Car Insurance is an insurance policy that protects the owner of the vehicle against any financial loss arising out of damage to / theft of vehicle. Car Insurance Policy also covers the damage caused to third party or property. Car Insurance is mandatory in India. Car Insurance helps cover against theft, financial loss caused by accidents, (Bodily Injury, Medical Payments, Property Damage) and any subsequent liabilities. It may cover the insured party, the insured vehicle (damage) and third parties (car and people) based on the type of insurance bought.
As the name suggests, standalone own-damage car insurance is a policy that specifically covers for your own car’s damages and losses. This includes damages and losses caused due to accidents and collisions, natural calamities, fires, and thefts.
A third-party Car Insurance plan provides coverage against any legal liability arising out of injuries to a third-party when the policyholder is at fault. It covers damages and injuries caused by the insured vehicle, to a third-party person or property. As per the Motor Vehicles Act, 1988, it is mandatory for every motor vehicle owner to buy at least third-party insurance cover.
A comprehensive Car Insurance plan offers complete protection against the damages to the car due to an accident or a road-mishap. This plan is called a comprehensive plan because it provides coverage for the damages to the car, third-party legal liability, theft, along with the personal accident coverage. The coverage can be boosted by selecting additional covers, such as zero depreciation, engine protector, accessories cover, medical expenses, etc.
A comprehensive Car Insurance plan includes coverage for fire, theft, natural and man-made catastrophes, such as a tornado, hurricane, vandalism, damage caused to the car by animals, falling objects, civil disturbance etc.
It provides cover against loss or damage to the insured vehicle.
It provides cover against loss or damage to vehicle caused due to accident, fire, explosion, self-ignition, lightning, riots, strikes or act of terrorism, natural calamities.
It provides cover against financial liability caused by the injury/death of a third party or damage to the property.
It provides personal accidental insurance.
One needs to decide whether a Comprehensive Car Insurance is required or a standalone Third Party Liability Insurance is to be taken. Third Party Liability is mandatory by law in India. If one opts for only Third Party Liability policy, then only injuries caused to other people in an accident will be covered but not the damage to the Car or property.
Nowadays, many add on features or riders are available with the standard comprehensive Car Insurance Policy like zero depreciation, Engine Protection, Key Loss Protection, Return to Invoice etc. One needs to understand these add-ons and opt for them if it is suitable
Before buying a Car Insurance Policy, one should check up the list of garage which are providing the cashless facility for claim settlement. This will help in the easy settlement of the claims
Car Insurance premium is linked to the Insured Declared Value (IDV) of the car. IDV is the maximum amount that one can claim under a Car Insurance Policy. Lower the IDV Lower Coverage as well as Lower Premium
If there is no claim during the entire year then about 5-10% discount is given on renewal premium so, on renewal, NCB needs to be checked that it has been accurately calculated especially if there has been no claim in the previous year and NCB needs to be carried forward. NCB can accumulate up-to a maximum of 50%
The most important aspect of a “good” Car Insurance Policy would be easy and efficient claim procedure and hence knowing the same and being aware is a very important factor while buying Car Insurance Policy.
Motor Insurance gives the owner of the vehicle protection against-
Third-party insurance is a statutory requirement. The owner of the vehicle is legally liable for any damage to third-party life or property caused using the vehicle in public place.
The most important reason being it provides vehicle damage protection. This apart, driving a motor vehicle without insurance is a punishable offense in terms of The Motor Vehicle Act, 1988. As per Section 196 of The Motor Vehicle (Amendment) Act, 2019 driving uninsured vehicle would attract a penalty of Rs.2000 and/or imprisonment up to 3 months for the first offense and fine of Rs.4000 and/or imprisonment up to 3 months for the second offense.
Broadly, there are two types of insurance policies that offer motor insurance cover:
If you take Liability Only Policy, damage to your own vehicle will not be covered. Hence it would be prudent to take a Comprehensive Policy which would give a wider cover.
The Sum Insured under a Motor Insurance Policy reflects the value of the motor vehicle determined based on the concept known as Insured ‘s Declared Value (IDV). Basically, IDV is the current market value of the vehicle. IDV is calculated as the manufacture’s present value minus depreciation based on the age of the vehicle.
Third-party cover is a statutory requirement. Sum Insured depends on third-party injuries and vehicle damage. Compulsory Personal Accident cover for owner driver is also included. Depending on the policy, coverage can also be extended to cover various other risks such as Personal Accident to the occupants of the vehicle, workmen’s compensation to driver, etc. over and above the cover available to the insured.
The O.D. cover Motor Insurance Policy usually covers damages to the vehicle due to the following reasons –
The following contingencies are usually excluded from the Motor Insurance Policy –
There are many factors affecting Motor Insurance Premium. Third-Party Liability Premium rates are fixed and notified by IRDAI. In case of O.D. cover different insurance companies charge different premium for similar coverage. This is mainly because deductibles & IDV offered by one insurer could be different from that of the other for the same amount of premium you pay. Moreover, Insurance companies consider following items in determining the premium –
Yes, GST is applicable on premium. It would be as per prevailing rule of law.
NCB is the benefit accrued to an insured for NIL claims during the previous policy period. If a claim is lodged, the No Claim Bonus is lost in the subsequent policy period. NCB is given to the insured and not to the insured vehicle. So, in case of transfer of vehicle, the insurance policy can be transferred to a new owner but not the NCB. The original owner can, however, use the NCB on a new vehicle purchased by him.
As per current norms prevalent, NCB ranges from 20% to 50% on the Own Damage Premium. NCB is not available on Third-Party liability cover.
Yes, you can get a duplicate copy. Most companies nowadays provide Insurance Policy document digital format.
Generally, the following documents are required to be submitted –
This list is by no means exhaustive. Insurance Companies may ask for any other documents.
You must carry the following documents while driving a motor vehicle since otherwise you might end up with paying a heavy penalty.
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