Car Insurance Online – Applicability, Benefits, Exclusions & more

Having a car is good. Having a car insurance is even better. A car insurance will come in handy to cover up your costs if it gets damaged or stolen for some unthinkable reasons.

What do you mean by Car Insurance?

Car Insurance also called motor insurance covers the losses that you might incur in case your car gets damaged or stolen. A person has to pay the premium on an annual basis to get the car insurance. The premium is calculated on the Insured Declared Value (IDV). If the IDV of the vehicle is high then the premium amount will be high, if the IDV is less then the premium amount will accordingly go down.  

Applicability

As per the Motor Vehicle’s Act, 1988, It is mandatory for a motor vehicle operating in public space to be insured, to cover any damage to property or life. The insurance company bears the damage to property or injury towards a third party.  

Documents Required for Car Insurance

Car Insurance requires a very minimal documentation. To obtain a new policy, you only need to fill up the proposal form of the insurance company and a copy of your registration certificate (RC). For renewing the policy, you only need to provide a copy of your RC along with the copy of previous insurance details. Note: Carefully fill in all your details as it will help you a lot in taking claims.  

Benefits of Car Insurance

Taking a car insurance comes with the following benefits: 

1. It covers the losses against any damage or loss to the insured vehicle 

2. It covers any loss or damage to your vehicle caused by accident, theft, fire, explosion, riots, strikes or any act of terrorism. 

3. It covers the financial liability caused by injury/death of a third party or damage to the property. 

4. Personal accident cover.  

Points to consider before buying a Car Insurance

It is always necessary to compare the Vehicle Insurance as it can save a substantial amount of money and give you better coverage options. The following points should be considered before taking any policy:

1. Shortlist your coverage requirement: Before comparing the policies, you should ascertain as to what is your requirements and what coverage you need. A Liability coverage is cheaper than the comprehensive coverage but then the latter offers the best coverage. So if you are ready to compromise on some benefits then liability coverage is beneficial for you.

2. Compare the Coverage option: Once you have decided on which policy option is required, then you need to start comparing the coverage options. There are times when different insurance companies give various add-on in their policies.

3. Compare the Insured Declared Value (IDV): The different rate of IDV’s reflects the different rate of premium. IDV is the current value of the car after appropriate reduction. The rate of depreciation depends on the age of the car. The older the car, the higher would be the depreciation and thus lower IDV. Hence, it’s important to look carefully at IDV value quoted by different insurance agencies.

4. Comparison of  Insurer’s Claim Settlement Practice: It is the most crucial part of an insurance policy. Every policyholder expects a hassle-free claim. All insurance companies have their own procedure. Hence, it is essential to compare the claim settlement process and records of the insurance companies.  

Tips that come in handy while purchasing Car Insurance

• Add-on benefits: Have a complete knowledge of the add-ons which can be integrated with your policy, so that you get additional coverage
• False declarations:  Make sure that you do not make any false declarations in your documents before buying an insurance policy. The insurance policy will lapse immediately if they find any incorrect information at any point of the coverage period.
• Renew on-time: Make sure that you renew your policy on time as certain companies give discounts on premiums. Also, your insurance company will not ask for inspection of your vehicle.
• Discount for security features: If your car has certain security features installed like immobilizers and tire locks, the insurance company treats you as a responsible customer and you are most likely to get discounts on the premium which you pay.  

How is the premium for your car decided?

• Car make and model: Vehicle make and model play an important role in determining your premium. Some vehicles fare better when it comes to collisions which result in lesser injuries to the occupants and also the damages to the vehicle would be minimal.
• City: The city in which you live also has a say in the premium you pay. People living in metros and tier 1 cities have to pay more as the possibility of occurrence of accidents and thefts are more compared to other cities.
• NCB percentage: The premium will tend to decrease if you have not made any claims previously.
• Add-on benefits: Some add-on benefits like roadside assistance, cover for CNG/LPG kits, will increase the premium you pay.  

Coverage Under Car Insurance

There are 3 types of car insurance, namely:

• Comprehensive Coverage: This coverage is extensive and includes damage to the car, theft of the vehicle, third party legal liability and personal accident cover. This policy can be further extended for add-ons like accessories, zero depreciation cover etc. This is the most popular coverage as it offers end to end coverage and is hassle free for the policyholder.
• Third Party Liability Coverage: The third-party car insurance provides the cover against any liability to the third party when it’s your faulty during driving the car. It covers any damage or injury caused by you to any other person/property. Note: A third party liability is mandatory in India under the Motors Vehicle Act.
• Collision Cover: The Collision Covers your own car financially against damage caused by the collision which is usually an accident. It does not cover the damage or loss due to theft or vandalism.  

Compensation Charges

The comprehensive coverage policy would provide personal accident cover to the owner-driver. If you want to include the personal accident cover, you will have to pay an extra premium.

The accidental cover is of great use as the compensation is in the following manner:  

Claim Settlement Ratio

Claim settlement ratio is defined as the percentage of total claims settled to that of the total claims received. The following table lists the insurance companies which have a high settlement ratio.   

 Exclusions in Car Insurance

The following features are generally not covered in car insurance:

• Loss or damage to the car in the period where the insurance is not valid.
• Loss or damage due to normal wear and tear.
• Loss or damage to the car, when driven by a person who does not have a valid driving license.
• Loss or damage caused by the actions of the driver who is intoxicated i.e., alcohol or drugs consumption.
• Loss or damage to the engine as result of an oil leak.
• Loss or damage to the vehicle as result of abuse of Car Manufacturer Guidelines.

How to claim Car Insurance?

Investing in an insurance is useless if you don’t know how to make use of it when the situation arises. Follow these steps when you want to claim your insurance. All insurance companies would have set a time limit within which you’ve to make your claims. Insurances can be claimed for two cases

• Third-party claim: In case of an accident or injury is caused by you to a third person, you can claim the insurance for the third party.
• Own damage claim: Insurance can be claimed for your own damages in case of any accidents.   In both cases, it is very important to note down the details such as the number plate, make and model of the other vehicle involved in the accident.

Listed below is the claim process in case of an accident for both cases.

• Inform your insurance companies as soon as possible after the occurrence of an accident.
• All insurance companies will have their own registered garages. Take your car for further inspections and estimates for the repair.
• To file a claim, the insurance companies will ask for a set of documents. Make sure that you have all those in hand.  

Documents required to file a claim

The following documents will be necessary to file an insurance claim:

• Completely filled claim form
• Original FIR, if applicable
• copy of the insurance policy
• A copy of the owner’s driver license
• A copy of the Vehicle’s RC document
• Estimates cost of repairs
• Related medical bills in case of any injuries.

Car Insurance and No Claim Bonus

Purchase of used cars is becoming a norm in the country. It should be noted that the process of buying used cars not only involves selecting the right brand and model; it also includes a very important step – the transfer of car insurance to the new car owner.

When you purchase a used car, the first step would be the transfer of the registration certificate (RC). Ideally, the car insurance should also be transferred at the time of transfer of the RC. The car owner should raise a request with his/her insurance company for the insurance transfer. Once the new owner has bought the car, the policy of the previous owner will not be valid.

As per IRDAI guidelines, the name and address of the insurance documents of a car and the RC should match. So, in the event of an emergency, the new car owner can recover the incurred expenses without too many hassles. However, the NCB is assigned to the driver and it is not tagged to the car. So, when the sale of the car happens, the NCB on the insurance remains with the previous owner. This NCB can be added to the insurance of a new car later on. The NCB can be retained by obtaining an NCB retention letter issued by your insurance company. The NCB can be retained for a maximum of 3 years, after which it becomes void.

Documents required for NCB retention

• Policy cancellation request
• Original copy of the policy and certificate of insurance (Form 51)
• Notice of ownership transfer (Form 29), if applicable
• Application for intimation and transfer of the car ownership (Form 30), if applicable
• Copy of the RC book with the new owner’s name, if applicable
• Proof that the car was delivered to the new owner, if applicable

Frequently Asked Questions

What is IDV?

IDV is the maximum amount the insurer can pay to you in case your vehicle is damaged or stolen. It is calculated as: 
[Manufacturer’s listing price – Depriciation] + [Accesories not included in listed price – Depriciation] 

What is NCB?

o-claim bonus (NCB) is the claim you make in case if you had not made any insurance claims during the insurance period.

What is an Anti-theft device? How does it affect my premium?

An anti-theft device is a device which will help you against the theft of your vehicles. Popular anti-theft devices are tire locks, steering wheel locks and kill switches. When you mention this to your insurance company, they reduce your premium as they believe that you are a more responsible driver.

Is service tax applicable to the premium payments?

Yes. Service taxes are applicable to your premium payments and they are according to guidelines set by the IRDA. 

What is Zero Depreciation Cover?

Commonly offered as an Add-On, the Zero Depreciation Cover offers a full settlement on your claim without the usual deduction affected for depreciation. A deduction due to depreciation is a common factor in the normal car insurance.

What is Cashless Car Insurance?

If your car is insured under this policy, then you can get your car repaired at any of the garages registered in the insurance company’s network. The settlement of all costs will be taken care by the insurance company. You may have to pay some amount because of the depreciation factor.

What should I do if I lose my insurance policy?

Getting a duplicate copy of the insurance policy is very easy nowadays. You can approach the insurance company for the same. If you had bought your insurance policy online, then you can just download your insurance policy from mail which your insurance company had sent to you.

Why car insurance premiums differ from company to company?

Car insurance premium rates differ from one company to another based on their own internal arrangements. The company calculates your premium based on these factors-

• The risk posed by you to the insurer,
• the insurer’s operational costs,
• the estimated money that the insurer is likely to pay as settlement through the year.

I have shifted to a new place. Is it necessary to update my registration address on my car insurance? How do I do it?

It is necessary to update your change of address at RTO as well as inform your motor insurer. You can get in touch with your insurance provider via their toll-free number, email or in person. You can do this online as well. Just go to the official website and enter the details in the required columns.

Why do car insurance premiums increase every year?

Car insurance costs rise every year depending on the company costs in policy distribution, loss of investment, fuel prices, etc. Your insurance premium can go up depending on the age and value of your car, your driving history, and the claims made.

What is the PUC Certificate validity for new cars in India?

For old cars, i.e., the ones that were bought on or before 31 March 2010, the Pollution Under Control (PUC) Certificate should be renewed on a quarterly basis. The validity of the PUC Certificate for new cars is 1 year. Vehicles that were bought on or after 1 April 2010 are considered to be new cars under this classification.

How many claims can be made in a year?

You can make multiple claims per year, but the insurance company can put a limit on the add-on claims ( NCB protect, zero depreciation, etc ).

IRDA Guidelines for Motor Insurance

Coverage under any motor insurance policy:

• Natural Disasters – Earthquakes, Floods, Fire, Lightning
• Man-made Hazards – Theft, Explosion, Riots, During Transit

Exclusion Under motor insurance policy:

• Individuals driving with no/invalid driving license
• Driving under the influence of alcohol or other intoxicating elements
• If an accident or damage has taken place outside the geographical coverage of the policy
• Mechanical or Electrical failures in the vehicle
• A scenario where the insured vehicle has been used for illegal purposes

Response Time for Insurance Companies

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