Everything Indians Should Know About Car Insurance

If you have bought a car, it is mandatory to buy car insurance as per the Indian Road Safety Act and Indian Motor Vehicles Act. However, buying car insurance could be a tricky affair. Here is your guide to everything you should know about car insurance.

Types of car insurance

1. Third party liability: It protects you against the risk of damage caused by your vehicle to another person, vehicle or property.
2. Comprehensive insurance cover: It covers third party liability, damage to your car due to accident/natural calamity/man-made calamity, loss/theft of your car, and personal accident (injury as well as death) cover for the owner/driver.

Exclusions from car insurance coverage

1. Damage caused by the person driving without a driving license or under the influence of alcohol/drugs.
2. Intentional loss or damage.
3. General wear & tear or breakdown of the car.
4. Damage outside India.
5. Damage during a war or nuclear attack.

Factors affecting premium

1. Insured Declared Value (IDV): The existing market price (after adjusting depreciation) of your car.
2. Vehicle related factors: The make and model of the car, its cubic capacity, and type of fuel (petrol or diesel) it uses.
3. Driver details: The age and occupation of the driver. Discounts are offered to experienced drivers, doctors, chartered accountants, etc. If there are multiple drivers, premium goes up.
4. Location: Whether the car will be driven in urban, small towns or rural areas.
5. Claim History: Benefit of ‘no claim bonus’ if there is no claim made during the policy tenure. Higher premium if you have a history of too many claims.

Additional cover/add-ons/riders

1. Nil-depreciation insurance / Depreciation shield / Zero depreciation insurance helps to claim the entire expense of replacing car parts damaged in an accident without having to pay from your pocket.
2. Personal accident cover provides coverage to the owner as well as the paid driver in the event of death or permanent damage to the limbs.
3. 24x7 spot assistance helps you avail round the clock services in the case of the car breakdown, especially if you usually drive late nights or long distances.
4. Engine protector compensates the cost of engine-related repairs not related to accidents.
5. Vehicle replacement gives you an advantage of replacing your damaged car with a new or similar equivalent model.

Smart ways to save money on premium

1. Bundled car insurance: Get a discount on taking a combined coverage package such as car, health and/or home insurance from the same insurance company.
2. Voluntary deductible: Agree to share car expenses from your pocket during a claim.
3. No claim bonus (NCB): Carry forward accumulated ‘no claim bonus’ from previous years and avail discount on the subsequent premiums.
4. Discount for security features: Bag a discount on safety devices installed in your car.

How to buy car insurance

You can buy insurance:

1. Directly from the car dealer
2. By visiting the branch of the insurance company
3. Online from the website of the company or a web aggregator

However, it is advisable to avoid the first two options as you may not get the best deal.

Pros & cons of buying insurance online

1. Lower premium
2. Free quotes
3. Save time & cost, lesser paperwork
4. More choices and easy comparison
5. Better decision making
6. Buy the policy at the click of a button
7. No sales pressure

The key disadvantage associated with online car insurance is the lack of human interaction, due to which you may not understand the policy details. You may also get inaccurate quotes if you enter incorrect information.

Pitfalls to avoid while buying insurance

1. Value of the car: Deliberately reducing the IDV of car in order to get lower premium. By doing so, you will not get the maximum benefits during the claim.
2. Lowest premium: Ignoring other benefits offered by a policy and selecting only the one that offers the lowest premium.
3. Lapse of policy: Not renewing the premium within the due date or grace period offered by the insurance company. You not only run the risk of driving a car without insurance, but also miss on discounts/premium benefits on the timely renewal.
4. Terms & Conditions: Not reading the stipulations mentioned in the policy. Any clause can go against you during the claim.

Things to research before choosing a car insurance firm

1. Claim settlement history: Buy insurance from a reputed company which has a proven track record of settling claims.
2. Customer service and support: The insurance company should have excellent customer service to address all your concerns timely and appropriately, before and after buying insurance as well as during the claim settlement.
3. Network garages: Always choose an insurance company which has an extensive network of garages/service centres across various locations.
4. Speed of issuance and coverage: Find out how quickly the insurance company issues the policy and starts the coverage after the car inspection.

Claim Settlement Process

1. Register your claim with the insurance company immediately after the accident/theft/damage or as the case may be. Note the claim reference number.
2. File an FIR at the nearest police station (in case of an accident).
3. Send your vehicle to repair to the network garage.
4. Submit the documents required by the insurance company. The documents vary according to the nature of the case.