehicle (and accessories) at the commencement of the car insurance after adjusting for depreciation for every year.
IDV = Ex-Showroom price plus sales tax minus depreciation
2) What is No Claim Bonus?
If one has made no claim on his car insurance policy this year then as a reward, the insurance company grants him a discount in premium on your policy renewal. This discount is called the No Claim Bonus. This bonus is offered only if the motor insurance policy is renewed within 90 days of expiry of the previous policy.
If you have made no claim in the first year, you get a bonus of 20 per cent; for two consecutive years, the bonus is 25 per cent; for three consecutive years, it’s 35 per cent; for four consecutive years, 45 per cent, and for five consecutive years, the bonus is 50 per cent. It is offered up to a maximum of 50 per cent.
However, if you make an insurance claim, the No Claim Bonus reduces to nil on renewal.
YOU CAN GET BONUS EVEN IF YOU CHANGE THE INSURANCE COMPANY
3) Does the motor insurance policy automatically cover all my high-cost accessories such as music system, extra fittings, etc?
Loss or damage to accessories is covered if they come as part of the vehicle and not separately installed by you.
If you do install additional accessories such as a music system, extra mirrors, etc, you do have the option of adding these accessories as part of your car insurance policy. The price of such items would be included after depreciation, over and above the Insured’s Declared Value (IDV) of the vehicle.
Note that if these are stolen from the vehicle, then one cannot claim insurance unless the entire vehicle along with accessories was stolen.
4) Should I purchase the Comprehensive Insurance policy or the Third Party Only policy?
It is always advisable to take comprehensive cover than a third party cover. This is so to protect the individual from making additional payout from his pocket in the event that something’s are excluded in the TP cover.
5) What are the different types of Personal Accident Covers available for drivers and passengers?
An owner-driver of a private car is provided car insurance with personal accident cover of up to Rs. 2 lakh while the owner-driver of a two-wheeler is covered for Rs. 1 lakh.
A personal accident insurance cover can also be purchased at an additional cost to cover employed drivers and persons traveling in the vehicle, on a named as well as unnamed basis.
6) What if I do not receive an Insurance certificate right away?
If you do not receive your insurance certificate right away, you will be provided with a cover note. It is a temporary insurance document establishing proof of Insurance and you can register your vehicle with it. The cover note is valid for 30 days from its date of issue. Within that time, it is replaced by the actual policy document and certificate.
WE GUARANTEE YOU POLICY ISSUANCE WITHIN 7 WORKING DAYS
7) What does the Legal Liability cover for a paid driver include?
Legal liability cover for a paid driver covers the legal compensation that might have to be paid if a third party files any case against the driver for damage, loss, or fire. The driver is covered for a sum equal to his salary for the policy period. It also covers accidents and occupational diseases.
8) How much would the insurance company pay in the event of an accident?
In case of an accident, the insurance company pays for the replacement of the damaged parts and the labor fees.
The costs that you have to bear include:
- The amount of depreciation as per the rate prescribed
- Reasonable value of salvage
- Voluntary deductions under the policy
- Compulsory excesses levied by the insurer
9) What should I do if I receive a Court notice from a third party claimant?
In the event of a third party claim, notify the insurance company in writing along with a copy of the notice and your insurance certificate.
DO NOT offer to make an out-of-court settlement or promise payment to any party without the written consent of the insurance company. The insurance company has a right to refuse liabilities arising out of such promises.
The insurance company will issue a claim form that has to be filled and submitted along with:
- Copy of the Registration Certificate
- Driving license
- First information report (FIR)
After verification, the insurance company will appoint a lawyer in your defense. You are expected cooperate with the insurance company, providing evidence during court proceedings. If the court orders compensation on your part, the insurance company will then do it directly.
10) What if I have an accident with an uninsured vehicle? What is the extent to which I am covered?
It does not matter whether the vehicle on the other side has insurance or not. If you have a comprehensive policy for your vehicle, you are fully insured against liabilities, subject to your policy specifics.
11) Voluntary Deductibles and Compulsory Excesses?
For cars below 1500cc, Rs 500 is deducted from the claim and for cars above 1500cc, Rs 1000 is deducted
You can increase the deductible amount as voluntary deduction against which a discount is given in the premium
12) What if I forget to renew my auto insurance on time?
A car insurance policy has to be renewed before the expiry of the ongoing term of insurance. Delay in renewing a policy and thereby driving a vehicle without valid motor insurance is illegal and there are substantial penalties.
Here are some scenarios where you will lose out:
- In case the uninsured vehicle has an accident, the insurance company is not liable and you would have to bear the liabilities alone, if any.
- If the policy is not renewed within 90 days of the expiry date of the previous policy, the No Claim Bonus cannot be claimed.
- If the policy expires and is not renewed on time, the insurance company will insist on a physical inspection of the vehicle before granting renewal.
13) Can I renew my auto insurance with another insurance company?
Yes, you can renew your Auto Insurance with any company and you will get all the existing benefits.