Teaching Online Contents
- 1 Today Best Car Insurance Plan
- 1.1 Introduction to Insurance
- 1.2 Why do you need Car Insurance?
- 1.3 Types of car insurance policies in India
- 1.4 What is IDV and why is it important?
- 1.5 How is Car Insurance Premium Calculated?
- 1.6 How to Decide on the Right Coverage
- 1.7 Benefits of Buying Car Insurance Policies Online
- 1.8 Why Compare Car Insurance Policies from BankbazaarInsurance
- 1.9 Compare Before Buying the Best Car Insurance Policy Online
- 1.10 Top Car Insurance Companies in India
- 1.11 Statistics of Car Insurance companies (2016-17)
- 1.12 Inclusions and Exclusions in Car Insurance
- 1.13 What is RTI in car insurance?
- 1.14 Car Insurance Add-On Covers – Optional but Most Important
- 1.15 Things to Remember Before Buying a Car Insurance Policy
- 1.16 Get the Benefits of Buying Car Insurance Online
- 1.17 Misconceptions about Purchasing Auto Insurance Online
- 1.18 Documents Required to Buy Auto Insurance
- 1.19 How to Verify the Authenticity of Your Motor Insurance Policy?
- 1.20 How to Purchase Car Insurance Online?
- 1.21 Agents vs Dealers vs Brokers
- 1.22 Mistakes to Avoid When Buying Car Insurance
- 1.23 What are Compulsory and Voluntary Deductibles in Car Insurance?
- 1.24 How to Lower your Car Insurance Premium
- 1.25 Anti-Theft Devices for Cars
- 1.26 How to Renew an Expired Car Insurance Policy
- 1.27 Car Insurance Renewal Checklist
- 1.28 How to Go for Online Car Insurance Renewal
- 1.29 What is a Car Insurance Claim?
- 1.30 How to claim on your car insurance policy
- 1.31 Partial Claim Settlement
- 1.32 Documents Required for Car Insurance Claim Settlement
- 1.33 What is Cashless Car Insurance?
- 1.34 Myths About Car Insurance
- 1.35 Why is Bumper to Bumper (Zero depreciation car insurance ) Insurance So Popular?
- 1.36 How Much is No-Claim Bonus for Car Insurance in India?
- 1.37 Rewards for Car Insurance Loyalty
- 1.38 What is an Endorsement in Car Insurance?
- 1.39 Cancelling a Car Insurance Renewal
- 1.40 When should you Change your Car Insurance Provider?
- 1.41 Car Insurance Claim Denials
- 1.42 Third-party Car Insurance Claim
- 1.43 Claim Process for Third-Party Liability Insurance
- 1.44 Tips to Negotiate a Car Insurance Claim
- 1.45 How does your Car Insurance Claim Affect the Premium?
- 1.46 Car Insurance and GST in India
- 1.47 How to Identify a Fake Motor Insurance Policy
Today Best Car Insurance Plan
Car insurance is basically a contract between a customer and an insurance company. The insurance provider agrees to pay the customer for the losses defined in the policy, in exchange for the premium that the customer pays.
- Auto insurance offers liability coverage on third-party property and life. This implies that if a third-party incurs a loss in a car accident that was caused by the insured car, the car insurance company will bear the expenses.
- Some policies also offer medical coverage, either in the form of riders or as a built-in aspect of the insurance cover. Medical coverage pays predominantly for the cost of treatment of injuries, compensation for lost wages, rehabilitation expenses, and funeral costs.
- Coverage under a car insurance policy includes damage to the vehicle or theft, as well.
Introduction to Insurance
The Code of Hammurabi which was written in the era of Babylonian in 2100 B.C. was a law that introduced insurance into our lives. As per the law, the traders had to pay King Hammurabi to ensure that the goods were imported/exported safely. After this, various insurance plans have been adopted over the centuries which gave birth to the official insurance contract in Genoa in 1347.
Llyod’s of London became the first official insurance provider abroad while the first insurance policy was introduced in India in 1870 by The European & The Albert. The first insurance firm in India, Bombay Mutual Assurance Society Ltd. commenced its operations in 1870.
The General Insurance was introduced during the Industrial Revolution around the 17th Century. General Insurance was brought into India by the British as an occupation with the introduction of the Triton Insurance Co. Ltd. The Indian Mercantile Insurance Ltd. was the first firm to manage all general insurance of all classes. And since 1907, a number of general insurance firms have emerged in India.
Why do you need Car Insurance?
In India, car insurance is mandated by the Motor Vehicles Act, 1998. Any four-wheeler the plying on Indian roads should have a valid motor insurance policy that provides at least a minimum cover of third-party liability. As indicated above, third-party liability refers to the damages caused by the car owner (while using the insured car) to other people or their property.
So, if a vehicle on the road incurs damage in an accident caused by your car, you need not pay the expenses from your pocket. Instead, a valid motor insurance plan equips you with the ability to raise a claim with your insurance company. If the damage is covered under your plan and there is no indication of fraud, the insurer will pay for the damages.
Although the law states that every car should be insured, the reality is that there are lakhs of vehicles in the country that are not insured. It is highly advisable to spend a few thousand rupees on availing auto insurance, so that you are not putting yourself at risk of extra expenses arising from your involvement in an accident.
Types of car insurance policies in India
Car insurance policies are usually valid for 1 year, following which they will have to be renewed. Policies can be broadly classified into two types, i.e., third-party liability insurance and comprehensive insurance. These two products vary primarily on the extent of insurance cover they offer.
- Third-party liability insurance – These policies offer limited coverage, as is evident from the name. The cover under these plans includes protection against injury of third-party and damage to his/her property. These policies do not offer coverage for losses incurred by the insured vehicle or its owner. The Indian legal system makes the third-party liability insurance cover mandatory for all vehicles.The basic inclusions of third-party liability cover are as follows:
- Liabilities towards damage to third-party vehicle involved in the mishap
- Liabilities towards injuries to third-party personnel involved in the mishap
The basic exclusions of a third-party liability cover are as follows:
- Liabilities towards damage to own vehicle involved in the mishap
- Liabilities towards injuries to third-party personnel involved in the mishap
- Comprehensive car insurance – This insurance plan offers a large amount of insurance coverage to the vehicle. This includes third-party liability cover and own-damage cover. Own-damage cover offers protection from damage to the vehicle and injuries to the owner-driver when the car is involved in an accident. Comprehensive car insurance also provides coverage against the following incidents:
- Damage or loss due to natural calamities, such as earthquake, lightning, typhoon, flood, storm, hurricane, cyclone, landslide, etc.
- Damage or loss caused by man-made calamities, such as theft, burglary, riot, terrorist activity, or strike.
- Damages incurred by the vehicle while in transit through rail, water, or road.
- Personal accident cover, which includes events of permanent disability or death of the driver. Some insurance companies also offer optional accidental insurance cover for co-passengers.
Since comprehensive car insurance offers wide coverage, it is very popular in spite of the higher premiums. It is advisable for every car-owner to be adequately protected through comprehensive car insurance.
The basic Inclusions of a comprehensive coverage:
- Liabilities towards damage to third-party vehicle involved in the mishap
- Liabilities towards injuries to third-party personnel involved in the mishap
- Liabilities towards damage to own vehicle involved in the mishap
- Liabilities towards injuries to third-party personnel involved in the mishap
What is IDV and why is it important?
Insured Declared Value (IDV) is your car’s current market value. It is also the highest amount that you can receive from a car insurance claim. This includes situations where you have incurred a total loss or damage beyond repair.
The insurance company will arrive at the IDV by assessing the following information:
- The registration details of the vehicle
- The city where the car was registered
- The registration date or date of first purchase
- The current registration type, i.e., company or individual owner
- The make and model of the car and the manufacturer
- The cubic capacity of the car’s engine
- The vehicle description
- The ex-showroom price of the car, i.e., the actual cost of the car plus tax
|Age of the car||Depreciation|
|1st year (new car)||5% depreciation is considered. Car insurance is offered at 95% of the ex-showroom price.|
|At the 2nd year renewal||20% depreciation is considered. Car insurance is offered at 80% of the ex-showroom price.|
|At the 3rd year renewal||30% depreciation is considered. Car insurance is offered at 70% of the ex-showroom price.|
|At the 4th year renewal||40% depreciation is considered. Car insurance is offered at 60% of the ex-showroom price.|
|At the 5th year renewal||50% depreciation is considered. Car insurance is offered at 50% of the ex-showroom price.|
|At the 6th year renewal||10% to 15% depreciation on the IDV of the previous year is considered. This amount is deducted each subsequent year. Car insurance is offered appropriately.|
How is Car Insurance Premium Calculated?
Insurance companies today offer value-added services such as instant quotes for prospective customers. This helps them understand the exact premium that they will be required to pay for the insurance coverage.
A premium calculator is an in-built tool present on the official third-party insurance websites and official websites of insurers. A premium calculator is used to calculate and quotes the insurance premium instantly.
Auto insurance premium is based on a number of factors, some of which include:
- Year of manufacture of the vehicle – This determines the age of the car. Older cars will have lower insurance premiums in comparison to cars that are relatively new.
- Place of registration of the car – Your residential location and the place where you got your car registered also has an impact on your motor insurance premium. Insurance companies have come up with the concept of ‘insurance zones’, based on the vulnerability of a vehicle to loss or damage while operating in that area. Urban drivers usually pay more for their car insurance than car-owners in rural areas or small towns. This is because the possibility of theft, vandalism, and accidents are higher in the cities.
- Current showroom price – The premium amount that you pay largely depends on the Insured Declared Value (IDV), which is essentially the market value of the car. Therefore, if the cost of the car is high, then the insurance premium will also be on the higher side.
- Model of the car – Imported brands and cars such as high-end sedans and SUVs will be charged more premium than hatchbacks. Similarly, for diesel vehicles the premium is higher than that of petrol cars. If a car has expensive or rare spare parts, the insurance premium of the vehicle will be higher as well.
- Purpose of the car – Car insurance providers offer personal and commercial insurance policies. If a car is used for commercial purposes, it will attract higher insurance premiums.
- Safety devices – Modern cars are equipped with safety features such as airbags, robust locks, advanced braking systems, and anti-theft devices. Insurance companies tend to increase the premiums for vehicles that are more susceptible to damage, theft, and occupant injury. You are eligible get a discount in premium of up to 2.5% if your car is safe. However, the features included in it should be approved by the Automobile Research Association of India (ARAI). Hence, you should research well and equip our car with safety features for reduced premiums.
- Claims history – If you raise a claim against your vehicle insurance, the premium for the subsequent year is likely to go up. If you abstain from raising claims, you will be rewarded with a No-Claim Bonus (NCB) that translates into a reduction in premium for the following year.
Apart from the above factors, your credit history, your driving record, the total distance your car has been driven, and the regularity of your car’s servicing also has an influence on the premium you pay towards auto insurance.
How to Decide on the Right Coverage
When you are deciding on a car insurance policy, you should keep two things in mind:
- Your ability to pay the premium on time – If you have existing loans or any such monetary obligations, you should assess your capacity to meet the premium due for your auto insurance. You should also note that third-party liability insurance is the minimum cover legally. If you opt for anything above this, you should check if you can afford it.
- Additional coverage – You may want to opt for an all-inclusive insurance plan for your car, so that you can avail wider protection. Based on the type of situation you want to cover, the premium amount will vary. The types of covers you can opt for are as follows:
- Personal injury protection – You can choose to avail protection for yourself or other passengers in the car against injuries/death in accidents.
- Coverage for being uninsured or underinsured – This covers the expenses incurred if you are hit by another vehicle that is either not insured or underinsured.
- Collision cover – This offers coverage for repairs done to the car after it was involved in an accident.
- Cover for car accessories – You can choose additional coverage for protecting your car accessories such as air conditioner or music system.
As the car ages, its value will go down as well. This translates into a lower premium for the vehicle’s comprehensive insurance policy. However, if you have only purchased third-party liability cover, the premium amount will not vary with the age of the car; it depends on the engine capacity that remains constant.
Benefits of Buying Car Insurance Policies Online
Buying car insurance policies online has become popular in India. The insurers are coming out with more innovative ways to make shopping for insurance an easy experience for the consumers. They have come up with apps for the same. There are several benefits of buying car insurance online:
- Accessible from anywhere
You can access the website or app of the insurer anytime, anywhere. Place and time is not a constraint if you have internet and can visit the site/app from the comfort of your home or any place you like.
- Easy, hassle-free and less time-consuming
The process of availing insurance has become easy, thanks to the websites and apps available. You can log into either, provide the necessary information, get the quote and buy the insurance if everything is okay. The whole process is hassle-free and takes very little time when compared to buying the insurance offline. You don’t have to run around for documentation or visit the branch for anything. You can also avail help by chatting with the online assistant who will help resolve your issues, if any.
- Comparing various options
Now you can compare various insurance schemes at your convenience before buying the insurance. You have the luxury to choose the insurance that matches your needs without any fuss.
- Low cost and paperless documentation
When you purchase insurance online, you cut down on your cost when compared to buying insurance offline. The documentation process is paperless throughout. Also, consumers who avail insurance via online modes/online are given certain discounts on insurance premium as paperless documentation cuts down the insurer’s expense too.
- Instant premium calculation and approval
The insurer websites and apps come with a built-in tool called the premium calculator to calculate insurance premium instantly. The policyholder just needs to provide the necessary details and the calculator will do the rest. The insurer can verify the information you have provided online and approve your insurance claim when you raise it.
- Easy endorsements
Insurance endorsement is any change/correction you need to make in your existing policy. It’s easy to make endorsements online whenever you need to.
- Free from agents
You don’t have to deal with insurance agents when you buy the policy, you can directly get all the information you need from the website itself. This safeguards you from fake or fraudulent insurance policies.
- Offers tranperancy
Online offers you process transparency and provides you with all the clauses and other details mentioned in the insurance policy.
- Backup of all policy documents at one place
Every policy you buy is saved under your name in the website. You can access all your insurance data anytime from the website/app.
- Easy and timely policy renewal
Renewing the policy is also easy, less time-consuming and hassle free. Most of the websites or apps have a timely reminder system that alerts you when it’s time to renew your insurance policy.
- Transfer of policy
Transferring the existing or expired insurance to another insurer can be done easily without any fuss.
Why Compare Car Insurance Policies from BankbazaarInsurance
BBI is a third-party website that offers a number of advantages when it comes to buying a car insurance:
- It is easier and convenient to buy insurance policy via BBI as the website offers a number of policies to choose from. You can compare each policy on the same platform without having to search the internet extensively.
- The website has an in-built premium calculator that helps you get the correct quote. The site links you to the insurer directly once you get the quote.
- The site offers assistance 24X7 throughout. You can reach the customer representatives or visit the website to avail any kind of help with your insurance policy.
- Their online website has a large database that imparts information and knowledge to the consumer on any topic related to insurance.
- BankbazaarInsurance makes sure you, as a policyholder get the best insurance at the best price.
- The site also provides a number of offers on different insurance schemes that you can avail.
- You can also apply for the transfer of insurance policy from one insurer to another via BBI without having to visit different insurer website.
- Policy renewal is easy when you compare insurance policies on BBI, this enables you to choose a good insurance policy while renewing.
- Serves as an integrated website for all your insurance concerns.
Compare Before Buying the Best Car Insurance Policy Online
Buying car insurance can be a daunting task if you are not adept at choosing the right coverage on your own. If you have a relatively new vehicle, then you will find auto insurance salesmen in plenty who would be willing to assist you in the matter. However, it is important that you choose a policy after good research and consideration.
There are multiple third-party financial websites that enable you to compare car insurance schemes, free of cost. You should use this facility as much as possible and compare quotes from multiple insurers to find out who is putting forth the best deal. When you do online research on the offerings out there, you will be better equipped to make a decision. Online policy comparison is also a faster and more convenient method as opposed to discussion with an agent.
Listed below are some things to consider while comparing auto insurance policies:
- Compare coverage and cost – Generally, car insurance that offers less coverage would be priced lower as well. So, instead of searching for the cheapest car insurance you should look for the most affordable one. The ideal policy would maintain a healthy balance between the coverage offered and the price of the plan.
- Consider the reputation of the insurance company – Assessing the claim history of an insurer is a sure-shot way of understanding its reliability and customer service. You should look for an insurer with a high claim settlement ratio, in addition to experience and a significant presence in the industry.
- Know your policy – Ensure you know everything there is to know about the insurance policy you are about to avail. It is always in your best interest to gather all the available information about the insurance policy you are going to purchase or renew, this way you can avoid buying a policy that doesn’t satisfy your insurance needs. You can visit the nearest branch office of the insurer or visit their official website to gather the required information on the policy.
Top Car Insurance Companies in India
Several private and public sector insurers offer car insurance plans with a host of valuable add-ons. The public sector companies have traditionally enjoyed the preference of the customer. However, there has been a surge in insurance sales by private players in the recent past.
If you are looking to buy a car anytime soon, listed below are 5 of the top auto insurance companies in India that are worthy of your attention:
- ICICI Lombard General Insurance Company Ltd.ICICI Lombard, one of the top private players, has recorded stellar figures as far as customer satisfaction is concerned. The brand has also received recognitions for its customer centricity and brand loyalty. The insurance company offers the policyholder several attractive features in its auto insurance plan, such as:
- Towing assistance
- Doorstep surveyor facility
- Online policy that can be purchased in installments
- Cashless claim settlement facility at more than 2,900 network garages
- The Oriental Insurance Company Ltd.A public sector insurer, Oriental Insurance Company, has been the most preferred car insurance provider in India for years. The brand has also bagged most of the prestigious awards in the domain, indicating its robust financial framework and dedication to excel in the business. Additionally, the insurer has:
- Quick claim settlement facility, and
- It offers valuable add-on covers to policyholders
- Tata AIG General Insurance Co. Ltd.The company has developed a vast customer base in a short period post inception through its robust distribution network and hassle-free claims service. The insurance company has also received several awards in the past, including that for the deployment of mobile technology in the insurance domain. Key features of the car insurance plan offered by Tata AIG include:
- Warranty on repair work
- Free car pick-up service
- Cashless claim settlement facility
- Settlement of all claims within 7 business days
- Add-ons that enhance the basic plan
- HDFC ERGO General Insurance Co. Ltd.HDFC ERGO is a leading insurance company in India with a customer-oriented approach and a strong distribution network. The insurer also has one of the most competitive claim settlement ratios among private players in the industry. The company is known to settle claims in an efficient manner within the shortest duration. Features of the motor insurance plan offered by HDFC ERGO are:
- Discounts on the basis of profession and age
- Quick claim settlement process
- Limited documentation for application
- Cashless claim settlement facility at more than 1,600 network garages
- Dedicated customer service team
- New India Assurance Co. Ltd.A public sector insurance company, New India Assurance is backed by strong infrastructure and capital. The brand also has an international presence and is known for the innovative insurance solutions it offers. Today, New India Assurance is undoubtedly a top auto insurance company in India. The benefits of buying motor insurance from the insurer include:
- Claim decision will be made within 3 days of submitting the request
- A surveyor is appointed for inspection within 48 hours of intimation of the claim
- Claim payment is made with minimal delays
- All grievances are acknowledged within 3 days
- Resolution of grievances are also done within 15 days
Statistics of Car Insurance companies (2016-17)
The table below highlights the various aspects related to Car insurance companies in India during 2016-17.
|Insurance Company||Incurred Claim Ratio*||Status Of Grievances*||Solvency Ratio*|
|Bajaj Allianz General Insurance||69.19%||99.28||2.61|
|Bharati Axa General Insurance||89.09%||99.81||1.65|
|Cholamandalam MS General||79.82%||99.82||1.64|
|Future Generali India Insurance||81.77%||99.86||1.72|
|HDFC ERGO General Insurance||89.43%||100||—|
|ICICI Lombard General Insurance||78.91%||97.61||2.1|
|IFFCO Tokio General Insurance||84.37%||99.94||1.6|
|Liberty General Insurance||77.29%||99.06||2.87|
|Magma HDI General Insurance||78.49%||84.96||2.07|
|The New India Assurance||86.95%||99.19||2.19|
|The Oriental Insurance||126.66%||95.36||1.11|
|Reliance General Insurance||91.39%||99.32||1.68|
|Royal Sundaram Alliance General||82.15%||99.28||1.69|
|SBI General Insurance||102.07%||95.33||2.19|
|Shriram General Insurance||103.18%||100||1.94|
|Tata AIG General Insurance||79.31%||99.93||1.8|
|Universal Sompo General Insurance||89.77%||100||1.57|
|United India Insurance||78.89%||98.51||1.15|
Incurred Claim Ratio*:
Incurred Claim Ratio is the total sum of all the claims that have been settled by the car insurance firm divided by the total sum of insurance premiums that have been collected by the insurer in the same period.
Incurred Claims Ratio is an indicator of the insurer’s ability to settle the claims.
Status Of Grievances*:
The total percentage of customer grievances that have been resolved out of the total number of the registered grievances during the year.
Solvency Ratio is an indicator of the insurance firm’s ability to settle its long-term debts.
Inclusions and Exclusions in Car Insurance
The inclusions and exclusions associated with third-party liability insurance are shown below:
|What is covered||What is not covered|
|Liability for third-party injury – If you cause injury to an individual in an accident, your insurance company will compensate that person.||Injury to self – You will not be offered coverage for your injuries in an accident.|
|Liability for third-party property damage – If you cause damage to someone’s property in an accident, your insurance company will pay for the expenses.||Damages to your car – If your car is damaged in an accident or stolen, you will not receive any compensation from your insurer.|
For comprehensive car insurance, the inclusions and exclusions are as detailed below:
|What is covered||What is not covered|
|Own-damage cover – Apart from third-party liability cover, you can claim for damages incurred by your car in an accident.||Policy not in-force – It is critical to renew your car insurance on time. If your vehicle is involved in an accident after the expiry of the policy and before renewal, the losses incurred will not be covered.|
|Personal accident cover – If you have been injured in an accident, you will receive compensation from your insurer. This will greatly reduce your financial burden during this taxing time.||Nuclear risk and war – If your vehicle is damaged due to radiation, war, terror attacks, hostilities, or invasion, you will not be covered.|
|Coverage against natural calamities – This includes protection against earthquakes, floods, landslides, etc.||Usage of alcohol and other intoxicants – If the driver of the insured car is found to be under the influence of alcohol or drugs at the time of the accident, the expenses incurred will not be covered.|
|Stolen car – If your insured car has been stolen, the insurer will pay the Insured Declared Value (IDV) of the vehicle as mentioned in the policy document.||Consequential damage – Consider a scenario in which you find that there is an oil leak and in spite of that, you drive the vehicle. If the gearbox fails, it is considered as consequential damage. The policy will not offer you coverage in this situation.|
|Man-made disasters – The insurance company will protect your vehicle from man-made hazards like terrorism, strikes, riots, fire, etc.||Deliberate accidental loss – If you stage an accident or perform any other fraudulent activity, the policy does not cover the losses.|
|Malicious acts – Underage drivers, a person driving without a valid license, or driving on the wrong side of the road are considered as malicious acts that are not offered coverage under an auto insurance plan.|
|Commercial vehicle – Insurance companies offer different insurance plans for private and commercial vehicles. If you try to perform any manipulations on this front, your claim request could be rejected.|
Most insurers offer you the facility to include some excluded events on payment of additional premium. The following coverage can hence be added to the base plan:
- Wear and tear – Losses due to wear and tear are usually not covered under car insurance policies. The IDV of your car is revised downwards on an annual basis to account for depreciation. If you opt for a zero depreciation add-on cover for your vehicle, depreciation will not be considered on the value of the damaged parts. This includes metal, rubber, fiberglass, and plastic parts.
- Electrical and mechanical breakdown – Adding an engine protector cover will ensure that the vehicle is protected against mechanical and electrical breakdown. This is particularly useful for your car if you stay in an area that is prone to flooding.
- Extended accident cover – Personal accident cover is offered for the owner-driver under all comprehensive car insurance policies. However, this cover is not available for the passengers. By paying extra premium, you can add the passenger cover to your base policy. This will offer insurance coverage for the passengers as well.
What are consumables in car insurance?
Consumables are certain substances used in vehicles; these are susceptible to wear and tear or must be replaced regularly. In other words, these items are either consumed completely or are unfit for future use. This includes nuts and bolts, screws, brake oil, engine oil, oil filter, fuel filter, lubricants, ball bearings, grease, air conditioner gas, washers, etc.
A basic comprehensive car insurance plan does not offer coverage for consumables. Insurers offer add-on covers for insuring the car’s consumables. These riders need to be purchased separately by paying extra premiums. These can be added to the base plan to enhance the insurance coverage.
Listed below are certain conditions that apply to the consumables add-on cover:
- For a consumables claim to be valid, the claim must fall under the own-damage part of the comprehensive cover.
- Repairs to the vehicle’s consumables should be undertaken within 3 days from the date of theft or loss. If you do not raise the claim within this time, it can be invalidated by the insurer.
- The consumables add-on cover is only available to cars that are below 5 years old.
What is RTI in car insurance?
Return to invoice (RTI) cover is an add-on insurance policy that bridges the gap between the Insured Declared Value of the car and its invoice value. It is an option that will offer you the on-road price of the car (at the time of purchase) in the event of a claim. The cost of RTI cover is about 10% more than the cost of a comprehensive car insurance plan. The RTI cover offers protection against a significant financial loss, such as a stolen car or a vehicle that is damaged beyond repair.
If your vehicle was only protected by a comprehensive car insurance policy, you would have received the IDV of the vehicle as claim payout. The value pertaining to the depreciation of the vehicle would not be offered to you. The RTI add-on policy covers this gap.
Here are a few things you need to keep in mind when availing a RTI cover:
- You cannot raise claim for small vehicle damages using the RTI cover.
- The RTI cover is most useful for covering financial losses that have risen as a result of the insured vehicle being stolen or the insured car being completely damaged.
- You can opt for a RTI cover of you stay at a theft-prone area, and the chances of your vehicle getting damaged or stolen is high.
- This cover gives the policyholder a relief from the depreciation factor of the vehicle.
- The RTI cover is applicable only for vehicles that have been newly purchased or that are less than 3 years old.
Car Insurance Add-On Covers – Optional but Most Important
Add-on plans offer insurance coverage for several events in addition to third-party liability cover and own-damage cover that a standard policy offers. Based on the type of vehicle you own there is a huge potential for you to save money at the time of a claim. Effectively, add-on plans make your auto insurance work better for you.
The motor insurance add-on covers available in India are as follows:
|Zero depreciation cover||This is one of the most popular riders in car insurance. This add-on entitles you to claim the entire cost of repairing damages that were caused in an accident. You will not be required to pay anything out of your own pocket. Effectively, this cover overrides the depreciation element associated with your car, and gives you the full value of the car as on the date of purchase. This add-on cover is available for cars that are up to 5 years old. Claim under the rider can be recorded up to 2 times during the policy term.|
|Engine protect cover||This rider is particularly useful for owners of new cars and high-end models. Insurance companies usually offer this cover for cars that are less than 3 years of age. The rider offers coverage for all engine-related repairs and is not only limited to accidents. The cost of engine repairs is usually very high. So buying the rider will be very useful if you stay in an area that is prone to waterlogging. Regular wear and tear of the vehicle and negligence on the part of the owner are exclusions under this rider.|
|Return to invoice cover||If your vehicle is equipped with this insurance cover, you will receive the original invoice value of the car (including road tax and registration charges) in the event of its theft or total loss. In effect, this rider does not take into account the IDV of your car; instead it pays you the market value. However, if the same model of car is available in the market at a lower cost than the purchase price, the current price is taken into account. This cover is usually offered for cars that are less than 3 years old. Imported vehicles may not be offered coverage under the rider.|
|Loss of personal belongings cover||This add-on enables you to avail compensation for the theft or loss of personal belongings such as electronic equipments, laptop, etc. from the locked car. The compensation received under this cover can be up to Rs.50,000.|
|NCB protect cover||If a policyholder does not make any claims during a policy year, he/she is rewarded with a No-Claim Bonus (NCB). The benefit is translated into a reduction in the premium for the following year. This bonus can accumulate for several years and amount to a considerable discount in premium. However, if the policyholder raises a claim, the NCB will be reset to the original value. On taking the NCB protect cover, the policyholder can preserve the accrued NCB even if he/she raises a claim. Some insurers limit the coverage under this rider to one own-damage or total loss claim in a year. Vehicles that are older than 3 years cannot avail this rider coverage.|
|Roadside assistance cover||Under this insurance cover, the policyholder will receive services such as towing, refuelling, flat tyre change, arranging for a mechanic, etc. in the event of car breakdowns. The facility is available round the clock as well. Some insurers offer this service at a nominal fee (i.e., as an add-on cover), while others have it in-built with the base plan. Several insurance companies offer this cover only for renewed policies, as opposed to fresh ones.|
|Personal accident cover for passengers||This add-on cover offers compensation to the passengers in the insured vehicle if they face death or partial and permanent disabilities in an accident. The maximum sum assured under this cover is usually Rs.1 lakh per insured member.|
|Daily allowance||If the insured car is stolen or is undergoing repairs in a garage, this add-on cover offers compensation to the driver so that he/she can hire another vehicle. The amount provided each day varies between Rs.500 and Rs.1,000, based on the model of the insured car. The amount is usually provided for 10-15 days. The exclusions under this rider are:
|Consumables cover||If your car is protected with this cover, you can avail compensation for the money you spend on screen washers, nuts and bolts, bearings, engine oil, etc. when you get the car repaired post an accident. Standard motor insurance policies do not offer compensation for the amount spent on these elements. Vehicles that are more than 3 years old are not eligible for this cover.|
|Key replacement cover||If you have opted for this add-on cover, the insurer compensates you for the expense of replacing your lock and key in the event of a theft involving your car.|
Things to Remember Before Buying a Car Insurance Policy
You have decided to get your dream set of wheels and are sieving through the discounts offered by manufacturers. You should note that this is the right time to shop for car insurance as well. It is crucial that you buy the right auto insurance policy and add-ons, so that you are adequately covered.
Listed below are few things that you should keep in mind when buying motor insurance:
- Assess the amount of coverage you need – Insurers offer auto insurance plans that provide third-party liability cover and comprehensive cover. Although it is advisable to buy a comprehensive insurance plan, you may opt for third-party liability cover if you deem it appropriate for your needs.
- Check if you need add-on coverage – Even if there is a persistent insurance agent on your heels advising you to buy add-on coverage, you should buy it only if you feel the necessity. For instance, buying a waiver of depreciation cover is useful as it allows the claimant to receive the full claim amount, including the value of metal and plastic parts that have been replaced.
- Be aware of the No-Claim Bonus (NCB) – If you do not make any claims in a policy year, the insurer rewards you with a No-Claim Bonus, which could result in a reduction in premium for the subsequent year. Some insurers offer you discounts up to 50% on the premium payable if you maintain a claim-free streak. This is a significant bonus and should be preserved as much as possible.
- Explore the option of voluntary excess – Voluntary excess is the amount that you will bear from your own pocket in the event of a claim. This amount is agreed upon with the insurer at the inception of the policy. The advantage of opting for voluntary excess is that it would bring down your premium by a good amount.
- Compare policies online before buying – As explained above, it is important that you explore the options available in the market when deciding on an insurance policy. You could even save up to 20% on the premium amount by doing so. You should also be aware of the fact that buying auto insurance online is a cheaper option. It is important to compare the offerings from your car dealer, insurance agent, and online portals before finalising on the plan.
- Check if the insurer is offering cashless claim settlement facility – When picking an insurance company, make sure that it has a good reputation of settling claims on time. Also, ensure that the company is affiliated to network garages where you can avail cashless claim settlement. If you are getting your car repaired after an accident, a cashless process is totally hassle-free; so you should choose that option if you can.
- Make sure you do not nullify the insurance while customising your vehicle – If you choose to customise your car, ensure that the changes do not make the insurance coverage void. You should stick to minimum cosmetic changes, so that your insurance is preserved. Do check with the insurance company on the limits pertaining to customisation.
Get the Benefits of Buying Car Insurance Online
The digital mode of selling all kinds of goods has seen an astonishing growth in India over the past few years. With the increase in the use of smartphones and strategically designed mobile apps, e-commerce now seems to be at the peak of its potential.
Even the insurance market is able to reach out to its customers through the internet. In fact, the online mode of insurance purchase is most preferred by the digital natives.
Listed below are the benefits of buying car insurance online:
- More economical – Online car insurance policies are cheaper than those offered by an agent. Insurance providers offer lower premiums on online policies, as the entire process involves significant operational savings that can be passed on to the customer.
- Convenient and saves time – When you buy insurance online, you will not be required to update long and tedious application forms. Most financial websites that sell insurance have a user-friendly interface where you can easily update information about yourself. Moreover, the hassle of standing in long queues can be avoided.
- Instant policy – Policy issuance is extremely quick when you buy online. This is because the delays involved in processing physical documents is avoided.
- All policy documentation in one place – Online policies can be accessed from anywhere in the world. This is very convenient, as you need not carry your policy documents around.
- Updates to policy – If you require any updates to be performed in the policy document, the offline mode would cost you a lot of time. You would have to re-submit the updated details to the insurance provider with an endorsement form. In the online mode, a simple self-declaration is sufficient when requesting for updates.
- Renewal reminders – When you have an online policy, it is very easy to reload the information at the time of renewal. Some websites also offer you timely reminders so that you can renew your auto insurance on time.
- Review policies and read reviews from other customers – Before buying a plan, you can read reviews put up by other customers. You can also compare features of multiple policies and understand the issues faced by customers before you decide on a plan. Comparing insurance plans across multiple insurers is not possible if you opt to buy insurance through an agent.
- Paperless transactions – When you buy insurance policies offline, you will have to fill up a lot of documents. On the other hand, online insurance purchase involves limited or no paperwork. Besides being environment-friendly, these transactions are highly efficient as well.
Misconceptions about Purchasing Auto Insurance Online
There are many who display reluctance in buying car insurance online. The overall lack of enthusiasm can be attributed to several factors.
- Authenticity – All policies that are issued by a licensed broker, insurance company, or web aggregator are deemed authentic, as long as the intermediary is registered with the Insurance Regulatory and Development Authority (IRDA). The IRDA ensures that there is no malpractice involved in policy sales through those channels. So, you can rest assured that your insurance policy will be a legitimate bond.
- Reliability – As indicated above, online sales of all sorts of goods are flourishing in the country. The online mode of policy purchase is considered as a more convenient and cost-effective option. Since you perform banking activities, purchase of airline tickets, and do hotel bookings online, you can be assured that buying insurance packages online is equally safe. Third-party financial aggregator websites have stringent security policies and these comply with global security standards. This ensures that transactions through these websites are absolutely safe.
- Geographical distance – Some users do not prefer to buy insurance plans from online portals, as they fear that the claims process may be difficult to follow-up on. The general perception is that if the insurer is within the city, the claim processing cycle will commence immediately as opposed to an online claim. But the truth is that an online insurance broker would assist you in following up on the claims process and make it so much easier.
Documents Required to Buy Auto Insurance
Car insurance companies usually request you to furnish the following documents while purchasing car insurance online:
- Driving license – This indicates that you can legally drive and hence, are eligible to buy car insurance. It also enables insurance companies to assess your driving record before offering you the policy. A good driving record will bring down your insurance premiums.
- Bank information – Insurance companies may run a credit check before issuing you a policy. Your bank account details are important for this.
- Vehicle details – The insurance company will need to know the details of your car in order to decide on a premium. The latest models with good safety features usually cost less to insure when compared to older models.
- Other details – The car insurance provider will also request you to provide general information, such as your name, address, date of birth, etc.
How to Verify the Authenticity of Your Motor Insurance Policy?
Sometimes it so happens that the insurance policy you purchase turns out to be a fake one. Buying the insurance policy doesn’t end at just buying it, it is of vital importance that you also cross-check the insurance policy documents before signing or buying it so as to ensure the authenticity of the insurance policy. The steps below will help you recognise a fake insurance policy:
- Contact your insurer
Contact the insurer via proper channels. When you visit the official website or branch office, ensure that they are genuine. In case of websites, ensure that they are secure and original site of the insurer and not a fake one. When it comes to visiting a branch office, ensure that they hold the genuine certificate stating them as a genuine branch office of the specific insurer. In case you are going via third-party insurance agents/dealers, ensure that they hold a genuine licence that allows them to sell insurance policies. When contacting the insurer, get the phone number/toll-free number for customer care via the official website.
- Ask for receipt
Ask for the invoice copy of the insurance premium when you buy the insurance. The premium paid will be present in the insurance document itself but it is vital that you have an invoice stating the correct insurance premium amount.
- Check the information provided
When you receive the insurance policy, check the deductibles (like compulsory deductibles, voluntary excess), NCB (no claim bonus) and IDV (insured’s declared value) mentioned in the document to ensure that the insurance policy is genuine.
- Ensure that you sign on the proposal form
When you receive the insurance proposal form, make sure you sign the form yourself and not allow anyone else to sign on your behalf.
- Compare the policy with online site
Visit online websites of the insurers and check the various insurance options available to you. Compare them and choose the one that best suits your insurance needs.
- Check all the details
It is your responsibility as a prospective policyholder to ensure everything that you discussed and agreed with the insurer or the insurance agent is laid out correctly in the document. You have to take your time and read through the document. Also ensure that the insurer details provided in the document are correct. Your personal details mentioned in the document also need to be correct.
- QR code
Every car insurance policy has a QR code as it has been made mandatory by the Insurance regulatory and development authority of India (IRDAI). If you have a smartphone, install an app that reads the QR code. You can get the insurance details by scanning the specific QR code of your insurance policy.
How to Purchase Car Insurance Online?
You can buy car insurance plans directly from the website of insurance companies. Alternatively, you can make use of the facility offered by neutral third-party financial websites. The advantage of buying policies from financial aggregators like BankBazaarInsurance include:
- You can be assured of a seamless experience with minimal paperwork.
- You will be able to compare the offerings in the market and make a judicious decision.
- You will get the expert assistance of the intermediary in resolving claims and other issues.
- The payment process is fast, secure, and completely hassle-free.
Here are the *steps to be followed when purchasing or renewing car insurance policy online:
- When purchasing the car insurance policy online:
- Visit the website to purchase the insurance policy
- Click on the motor insurance tab present on the main page
- Select the car insurance plan you want to purchase from the options available for private vehicle or commercial vehicle
- After selecting the plan, click on the “buy now” tab
- The page will get redirected to another page that has the “Insurance for new vehicle” tab which you have to click on
- On clicking the above mentioned tab, another page will open asking for your details, such as your phone number, your name, etc.
- Next, provide the registration number of your vehicle and click on the “purchase” tab
- This will redirect you to the payment page where you can use debit card or credit card or netbanking to purchase the car insurance policy
- When renewing the car insurance policy online:
- Visit the official website to purchase the insurance policy
- Click on the motor insurance tab present on the main page
- Select the car insurance plan you want to renew from the options available for private vehicle or commercial vehicle
- After selecting the plan, click on the “buy now” tab
- On the next page, click on the “Renew the policy” tab
- Enter your the registration number of your vehicle and your existing Bajaj Allianz policy number on the next page
- Click on the “proceed to renew” tab present on the next page
- This will redirect you to the payment page where you can use debit card or credit card or netbanking to purchase the car insurance policy
*Please note that the above steps vary from insurer to insurer.
Agents vs Dealers vs Brokers
In an attempt to improve insurance penetration in the country, the government has been encouraging several authorised entities such as online brokers, banks, car dealers, etc. in distributing insurance. In order to understand the distribution landscape better, let us take a look at the main differences between insurance agents, brokers, and car dealers:
|Insurance agents||Brokers||Car Dealers|
|An insurance agent is an entity authorised to represent the interest of the insurance company.||The insurance broker is a representative of the customer, not the insurer.||Car dealers are not licensed insurance distributors. They just act as intermediaries between the insurance company and the customer. They receive a commission from the tie-up between the car manufacturer and the insurance company.|
|The current regulations indicate that a bank or agent cannot represent more than one insurer.||Brokers have a fiduciary responsibility towards customers. This implies that there is a relationship of confidence and trust between the customer and the broker.||Insurance policies bought from car dealers can be more expensive than those bought from brokers or through online modes.|
|Agents are trained and licensed to sell insurance policies, but they cannot be held responsible for the advice they provide. In the event of a misguided advice, the insurance company will be held responsible.||Brokers are ideally supposed to browse through the insurance products offered by various insurance companies and offer you the one that suits your needs. Effectively, they would keep your interest paramount. Brokers have greater accountability, when compared to agents.||It is advisable to look beyond the insurance offered to you by the car dealer. If you shop around a bit, you will certainly find a better deal.|
|An insurance provider can cancel the license of an agent, if he/she has been responsible for wrong advice or other such issues.||A customer can file a complaint in the court against an insurance broker.|
Mistakes to Avoid When Buying Car Insurance
For most, buying a car implies spending a lot of time and effort in narrowing down on the most suitable model. However, not many prospective car owners show that discipline while purchasing an insurance policy for their cars. Most Indian car buyers look to secure the cheapest insurance mandated by law, and in the process they miss out on the most crucial aspects of buying auto insurance. Here are a few mistakes that you should avoid when buying motor insurance:
- Comparing policies online – It is important to compare policies from different insurers to understand the coverage and costs.
- Buying low premium policies – Policies with lower costs also have minimal coverage. You should assess if you would require a comprehensive car insurance cover based on the possible repair and maintenance expenses in the future.
- Bundling insurance for discounts – Some insurers offer additional benefits to customers who opt for health, home, and auto insurance from the same company. This is a great way to save on your car insurance premium.
- Opting for unnecessary add-ons – A standard policy package will come with several add-ons that may not offer the coverage needed for your car. So, you should avoid the temptation to buy unnecessary add-ons with your policy.
- Disclosing driver details and history – Several factors pertaining to the driver and his/her driving history affect car insurance premiums. The driver’s age, history of accidents, safety accessories in the vehicle, usage of the car, etc. are some of the criteria that determine the premium. If you intend to hide a few details to avail low premium, you are actually putting yourself in danger. If the car insurance company finds out that you had not disclosed all facts accurately, the policy may be invalidated.
- Reading the fine print – Once you have decided to buy a car insurance policy, you should carefully read the terms and conditions within to understand the extent of coverage. Otherwise, you would assume that several aspects fall under the coverage, when in fact, they don’t.
What are Compulsory and Voluntary Deductibles in Car Insurance?
Deductible or excess is essentially a portion of the claim amount that will be borne by the policyholder before the policy kicks in and pays out the remaining claim value. Deductibles can be classified into two types, i.e., compulsory and voluntary. The main differences between the two are elucidated in the table below:
|Compulsory deductible in car insurance||Voluntary deductible in car insurance|
|This is a fixed amount that is agreed upon at the time of policy inception. This is usually a small amount and is based on the age of the car, model, engine capacity, etc.||This is the amount that the policyholder chooses to bear, based on his/her risk and affordability.|
|The compulsory excess amount is compulsorily paid by the policyholder.||In the event of a claim, the policyholder will have to pay the compulsory excess and the voluntary excess.|
|Premiums will not be lowered on the basis of compulsory deductibles.||The voluntary deductible amount chosen alters the premium for the policy. If you choose a high voluntary deductible, the premium will be relatively lower.|
|This is a mandatory contribution in a claim.||This is a purely optional contribution.|
Deductibles are part of comprehensive car insurance policies. Compulsory deductibles actually discourage policyholders from raising small claims. A high level of compulsory deductibles also ensures that drivers will focus more on road safety so as to avoid damages to the vehicle and subsequent claims.
Individuals who are confident of their driving abilities or those who are able to pay money without difficulty in the event of an accident can opt for high voluntary deductibles. This will help them save a great deal on the premium.
How to Lower your Car Insurance Premium
With the recent GST implementation, car insurance premiums have seen a definitive hike. In order to ensure that you get the best deal on your auto insurance policy, you should keep the following tips in mind:
- Policy lapsation – If your motor insurance policy moves into the lapsed status, you may not qualify for NCB which lowers your future premium. So, ensure that you follow the payment timelines strictly.
- Option of deductibles – Increasing the amount corresponding to voluntary deductibles will reduce your auto insurance premium. However, when you opt for deductibles you should ensure that you decide on an amount that you can pay comfortably at the time of a claim.
- Shop around – Assessing the different car insurance products available to you in the market is a sure-shot way of getting hold of a plan that best suits your needs. You can compare car insurance policies at websites like BankBazaarInsurance absolutely free of cost.
- Decision on the coverage – Usually, auto insurance policies have predefined features. But if possible, opt out of features that you think will not be useful to you. You can save significantly on the premium by doing so.
- Avoid claiming small amounts – Very small claims work against the objective of auto insurance. When you raise a small claim, you stand to lose the No-Claim Bonus that you have diligently accumulated over the years. If you observe 5 claim-free years, you may even get a discount in renewal premium of around 50% through NCB. In the case of some small claims, the final amount claimed may even be lesser than the processing fees and loss of NCB. So, refrain from making small claims to save on renewal premiums.
- Old to new policy – If you are selling an old car, ensure that you procure the no-claim certificate from the insurer. You can reserve this bonus for a few years; so you don’t need to use it with the insurance of a new vehicle immediately. When you eventually buy a new car, you can utilise this benefit to get a reduction in premium on the new car insurance.
- Installation of safety features – Equipping your car with steering wheel locks, anti-theft alarms, air bags etc. could translate into a 5% discount in your car insurance premium. If you are a member of the Automobile Association of India (AAI) or the Western India Automobile Association (WIAA) you can get further benefits on auto insurance.
- Limiting customisations – Customising your vehicle with features such as spoilers, alloy wheels, automotive night vision, etc. may lead to higher car insurance premiums. Hence, it is advisable to limit your customisations as much as possible.
- Loyalty – Most insurers offer discounts to customers who hold multiple insurance policies with the same company. This is a great way to lower your auto insurance premium.
Anti-Theft Devices for Cars
A number of cars today come with anti-theft devices. With the growing number of robberies, it has become imperative to install anti-theft devices in the cars. Anti-theft devices not only safeguard the cars but also lower the car insurance premium.
There are different kinds of anti-theft devices available and they are categorised as below:
- Keyless lock device
This is one category of anti-theft devices that uses electronic coding to start the car instead of a mechanical key. You can start using the car only after you have provided the numeric code depending on the type of receiver used. If its a keyboard placed near the driver’s door, enter the code using the same and if a sensor is placed near the driver’s door, unlock the car by swiping the chip with the code over the sensor.
- Steering wheel lock
This is another smart device that protects your car from being stolen. As the name suggests, this device locks your steering wheel in a fixed position. No one can use the steering wheel without opening the lock.
This anti-theft device alerts the owner and people near the car with high-pitched sound when the car is being tampered with.
- Electronic Immobilizers
These are built-in transponders that send signals to the fuel pump and ignition system. The car cannot be operated unless the ignition starters are given proper signals.
- Vehicle Tracking
This particular device can be used to track the vehicle after it gets stolen. The device offers real-time GPS location of the stolen vehicle that can help you trace and retrieve the vehicle.
- Gear Locks
This is a device used to lock the gear in your car so that if your car is broken into, the thief will not be able to use the car.
Based on the information given above and depending on the safety factor of the place where your vehicle is being parked at, your affordability, etc. choose a safety device that would protect your car from being stolen or getting involved in a mishap.
Do New Cars Already Have Anti-Theft Devices?
Most of the new high-end cars being launched in the market have some or the other anti-theft device installed in them.
How to Renew an Expired Car Insurance Policy
It is crucial to renew your car insurance on time, as it keeps you away from unexpected circumstances and monetary liabilities. If a car insurance plan is not renewed on time, it is referred to as a lapsed policy. An expired policy is not desirable due to the following reasons:
- When a policy expires, it is not valid anymore. If you drive with an expired car insurance policy, you may be slapped with penalties or even face legal action.
- If you hold expired car insurance, you may incur heavy financial losses in the event of an accident.
- The longer you wait for the renewal of your auto insurance plan, the more cumbersome the entire process becomes. When renewing an expired policy, you will also have to pay for the survey of your vehicle.
- If a car insurance plan is in lapsed status for more than 3 months, you may lose your accrued NCB.
Listed below are steps for renewing your expired car insurance:
Step 1 – Get in touch with your insurance company at the earliest. Your insurer will be able to advise you on the next steps, and even prevent a situation where you may have to bear a penalty.
Step 2 – Do not drive the car until the insurance is renewed.
Step 3 – Renewing your car insurance plan online is a good option, so that the policy will be reinstated within hours. In case you are looking to buy a new insurance policy, you can do the necessary research and evaluate different plans through online comparison tools available at third-party financial websites.
Step 4 – Once you have decided on a plan, contact the insurer to understand about the documentation needed.
Step 5 – Get an appointment for survey of the vehicle at the earliest. This step is mandated by most insurers as your insurance coverage has expired. A representative from the insurance company will review pre-existing damages of your car before providing approval for motor insurance.
Step 6 – Within 24 hours of getting the approval from the surveyor, you should buy the policy.
Car Insurance Renewal Checklist
When renewing your car insurance policy, you should keep your expired policy and a copy of the Registration Certificate (RC) handy. Moreover, you need to be ready with other details such as the city where the car was registered, the address of the RTO, date of first registration, car model number and company, etc.
This list is just indicative; so you should check with your insurance company for the complete list of documentation required.
How to Go for Online Car Insurance Renewal
Renewing car insurance online is a quick and hassle-free process. Listed below are the steps you need to follow for the same:
- Log in to the insurer’s website and select the option for policy renewal. You may be required to clarify if you are a new customer or an existing one.
- You will get an application form that will have to be filled out accurately and submitted. The form should be updated with the details of the expired policy; so keep that handy.
- The next step is the payment. Premium payment can be done through debit or credit card.
- Once the payment has been made, the insurance company will verify the information you have submitted in the form. You will then receive an acknowledgement of the renewal request.
Another great way to buy car insurance is through the websites of neutral financial aggregators. You will receive expert guidance from these companies in identifying a policy suited for your needs.
Hassle-Free Online Car Insurance Renewal
Renewing car insurance online is a very convenient method. It is quick, reliable, and highly secure. Moreover, you have the option to compare policies across several insurance companies and select one that is best suited for your car. You should make use of this facility as much as possible.
What is a Car Insurance Claim?
A car insurance claim is an application for compensation to the insurer pertaining to the terms of your insurance policy post a mishap. A car insurance claim can be cashless claim or reimbursement claim.
- Cashless Claim
Under this type of claim, the insured can get his/her car fixed at an authorised garage post a mishap and the insurer will pay the garage for the repairs.
- Reimbursement Claim
Under this type of claim, the insured can get his/her car fixed at any unauthorised garage post mishap for which he/she has to pay the garage. Later the amount is reimbursed by the insurer after receiving the payment receipt.
How to claim on your car insurance policy
With a new car comes a number of added expenses. Some of these include the operating and maintenance costs of the vehicle, which cannot be avoided. An unfortunate incident such as an accident or theft may set you back by a huge amount, unless your car is equipped with a comprehensive auto insurance plan. Read on to understand the procedure for raising car insurance claims in India.
- Claims for own-damage: If your car was involved in an accident, you should follow these steps to claim for damages:
- Inform the insurance company – You should get in touch with the insurer at the earliest. Most insurers follow strict timelines, as would be mentioned in the policy documentation. If you had bought the plan from a third-party website, you can contact them as well.
- File an FIR – Although it may not be mandatory for claim settlements, it is advisable to lodge an FIR.
- Evaluation of the damage – Once the insurance company has been notified, an inspection of your vehicle will be scheduled. A representative from the insurance company will inspect your car and have it moved to the nearest network garage.
- Claim settlement – After the survey, your insurer will analyse the claim request and send an approval to the garage. The garage will have to provide an estimated cost for the vehicle repair and timelines for the same. The insurer will be in touch with the network garage for an overall view of the extent of damage and the way in which the repair work is proceeding. You will have to bear the compulsory deductible and variable deductible components, as stated in the policy document. Once the expenses are settled, you can drive your repaired car home.
- Claims pertaining to third-party liability: If you are responsible for an accident in which a third-party suffers injuries or damage to property, here is what you need to do:
- Lodge an FIR – Following the accident, either you or the third-party should lodge an FIR at the nearest police station. Keep a copy of the FIR for future reference as well.
- Share policy document – You should mandatorily share a copy of your car insurance policy with the third-party, so that he/she can raise a claim on it.
- Claim at Motor Tribunal – According to the Motor Vehicles Act 1988, third-party liability claims are raised at the Motor Accident Claims Tribunal (MACT). The claim can be raised by the third-party at the tribunal closest to his/her residence or yours.
Listed below are certain points to note involving third-party claims:
- Compensation for disablement or death of the third-party is dependent on several factors, including the affected person’s earning capacity.
- Insurers pay a maximum amount of Rs.7.5 lakh as liability towards property damage. If the compensation amount is higher than that, the car-owner will have to bear the extra amount.
- Several parties are involved in a third-party liability claim. This could lead to the entire process extending for a long duration. Hence, it is advisable to see if the situation can be settled amicably outside the tribunal.
- Claims for theft: It is important to understand the process of claim settlement when a theft is involved.
- If you find that your car has been stolen, you will have to first file an FIR at the nearest police station.
- You should then intimate your insurance provider and raise a claim. When raising claims, you should submit the following documentation:
- A copy of your car’s registration certificate (RC)
- A copy of your driving license
- A copy of the FIR
- The first 2 pages of your car insurance policy
- A detailed letter that is addressed to the RTO
Partial Claim Settlement
There may be instances where your insurance company may pay a part of the claim amount but not the entire value. This occurs when your insurer has assessed that the level of damage suffered by your car is not as huge as you have reported. It also depends on the claim specifics, terms and conditions, and the type of coverage.
In order to avoid such a scenario, you should be familiar with the policy terms and conditions before raising a claim.
Documents Required for Car Insurance Claim Settlement
If you are reporting a claim under motor insurance, you should first get in touch with the insurance company at its customer care number. The details you need to provide when raising a claim are:
- Insurance policy number
- Your contact number
- Name of the policyholder
- Time and date of the accident
- Vehicle number
- Location of the loss
- Model and make of the car
- A short description of how the accident occurred
- Extent of the loss
- Name of the garage with contact details
- Contact details and name of the third-party in the event of a third-party liability claim
Other documents that you need to keep handy are:
- For accident damages:
- Proof of insurance
- Tax receipt and a copy of the registration book (The originals may be needed for verification later)
- Copy of the driving license of the insured driver
- FIR (For third-party liability claims)
- Estimated cost of repair at the garage
- Repair bills and receipts after payment is made at the garage
- Claims Discharge Cum Satisfaction Voucher, signed across a revenue stamp (Only for a cashless claim)
- For theft cases:
- Original policy document or certificate
- Original registration book with endorsement of theft from the RTO
- Original tax payment receipt
- Details of the previous insurance
- Policy number
- Insurance provider
- Duration of insurance
- All keys, warranty card, and service booklets
- Acknowledged copy of the letter to the RTO intimating theft and classifying the vehicle as ‘Non-use’
- For liability claims:
- Form 35 signed by the financer, undated and blank
- Form 28, 29, and 30 that have been signed by the policyholder
- Consent towards the claim settlement from the policyholder and financer
- Letter of subrogation
- Claim Discharge Voucher signed across a revenue stamp
- NOC of the financer if the claim is settled in favour of the policyholder
The above lists are only indicative. The insurance company may request for additional information or documents, if required. The insurer may also send a representative to verify facts, if needed.
What is Cashless Car Insurance?
The cashless claim facility was initially a part of the health insurance industry. It has gradually gained popularity and has become an inherent part of the car insurance sector as well. The facility is very helpful to a policyholder who does not have a very high disposable income.
In the event of an accident involving the insured car, the vehicle can be taken to a garage affiliated to the insurance company. Such service centres are referred to as network garages. The repair work done on the car will be completed in an efficient manner and the policyholder is not required to pay the bill. He/she would only have to bear a minimal part of the claim amount that corresponds to deductibles. The final bill is settled between the insurance company and the garage in a quick and hassle-free manner.
Key features and benefits of cashless car insurance include:
- Usually the services offered by network garages are better in comparison to local garages.
- Cashless motor insurance essentially saves you a lot of time and effort and minimises the impact of overwhelming out-of-pocket expenses that come at a short notice.
- When buying a comprehensive auto insurance policy, you should check if the insurer has a list of network garages where you can get your car repaired.
- Some insurers also offer the cashless claim facility to used cars.
- If authorised network garages are out of reach, then you can get the car repaired at a local garage and raise a reimbursement claim for the expenses. This way, you will have to pay for the repair work up front. You will receive the claim amount only after the insurer approves it.
- The list of network garages will be provided on the insurance company’s website. You can also call its customer service helpdesk to identify the network garages in your area.
- The most significant benefit of cashless claim facility is the relief that the insurer will directly handle the expenses without you having to pay up front. Most insurers also offer free pick-up, car wash services, and towing facilities as part of the package.
Car Insurance Name Transfer Procedure
Buying used cars is a practice that is becoming very popular in the current economic climate. Transferring car insurance is a part of the purchase process of the used car. The good news is that it is not difficult to do.
When you buy a used car you have to transfer the registration certificate. You must treat this as a very important step in the car purchase process. The transfer of car insurance works along with the car ownership transfer. You can request your insurance company to process the car insurance transfer.
The documents required for the transfer of car insurance are mentioned below:
- Old insurance policy document
- A copy of the new registration certificate (Form 29)
- Application form for the new insurance
- No Objection Clause (NOC) from the previous car owner/policyholder
- The difference in the No-Claim Bonus amount
- Inspection report, based on the survey done by the insurance company
The NCB is an important aspect that should be given some thought when you transfer a car insurance policy. NCB is a reward given to the policyholder for observing claim-free years. It is not tagged to the vehicle. So, if you are buying a used car the NCB already accumulated on that car’s insurance policy cannot be transferred in your name. The NCB will remain with the previous owner and can be used by him/her on the insurance of his/her next car.
The old car owner will have to request for an NCB retention letter to the insurance provider so as to preserve the NCB. The following documents will have to be submitted when applying for the NCB retention letter:
- Letter requesting for the cancellation of policy
- Application for the intimation and ownership transfer of the car (Form 30)
- Original copy of the policy and certificate of insurance (Form 51)
- A copy of the registration certificate book that shows the name of the new owner
- Notice that indicates the transfer of ownership of the vehicle (Form 29)
- Proof that the car was delivered to the new owner
Once the car ownership is transferred, the insurance policy held by the previous owner is not valid anymore. It is mandatory that the registration and insurance documents are in alignment at the time of a claim.
How to Transfer Old Insurance to Your New Car?
In India, the insurance of a used car can be transferred to either a new car owner or to a new vehicle owned by the same person. The procedures and documentation for the transfer is the same in both cases. It is advisable to analyse all documents and procedures ahead of time so that there are no issues during the actual policy transfer process.
As per the guidelines set by the Insurance Regulatory and Development Authority of India (IRDAI), the name of the policyholder and his/her address should be the same in the vehicle registration document and insurance policy document. In case the name and address doesn’t match, your claim will not be settled nor will your liabilities be covered by the insurer.
You need to submit the following documents along with a Rs. 50 transfer fee to the insurer for transferring your car insurance transfer:
- New copy of the registration certificate/form 29.
- Inspection Report (to be carried out by the insurance company).
- Old policy document.
- New application form.
- No Objection Clause (NOC) from the previous policy holder.
- No Claims Bonus difference amount.
Myths About Car Insurance
Understanding the legal jargons in a car insurance policy document is quite a task in itself. To add to that, if you are faced with car insurance theories that do not sound right at all, you should be equipped to weed out the truth from fiction. Listed below are some auto insurance myths that will set you on the right path:
Myth 1 – Buying car insurance is cumbersome.
Purchase and renewal of car insurance can be done easily online at the insurer’s website or at third-party financial websites. It just takes a few minutes for the process. Some insurance companies today also have the Photo Quote option wherein you can submit a photograph of your current policy document and receive an instant quote for policy renewal.
Myth 2 – Car insurance offers coverage only for accidents.
In addition to accidents, car insurance also covers natural calamities such as floods, earthquakes, lightning, landslides, etc. Man-made disasters like theft, burglary, and damage in transit are also covered.
Myth 3 – The car insurance claim process is very inconsistent.
This is certainly not the case. You can raise claims online in a hassle-free manner. In order to raise a claim, the policyholder will have to log on to the insurer’s website and update a claim form. The progress of the claim can also be tracked online. Within 24 hours of claim registration, the insurance company will get back to you for document submission. You will receive the assistance of the insurer at every stage in the claim process.
Myth 4 – If my insured car is involved in an accident, I can claim for an amount equivalent to the cost of a new car.
No, this is not the way car insurance works. When the insurer calculates the current cost of your car (IDV), the depreciation amount is deducted from its original price. So, the maximum amount that you can receive under the insurance coverage is this value of your car post depreciation.
The insurer makes sure that after you receive the claim amount, you will be in the same financial position as you were in before the damage. This indicates that the principle of indemnity rides on the insurance amount.
Myth 5 – My friend was driving my car when the accident occurred. So, he is responsible for the damages.
This is not true. The owner of the insured car will be responsible for all accidents the car is involved in, irrespective of who was driving it at that point of time.
Myth 6 – My personal belongings inside the car are covered.
In an accident if you incur loss/damage to personal belongings inside the car, you will not receive any reimbursement through car insurance.
Why is Bumper to Bumper (Zero depreciation car insurance ) Insurance So Popular?
This rider policy is favoured by most of the Indian car owners because of the advantage it offers by protecting the market value of the car against depreciation. The high-end cars tend to be more expensive than the other models, hence it is considered an asset by many to have Bumper to Bumper insurance policy added to one’s base policy.
Zero Depreciation Car Insurance Vs Comprehensive Coverage
Zero depreciation cover, also known as bumper to bumper insurance, can be added as an optional coverage to your base car insurance plan. The difference between a comprehensive car insurance policy and a plan with zero depreciation cover is as shown below:
|Parameters||Comprehensive Cover||Zero Depreciation Cover|
|Premium||Varies based on the coverage chosen, the policyholder’s history, and the insurance company.||Zero depreciation cover can be added to the comprehensive plan by paying an additional premium.|
|Claim settlement||At the time of a claim, the sum assured is based on the Insured Declared Value of the vehicle. The value of the depreciated parts are not part of the coverage. So, the policyholder does not receive the entire cost of repair.||If this cover is opted for, the policyholder receives the entire expenses incurred, including cost of depreciated parts.|
|Age of the vehicle||This cover is offered for old and new vehicles.||The zero depreciation rider can be taken only for vehicles that are less than 5 years old.|
How Much is No-Claim Bonus for Car Insurance in India?
There are certain aspects of NCB that you should be aware of in order to utilise it effectively:
- NCB is available to the policyholder only when he/she renews the car insurance policy.
- As indicated above, NCB belongs to the policyholder, not the car.
- NCB is not transferable between people, except in the rare instance where the legal heir inherits the vehicle at the death of the policyholder. The car ownership and insurance in this case will be transferred to the heir. Along with it, the NCB will be moved.
- The NCB discount is offered only on the own-damage part of the premium. The third-party liability premium is not affected by it.
- It is tempting to raise claims for every small dent that surfaces on your vehicle’s body. However, you should be very careful when you do so. Once you raise a claim, your hard-earned NCB resets to the original value. So, be prudent when making a decision on the claim. Compare the estimated claim value with the reduction in premium that will be provided by the NCB. If the claim amount is smaller than the NCB discount, then you should ideally pay for the repair from your pocket. Also, if you have an old car that you are preparing to sell, you should forgo small claims to preserve the NCB.
The NCB rate grid followed by most insurance companies in India is as follows:
|NCB after 1 claim-free year||20% discount in premium|
|NCB after 2 consecutive claim-free years||25% discount in premium|
|NCB after 3 consecutive claim-free years||35% discount in premium|
|NCB after 4 consecutive claim-free years||45% discount in premium|
|NCB after 5 consecutive claim-free years||50% discount in premium|
Rewards for Car Insurance Loyalty
Insurance companies spend a lot of money on advertising to lure customers into buying their products. The promise of lower premiums and other benefits may be enticing to the common man. But assess the benefits that you are already enjoying with your current insurer before you think of switching. You may find that the perks of being loyal to your insurance company far outweigh the ones that you are promised by another insurer.
Listed below are some of the rewards that are offered to customers for their loyalty:
- Many insurance companies offer you longevity or tenure discount. This translates into a rate cut for a specific period of time. The amount of time you have to be insured with a company to be eligible for the discount varies. Some insurance providers also offer discounts when customers switch to avail their services. This discount may be more than the loyalty benefits offered by their previous insurance companies.
- Some insurance providers offer accident forgiveness schemes that ensure your premiums are not raised the first time you are involved in an accident. However, there are several other clauses associated with this benefit, and not all insurers offer this facility.
- Some insurance companies are more lenient in the event of minor accidents with longtime customers.
- If a longtime customer is a little late in premium payment, some insurance companies waive penalties associated with the policy revival.
Deciding on whether you should stay with your insurance provider or shift to another company is totally based on what you would gain and what you stand to lose.
What is an Endorsement in Car Insurance?
An endorsement refers to a correction or change made to the existing auto insurance plan. It is useful in cases where there is a change in the ownership of the car, addition of an LPG/CNG kit, addition of optional covers, increase in base policy coverage, removal or addition of electrical accessories, change in the geographical location, etc. The insurance company would not alter the original policy; instead they would provide an endorsement certificate to the policyholder.
Endorsements can be classified as follows:
- Premium bearing endorsements – This includes the following changes:
- Correction of the ex-showroom price of the vehicle
- Transfer of ownership
- Installation of a CNG/LPG kit
- Inclusion of Personal Accident Cover
- Removal of an anti-theft device
- Extension of the geographical area
- Installation of non-electrical accessories
- Installation of electrical accessories
- Participation in a rally
- Removal of automobile association membership
- Non premium bearing endorsements – This includes the following changes:
- Updating registration number
- Nominee details correction
- Correction in customer type
- Correction in customer/corporate name or prefix
- Correction in customer’s address, gender, or city
- Alteration of the mobile number and contact details of the customer
- Changes in lease agreement, hire purchase agreement, or hypothecation agreement
Cancelling a Car Insurance Renewal
Car insurance providers offer customers a ‘cooling off’ period of about 2 weeks within which they can cancel their policies. So, if the customer decides to change his/her mind about the current insurer or finds a better deal from another insurance company, he/she can proceed without any obligations in the first 14 days of the coverage.
After the cooling off period has lapsed, the insurer will charge customers a specific amount for cancellation, based on the number of months of coverage already provided. However, customers are usually not offered refunds after 8 months of the policy period.
The cancellation process is quite straightforward. The policyholder has to intimate the car insurance company of the return of policy through email or by calling its customer service desk. He/she would have to send a letter to the insurer with the policy as well. The reasons for policy return would have to be clearly stated in the letter.
Once the request is processed, the cancellation is done within a week.
When should you Change your Car Insurance Provider?
Most car insurance customers switch between insurance companies at the occurrence of any of the following events:
- Experience service that is below par
- Identify an alternate insurer offering a better insurance package or lower premium
- Understand that the current insurer does not offer some add-on covers that the customer needs
Car owners are spoilt for choice when it comes to buying auto insurance. Switching to a new insurance company is a simple process that can be done at any time. You do not even have to wait for the current plan to expire before you change insurance.
You can start by evaluating your insurance needs and then comparing policies online for the best rates and coverage. Once you have a new car insurance policy, you should cancel your old policy so that you do not get penalised for late payments on it.
It is recommended that you shop for auto insurance deals every year. At a minimum, you should look out for better deals in the following circumstances:
- Change in marital status – Once you are married your insurance needs may vary. You may require personal accident cover for the passengers, RTI cover, etc. It is advisable to check the car insurance policies available in the market at this point of time so that you know what you are eligible for.
- New car – The most appropriate insurance company for your old car may not be the best option when it comes to your new car. Insurance providers offer policies based on the make, model, and age of the car.
- Update in driving record – When traffic violations and claims reach a 3-year milestone, it is an ideal time to shop for a better price on your auto insurance. This is because insurance companies usually take your 3-year driving history immediately preceding the application for insurance. So if you have a clean track record for the past 3 years, you may get a better deal on your car insurance with another insurer.
- Improvement in credit score – Car insurance is dependent on your credit score as well. If your score has improved, then you should let your current insurer know. Also, check what the other companies have to offer you at this point.
- Age and experience – When a driver is above 25 years of age, he/she will be eligible for a lower rate on car insurance. Similarly, the driving experience of an individual will also have an impact on the premium. If you have been driving for 5 years or more, lower premium rates are usually available.
When you decide to switch insurer:
After you have analysed the various options available to you, you may decide to switch to a different insurance company. At this time, there are certain things you should keep in mind to ensure that the switching process is smooth:
- Avoid a gap of even a day – You should ensure that there are no gaps between the end of the old insurance and the commencement of the new one. You should ideally cancel your old policy only after the new plan is effective.
- Request for old policy cancellation – You should inform your old insurer that you will be cancelling the policy. Also, if you were paying through ECS, ensure that the payments towards the plan are stopped post cancellation.
- Get refunds, if applicable – If you have prepaid the premium for your old car insurance, you are eligible to get a refund of the premium on a pro rata basis. You may be charged a fee for policy cancellation. So, remember to settle the final amount with the old insurance company after you cancel the plan.
- Carry the new proof of insurance – Once you have a new car insurance policy in place, you should carry the proof of insurance with you at all times.
Things to consider when switching insurers
When you request for cancellation of your old car insurance policy and move to a new insurer, there are certain privileges that you cannot carry forward. This includes the following:
- You may lose the loyalty benefits offered by your old insurance company. This is inclusive of accident forgiveness that some insurers offer.
- Consider that you have a bundled package of car insurance and life insurance with an insurance company. When switching car insurance to another provider, you may have to bear higher rates on your life insurance that is still with the old insurance company. So you should consider shifting all your existing insurance policies to the new company, as you may end up saving more this way.
- Ensure that you are aware of the full impact of shifting insurers, so that you can avoid surprises and have a smooth transition.
- Ensure you compare different insurance policies to find one that fulfills all your insurance needs and falls within your budget.
- Make sure you choose a well reputed insurer to make the policy switch.
- Check for add-ons and additional features offered with the insurance policy.
- Inform the insurer when you decide to make the switch because sometimes in order to retain an existing customer from leaving, insurers tend to offer better discounts and benefits with the insurance policy.
Car Insurance Claim Denials
Your car is probably your most expensive asset, after your property and investment in financial instruments. Hence, it makes sense to have it insured from theft, natural calamities, man-made damages, and accidents. Third-party liability insurance is also mandatory in India.
However, auto insurance claims are often rejected by insurers. A majority of these rejections are due to the ignorance of the policyholder, or even negligence.
Reading through the terms and conditions in the policy document is an important activity that you should do as soon as you buy the plan. This way you will be equipped with a good understanding of the coverage that really helps at the time of a claim.
Listed below are some of the main reasons for rejection of car insurance claims:
- Making repairs without informing the insurer – If you are involved in an accident, it is crucial to inform your insurer of the same at the earliest. Authorised representatives from the insurance company will inspect the damages and estimate the cost of repair. However, if you get your car repaired on your own without intimating the insurer, the reimbursement claim may be rejected. This is because the insurance company will be unable to trace the accident, damages incurred, and the magnitude of repair work done on the car.
- Not adhering to timelines – If you do not inform the insurance company of the accidental loss within the specified timeline, then your claim may be rejected by the insurer. Insurance providers usually mandate that an accident should be reported within 48 hours.
- Driving without license – If you did not have a valid driving license at the time of the accident, the insurer will reject your claim.
- Not transferring old car insurance to your name – If you have purchased a used car and forgot to transfer the car insurance in your name, your motor insurance claim is eligible for rejection.
- Using private vehicle commercially – Your auto insurance claim will be rejected if you were using your private car for a commercial activity at the time of the accident. In case you wish to use the vehicle for commercial purposes, you should get an appropriate commercial car insurance policy.
- Driving after administration of alcohol or drugs – At the time of the accident, if you were drunk or under the influence of drugs, your car insurance claim will be rejected.
- Consequential loss – Consider a situation where your car has an engine oil leakage that you ignored and continued driving. If you encounter an engine seizure due to this negligence, it is termed as a consequential loss. In this case, your car insurance claim will certainly be rejected.
- Damages due to electrical or mechanical breakdown – If your car was damaged due to a mechanical or electrical breakdown, you cannot raise a claim for the loss.
- Normal wear and tear – The natural depreciation of car parts due to usage cannot be avoided. If the damage specified in the claim was due to this depreciation, then it can be rejected by the insurance company.
- Negligence leading to theft – You are liable to take good care of your vehicle and safeguard it from damage or loss. If the insurance company has proof that your negligence has led to a theft for which the claim was raised, the claim can be invalidated by the insurer.
- Not updating insurer about LPG/CNG kit – If you have installed an LPG/CNG kit in your vehicle, you should inform the insurance company at the earliest. Such an installation will require additional premium. If you fail to intimate the insurer about it, your claim will be invalidated.
- Inaccuracy in submitted information – Ensure that you provide all accurate information at the time of raising a claim. Otherwise, your claim could be rejected by the insurer.
How to Get a Duplicate Copy of your Car Insurance
The primary objective of a car insurance plan is to provide you financial protection if any unfortunate incident occurs. When you raise a claim under motor insurance you will be required to furnish your original policy contract. Hence, it is very important that you keep the document safe throughout the policy tenure.
However, if you happen to misplace your car insurance policy document, you have to follow the steps mentioned below:
- Submit an application for car insurance duplicate copy – You should write an application to your insurer with your name, policy number, date of issuance, type of cover, and whether the policy was assigned to another individual. You would also have to elaborate on the circumstances under which you lost the policy document. If the car insurance is held jointly, the application should be submitted jointly by all stakeholders.
Insurance providers usually charge a small fee for issuing a duplicate copy of the policy. This amount has to be paid when you submit the application.
- Put up an advertisement – Some insurance companies require that you publish an advertisement in the leading newspapers regarding the loss of the policy. The advertisement should be submitted to the company as well. The cost of publishing the advertisement is usually borne by the policyholder.
- Sign indemnity bond – You will be required to sign an indemnity bond on non-judicial stamp paper of appropriate value. The bond should include your name and policy number. The indemnity bond should also be signed by two witnesses who are not your family members. Some insurers also insist that a surety bond is submitted.
Once all the necessary documentation is duly submitted, a duplicate of the car insurance policy is issued within a week. The terms and conditions under the plan, nomination, and policy details will remain the same as that in the original policy.
Third-party Car Insurance Claim
Under third-party liability insurance, a third-party can raise a claim for losses caused by your insured vehicle, such as property damage, injury, or death. The claim for compensation will be filed against your insurer. There is no limit on the liability claim for injury or death. But the maximum limit for liability on third-party property damage is Rs.7.5 lakh.
If you are the third-party claiming damages from the person responsible for the accident, you have the following options:
- In the event of an injury you can raise a claim for medical expenses. This includes claims for physical disfigurement or loss of earnings.
- In the event of death, your dependents can raise the claim. The claim can also include reimbursement of medical expenses incurred for treatment before death.
- If there was property damage, the loss would have to be quantified with the surveyor’s report, motor vehicle inspection record, and the original bills from the garage.
If your claim is successful, you will receive the payment from the other person’s insurance company under his/her third-party liability insurance. Subrogation is the act by which the insurance company of one party, makes payment for accident expenses and claims this amount from the insurer of the other party. Subrogation is possible only with comprehensive insurance, and the insurer can decide whether to go for it or not.
Claim Process for Third-Party Liability Insurance
Raising a claim under third-party liability insurance is a daunting task. There are three steps to this process:
- You should first file an FIR and get a charge sheet from the police.
- Then you should approach a Motor Accident Claims Tribunal through a qualified lawyer.
- The claim will be examined in court and a liability will be fixed.
The complications in the claim process arise when the coverage of both parties are examined. Here, we have listed various permutations of situations when individual X has incurred damages to his car by individual Y’s car in an accident:
|Insurance coverage||Legal solution|
|Possibility 1 – Consider a scenario where X has only basic third-party insurance coverage for his car. He can claim compensation under Y’s third-party insurance. He should also establish that Y was negligent or responsible for the accident in court.||If the court decides in favour of X, he may/may not get the full amount claimed. This is because Y’s insurer will only offer the compensation decided by the court. Also, X cannot claim for the remaining expenses under his own car insurance policy.|
|Possibility 2 – Consider a situation where X has comprehensive motor insurance.||X can choose any of the following options:
|Possibility 3 – Consider a scenario in which both X and Y have comprehensive insurance coverage.||The insurance company of X may not subrogate the claim unless it is a case of disability or death. All ‘vehicle damage’ claims should be ideally settled out of court, as the judicial process can be very time-consuming. Third-party claims for death take a long time to settle as well. In spite of this, if X is keen on approaching the tribunal he can do so. He should be able to furnish all documents required for the proceedings.|
Tips to Negotiate a Car Insurance Claim
It’s important you should have a general idea on how to negotiate your car insurance claim with the insurance provider. You should be aware of the fact that insurance companies usually try to minimise the amount that they pay out as claim settlement. If you are overwhelmed at the thought of negotiating with your insurer, you can always seek the assistance of a good lawyer. You can also avail the service of an attorney if you have been refused a fair settlement.
The following pointers will help you negotiate an auto insurance claim in a fair manner:
- Raise the claim at the earliest – If you are involved in an auto accident, you should intimate your insurer immediately. This way, you can recall all the details of the accident in an accurate manner and update the insurance company on the injuries/property damage.
- Recollect the accident accurately and record it – You should ideally keep a record of the accident in a chronological manner. The file should contain the police report, record of doctor’s visits, car repair bills, or anything else that you deem worthy of being collected. If you have the documents readily available, you can use these during your negotiations.
- Calculate the amount that you stand to receive – Before you send a letter to your insurer regarding the claim, assess the amount of damage your car has incurred and the total expenses associated with the accident. When determining the claim amount you stand to gain, take the following into account:
- The expenses corresponding to medical care
- The loss in income that you suffered as a result of your injuries
- The cost of replacing your car or getting it repaired
- The cost of repairing any other property that was damaged
- If you are permanently disabled or need long-term medical assistance, estimate the amount for the same
- Put a value on the amount of pain you suffered after the accident
Based on these factors, decide on a minimum amount that you will be able to accept as settlement. A car insurance attorney can help you in this assessment as well.
- Send a demand letter to the insurer – After you are done with your claim amount calculation, you should send a letter to the insurance provider. Describe the accident in detail, elaborating on your injuries, the damage incurred by the vehicle, the treatment you availed, your health issues as a result of the accident, and any other losses you suffered. Then mention the amount of money you demand for the loss.
The insurer would most probably offer you an amount that is lower than what you have demanded; so you should ask for compensation that is about 25%-75% more than what you would settle for. It is crucial that you have documentation that would support everything in your demand letter. Else, you may not get the entire amount that you deserve.
- Do not accept the offer if you are not convinced – When the insurance company makes the first offer, it may be really low. This may even be a tactic from the insurer to check whether you are aware of the actual worth of the claim.
In this scenario, you should ask the insurance adjustor to justify why the claim amount is so low. Respond to each of the points in the reply letter with proof of your expenses and why you cannot accept the proposal. You may also make a counteroffer that is reasonable and one that the insurance company is willing to accept.
- Focus on the points that favour you – When you are negotiating on your car insurance claim, you should emphasize on your strongest points. If you are suffering from an injury that disrupts the quality of your life, discuss how this will affect you and your family financially and emotionally. If you have missed employment due to the injuries, focus on the loss of income. Make sure that the insurance company is aware of the difficulties you will be facing as an outcome of the accident, and that you are only demanding fair compensation.
- Take notes of the negotiations – You should take detailed notes of the conversation you have with your insurer. You should also request the insurance company to record all settlement offers in writing. If you finally agree on a claim value, make sure that it is recorded in a contract signed by all stakeholders.
- Take the help of an attorney if needed – After negotiations, if you are still unable to arrive at a fair settlement, you may require the assistance of a lawyer who may file a personal injury lawsuit.
Problems with Motor Insurance Claims
Policyholders often make the mistake of considering car insurance claim settlements as a smooth process. But expecting that the insurance company would honour your claims in a straightforward manner is naive. You should know that there are bound to be problems from the start to the end. You should also be prepared to deal with these problems as they come.
Listed below are some car insurance problems that may delay a claim settlement:
- Failing to report the incident quickly – The longer a policyholder waits to file a claim, the harder it becomes to get a fair settlement. You should report a claim at the earliest, so that you are not faced with more queries, problems, and ambiguities in the future.
- Failing to record all information – Auto insurers will not be able to arrive at a conclusion if you do not provide all details of the accident. They would want to know how the accident took place, who was involved, and what the damages are. If you are able to record this information accurately and produce proof of the same, your claim settlement process will be a lot more smooth. You may need to take pictures at the time of the accident, call the police, and get details from witnesses to make accurate records.
- Determining fault – If two cars are involved in an accident, it is natural for each driver to shift the blame on the other. Even if a driver accepts responsibility for an accident, he/she may change the stand after talking to his/her insurer. You will always have to be prepared for such accusations when you are involved in an accident.
- Not being aware of the claim process – It is important that you know the steps to follow when raising a car insurance claim. So, be cautious at each step and make sure that you furnish all details to avoid unexpected issues. Otherwise, you may be relying solely on your insurance provider to lead you through.
- Failure to buy sufficient insurance cover – If your car is involved in an accident and you do not have sufficient coverage, you would have to bear the expenses from your own pocket. So be adequately insured.
- Not providing accurate details while purchasing the policy – Several customers lie to their insurers in order to get lower premiums. The truth will be revealed when you raise a claim, and at that point of time, you will certainly take a hard hit. So, always furnish accurate information when buying an insurance plan.
- Choosing a garage that is not affiliated to the insurer – Insurance companies usually allow you to pick a service centre of your choice. You need not get the car repaired at a network garage. But you should ensure that the cost of repair at your local garage is not over the top. Choosing network garages for accident repairs is useful as you can get the car repaired without having to pay up front. Also the finances will be directly settled between the insurer and the network garage.
- Ambiguous terms and conditions – The policy documentation may include ambiguous terms and conditions. So, after the policy purchase you should read through the document carefully and get clarifications from the insurer, if necessary.
- Low offers during negotiations – It is known that claim adjustors would initially provide policyholders a low offer during claim settlement negotiations. Their focus would be on minimising the cost to the company. So before you start negotiations, you should personally work out the minimum amount you would settle for.
- Delayed claim settlements – People usually wait for the claim payout, without actually checking with the insurer on how the entire process is going forward. If you feel that there is a delay in claim settlement, you should contact the insurer and enquire about the same. Check if there is anything that the insurer is waiting for from your end. It is alright to chase up and ask questions.
How does your Car Insurance Claim Affect the Premium?
Many people are of the opinion that filing a car insurance claim will have an adverse impact on their premiums in the future. Based on the circumstances under which the accident took place, you car insurance rates may increase or decrease when you file a claim. Let us take a look at the various types of claims and the corresponding impact on premiums:
- Comprehensive insurance claims – If you have raised a claim for damages incurred through natural or man-made calamities, your policy rates will not see an increase the following year.
- Collision insurance claims – If you file a claim for expenses incurred after a collision, your insurance premium for the next year may increase. The extent of increase in premium is based on the severity of the accident and whether you were at fault or not. The insurance company may even refuse to renew the policy in certain cases.
- Liability insurance claims – Liability claims indicate that your car has caused damage to third-party property or life, placing you in the high-risk bracket for insurance. In this scenario also, your insurance premium may increase.
Car Insurance and GST in India
GST has been referred to as the largest indirect tax reform in the history of independent India. After the GST implementation on 1 July 2017, in a memorable midnight ceremony at the iconic Central Hall of the Parliament, insurance products have become more expensive. This includes hike in car insurance premiums as well.
As per the previous tax regime, car insurance products were charged service tax at the rate of 15%. Currently car insurance is charged GST at 18%, an increase of 3% in premium. So for instance, if you were paying a premium of Rs.10,000 before 1 July 2017, the service tax on it would have been Rs.1,500. This amount was paid in addition to the actual premium value. After GST implementation, you will be required to pay Rs.1,800 as GST. This implies that you will be paying an additional Rs.300 towards your car insurance policy.
How to Identify a Fake Motor Insurance Policy
Insurance frauds usually involve raising false claims. However, there have been instances where the policy bought by the customer was fake. This phenomenon is more common in the car insurance domain when the policy was not bought from a registered agent.
It would be very disappointing to discover at the time of a claim that the insurance policy you purchased was a fake one. Let us look at the ways in which you can avoid this misfortune:
- Sign the application form – You should read the terms and conditions in the policy and sign on the application form yourself.
- Get a receipt when buying – The insurance agent who sold you the policy should ideally provide you a receipt for premium payment when you have paid in cash. In case you do not receive it, you should specifically ask for one. It should be noted that some insurance companies do not provide a premium receipt unless it is specifically requested for.
- Pay premium through cheque – Paying premiums through cheques is the safest option to avoid becoming a victim of fraudulence.
- Check NCB, IDV, and deductibles – As soon as you receive the policy document, you should verify the No-Claim Bonus criteria, Insured Declared Value of your car, and the deductibles applicable. This will give you an idea of whether your car insurance policy is genuine or not.
- Get in touch with the insurer – The most simple way in which you can check the genuineness of your policy is by contacting the insurance company. You may have purchased the plan from an agent or a car dealer. You can confirm policy details with the insurance company by sending it an email or calling its customer service desk. Alternatively, you can visit the branch office of the insurer to discuss about your policy.
- Beware of offers with unusually low premium – You should be wary of buying insurance if it is offered to you at a very low premium. Once you receive the policy document, go through the inclusions and exclusions to understand if all your requirements have been recorded satisfactorily.
- QR code – On your mobile phone you can install an app that reads QR codes to verify policy details. The IRDAI has mandated all car insurance policies to have a QR code. When you scan the QR code, you will receive information about the policy instantly.
Consider that you have installed an LPG/CNG kit in your vehicle. Your insurance agent may not be aware of it, and hence, these may not be specifically mentioned in the application form. At the time of raising a claim, you will face difficulties for not having disclosed details about the LPG/CNG kit. Hence, it is important that you read the policy document thoroughly and declare customisations or safety features that you have added to your car.
It is also advisable to buy insurance directly from the insurer or from a reputed online insurance broking company. The advancement in technology has made online car insurance purchase easier and more flexible.
- When you buy auto insurance online, you can read the terms and conditions of the policy and get a printout or screenshot of the purchase receipt. This way, the possibility of fraud is mitigated to a large extent as well.
- Purchasing motor insurance online is beneficial because you know that you are buying from a reputed organisation through a registered website. It is much better than buying from an insurance agent who may be a fraud.