CAR INSURANCE DEMYSTIFIED

Before you purchase your car insurance policy, it is important that you understand what is being offered. To gain a better understanding of what your auto insurance policy covers, take a closer look at the annexure of your policy document. Depending on your car insurance policy type, the following are covered:

Natural Calamities: The insurer covers your car for damages caused due to natural calamities such as earthquakes, cyclones, etc.

Riots: In the event of outbreak of riots, damages caused to your vehicle from such instances are covered.

Third Party Legal Liability: You could be involved in a prolonged legal battle in case you cause bodily harm to an individual leading to their death or disability. Third-party legal liability is covered.

Loss of Property: If an accident results in damage of a property, third-party insurance covers compensation for such losses. As per IRDA norms, third-party property damages are covered up to a sum or Rs.7,50,000. If one wishes to lower this coverage amount, it can be restricted up to Rs.6,000. This will lower your premium amount.

Personal Accident Cover : If the owner/driver of a vehicle sustains injuries during an accident or results in his/her death, the same is covered by third-party insurance.

It is important to note that even your comprehensive insurance cover is not “comprehensive” in the complete sense of the term. There are certain cases for which your car insurance does not offer coverage. The most prominent ones include:

  • Injuries sustained by self or caused to another person while driving under the influence of alcohol or drugs.
  • Damages caused to the car from natural wear & tear
  • Damages incurred due to an accident which occurs while the driver/owner’s license has expired
  • You cannot claim the original value of the cover as its value depreciates each year
  • Electrical and mechanical breakdowns are not covered
  • Damages or loss caused due to war

Some of the above exclusions such as depreciation, can be covered by using “add-on” coverage. An add-on offers additional protection to your car by providing higher coverage. You will have a higher premium outgo for the incremental coverage but lower your financial risk in the event of an accident.

In Motor Insurance, No Claim Bonus is a reward to the policy holders for not making a claim in the preceding years. An insurance holder can get discount from 20% to 50% on payment of premium. The no-claim bonus is translated during renewal in form of discount. The discount on premium payable can be claimed only when a claim-free record throughout the year is maintained. Unfortunately a reduction in premium is not guaranteed due to the changing circumstances or with changes in the market. It is important that you keep your insurer informed of the accident you are involved in or no what so ever may be the situation. Depending on this, claim commencement shall be initiated.

NCB can be transferred from one car to another only if the policy bearer is the same. There are exemptions, but some insurance companies do allow NCB transferring from one insurer to another.

NCB can be terminated for the next year if a claim is made in the policy year. Similarly the same can again be terminated or disapproved if your car insurance policy isn't renewed post expiry within 90 days.

NCB is valid for 2 years. If a policy bearer does not utilise the same or does not have his own policy then he/she is required to start the process from scratch.

Buying insurance online is quick, simple and hassle-free. There are several advantages of buying your auto insurance online. These include:

  • Auto insurance is priced better when you purchase the same online. Insurers incur additional costs by way of operational expenditure and distribution costs when selling offline. Since these costs are eliminated online, the same gets passed-on to you.
  • Most online insurance portals are user friendly making navigation quick and easy.
  • The paperwork involved is significantly reduced.
  • Given the number of car insurance policies available, it can be confusing and even intimidating to understand which policy to go for. Comparing from your preferred insurance policies from leading insurers can help you choose the right plan based on your requirements.
  • You can pick from multiple payment options including net-banking, debit card, credit card, etc.

FAQs

Should I go for a comprehensive car insurance or will a third-party liability cover do?

A third-party liability cover is mandatory per the law. However, a third-party insurance only covers damages caused to the other party’s vehicle. A comprehensive insurance, on the other hand, is broader and covers your own vehicle besides providing third-party coverage. Therefore, in order to minimize your risk, it is advisable to go for a comprehensive cover.

How do I choose the Best Car Insurance Policy?

There are several parameters that you should keep in mind while choosing an insurance policy:

  • Policy Inclusions
  • Policy exclusions
  • Claim settlement ratio (i.e. the percentage of claims that the insurer has honoured)
  • Availability of cashless facility
  • Other benefits (such as roadside assistance, etc.)
  • Discounts applicable
  • Premium outgo (if you opt for add-ons and if you don’t opt for add-ons)
  • Available garage network in your location

Also, your insurance requirement can vary due to factors such as how prone your vehicle is to thefts, the age of your vehicle, etc. If you own an expensive high-end car, it is better to opt for a comprehensive cover.

Why does car insurance premium vary from one insurer to the other?

Each insurance company has varied coverage and set of guidelines due to which the insurance premium will vary. Also, the premium varies depending on the Insured’s Declared Value (IDV). If you quote a lower IDV for your car, your premium outgo will be lower. However, you will be eligible for a cover not exceeding the IDV of your car.

What is a No Claim Bonus (NCB)?

A No Claim Bonus (NCB) is a reward for being a safe rider. You are eligible for an NCB in the subsequent year at the time of renewal, provided you have not claimed insurance for a period of one year from the date of commencement of your policy. Further, your discount increases for each year of you not making a claim. Typically, the bonus is applied starting from 20% going to a maximum of 50%.

Can I redeem my NCB if my policy expires?

You will still be eligible for an NCB in case of policy expiry provided you renew your car insurance within 90 days of the expiration.

Can I transfer the NCB I have earned from one vehicle to another?

Yes. Several insurers offer a convenient feature where the NCB you have earned can be transferred from one vehicle to another. However, this is applicable only to vehicles owned by you (registered in your name) and cannot be applied to a policyholder other than you. Further, it may be noted that the vehicle type is required to be in the same category. In other words, if you have earned a No Claim Bonus for your car of brand A, you can transfer

Can I Renew my car insurance policy online?

Yes. Renewing your car insurance online is a simple process. Insurers allow you to renew your policy online a few weeks prior to the policy expiry date. In most cases, you are expected to renew your policy 60 days prior to expiry of the existing policy.

What is Break in Renewal?

Break in renewal refers to policy lapsation owing to non-payment of renewal premium on time. A vehicle insurance is an annual contract with the insurer, which requires to be renewed every year. On purchase, the policy will remain in effect from the date of purchase until the midnight of one day prior to that date the subsequent year. If you forget to renew your policy, you will have to get the policy renewed – which can be done from the same insurer or another insurer.

Is it possible to upgrade to a comprehensive insurance from a third-party insurance?

Yes. Moving to a comprehensive insurance cover is a simple process. You can get in touch with us at 1800-XXX-XXX or write to us at help@allriskcover.com. In addition, please submit a copy of your previous year’s auto insurance policy document as well as a copy of your car’s registration certificate.

Is it possible to pay my car insurance premium in instalments?

No. The Indian Insurance Act, 1938, does not allow you to pay your auto insurance premium in instalments. A workaround for this is to buy your insurance online via a credit card. You can then check with your credit card company if the amount can be converted into Equated Monthly Instalments (EMI) and pay accordingly.

What is a cover note?

A cover note is proof of purchase of insurance issued by the insurer as a temporary proof of insurance coverage. A cover note is valid for 60 days from the date of its issuance. The same is replaced by the original document within this period.

this to another car registered in your name. The bonus, however, cannot be applied to a commercial vehicle, a heavy vehicle such as a truck or Multi-Purpose Vehicle (MPV), or a two-wheeler.

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