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.
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.
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.
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.
The basic inclusions of third-party liability cover are as follows:
The basic exclusions of a third-party liability cover are as follows:
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:
Impact of GST On Car Insurance
The GST for the insurance sector is set at 18%. Earlier, before the introduction of GST, the tax for the insurance sector was set at 15% tax. The 3% increase in tax affects the consumers in terms of paying higher car insurance premium at the time of policy purchase and policy renewal.Read more about Impact of GST On Car Insurance...
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 IDV of a vehicle above 5 years of age is usually based on the mutual agreement between the policyholder and the insurer.
As the owner of a car, you should be aware of its IDV. You should never understate the IDV of your car. Lower IDV implies that you will pay lesser premium on your car insurance; however, you will get lesser insurance cover as well. Similarly, you should never overstate the IDV to increase the insurance coverage.
The insurance premium that you pay is directly proportional to the IDV of the car. So, as the vehicle ages, the IDV reduces and so does the premium. The depreciation is based on the following schedule:
|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.|
Motor Third-Party Insurance To Be Easily Available as Per The Supreme Court’s Ruling
The Supreme Court Committee on Road Safety has recently directed the union territories and states to perform periodic checks to determine whether or not the vehicles plying on the roads are insured with a third-party insurance cover. In case they find someone without a third-party motor insurance, they have been advised to retain the uninsured vehicle until a legitimate third-party insurance certificate can be produced by the vehicle owner. A number of states have reported back that the insurers have a tedious process for motor third-party policy issuance which makes it difficult for the vehicle owners to buy one without going through unnecessary hassles. The tedious process involves inspection of the vehicle.
To ensure instant and hassle-free issuance of third-party liability policy, the insurers have been advised to religiously follow the below given directions:
Note: The information mentioned above has been taken from the notification provided by the IRDAI on 1 January 2018.
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:
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.
When you are deciding on a car insurance policy, you should keep two things in mind:
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.
Auto Dealers To Upload MISP Details To The IIB’s Website
The Auto Dealers have always been an integral part of the insurance market in India. Other than selling cars, they have always played a prominent role in offering motor insurances for vehicles.
The Insurance Regulatory and Development Authority of India (IRDAI) introduced guidelines for Motor Insurance Service Providers (MISPs) on 31 August 2017 that are to be followed religiously by the auto dealers when providing motor insurance policies.
Insurance firms and insurance agents have been instructed to upload the details of all the MISPs they are planning to appoint along with the spokesperson and salesmen for each MISP. The details are to be uploaded to the Insurance Information Bureau of India’s (IIB) online portal in a standard format that would allow the document to be shared with the MISPs as well
The auto dealers would be allowed to upload the requested MISP details etc. starting from November 1, 2017.
Note: The information mentioned above has been taken from the notification provided by the IRDAI on 1 November 2017.
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:
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.
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.
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.
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.
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.
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.
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.
Online offers you process transparency and provides you with all the clauses and other details mentioned in the insurance policy.
Every policy you buy is saved under your name in the website. You can access all your insurance data anytime from the website/app.
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.
Transferring the existing or expired insurance to another insurer can be done easily without any fuss.
BBI is a third-party website that offers a number of advantages when it comes to buying a car insurance:
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:
In order to counter the lack of penetration of motor insurance policies in the country and with the fact that more than 60% of the vehicles on the roads of India are uninsured, the Supreme Court has decided to make long-term third-party motor insurance mandatory as of 1 September 2018. According to the ruling, now cars will have to have a long-term motor third-party motor insurance for a span of 3 years and two-wheelers will have to have a long-term motor third-party motor insurance for a span of 5 years. The Insurance Regulatory Development Authority of India has also instructed insurers to roll out the long-term policies as not later than 1 September after getting approval from the regulator on the pricing of the premiums. Irrespective of whether vehicle owners have a comprehensive insurance policy with a third-party liability, they will have to purchase the new long-term motor third-party motor insurance. According to experts, the ruling of the Supreme Court will ensure that vehicle owners are insured for a longer span and this will reduce the number of vehicles on the roads that are uninsured as policyholders will not have to go through the hassle of renewing their insurance policy year after year.
The The Insurance Regulatory and Development Authority of India (IRDAI) recently proposed a reduction in motor insurance premium for small private cars and certain two-wheelers and has plans to increase the insurance premium for some of the commercial vehicles.
The IRDAI has revealed the draft on revised premium rates for third-party motor insurance for the fiscal year 2018-2019 and have requested the shareholders to comment on the same till the 22nd March 2018.
A few of the draft proposals are as follows:
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, 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:
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:
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:
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:
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:
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.
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:
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:
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:
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.|
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.|
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:
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:
There are many who display reluctance in buying car insurance online. The overall lack of enthusiasm can be attributed to several factors.
Car insurance companies usually request you to furnish the following documents while purchasing car insurance online:
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 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 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.
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.
When you receive the insurance proposal form, make sure you sign the form yourself and not allow anyone else to sign on your behalf.
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.
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.
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.
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:
Here are the *steps to be followed when purchasing or renewing car insurance policy online:
*Please note that the above steps vary from insurer to insurer.
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.|
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:
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.
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:
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:
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.
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.
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.
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.
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.
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:
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.
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.
Renewing car insurance online is a quick and hassle-free process. Listed below are the steps you need to follow for the same:
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.
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.
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.
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.
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.
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.
Listed below are certain points to note involving third-party claims:
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.
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:
Other documents that you need to keep handy are:
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.
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:
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:
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:
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.
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:
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.
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 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.|
There are certain aspects of NCB that you should be aware of in order to utilise it effectively:
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|
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:
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.
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:
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.
Most car insurance customers switch between insurance companies at the occurrence of any of the following events:
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:
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:
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:
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:
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:
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.
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.
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:
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.
Raising a claim under third-party liability insurance is a daunting task. There are three steps to this process:
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.|
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:
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.
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.
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.
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:
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:
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.
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:
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.
Your car insurance claim also contributes to your car insurance premium. The premium for your car insurance depends on your insurer, the kind of mishap which has taken place and whether your policy has the accident forgiveness facility. It is not necessary that a claim should affect your insurance premium but there is a good chance it will.
Insurers usually consider the below factors to determine your car insurance premium rates:
Your future insurance premium depends on the severity of a mishap. In case your vehicle gets involved in a mishap where it incurs severe damages, the payout made by the insurer will be high to cover such damages, which would motivate the insurer to charge you higher for your insurance policy prior to your policy renewal.
In most of the cases, if the mishap was your fault, you will be charged a higher premium by the insurer otherwise your premium will remain the same. However, there are certain exceptions for such cases, a few are mentioned below:
If you are an experienced driver with an equally good driving record, you are most likely to be a valuable customer to the insurer as the insurer won’t have to shell out money on you. In case you don’t have a good driving record and have raised claims before, insurers may tend to value you less because you are prone to get into accidents that results in the insurer paying for your liabilities depending on the severity of the incident. The premium for such drivers will be higher than that of experienced drivers.
In case your car gets stolen, you will be charged a higher insurance premium by the insurer as the insurer will have to pay your claim for stolen vehicle.
Every insurer is different from another, hence, each insurer will have a set of guidelines for determining the car insurance premium rates, any change to your insurance premium will primarily depend on your insurer.
Few of the insurers offer accident forgiveness feature in the insurance policy. Under this feature, drivers with a good driving record can be involved in one accident without it resulting in an increase in premium post claim settlement.
When driving on Indian roads, it is important to carry the following documents:
Usually, it is sufficient to carry the photocopies of the above documents. In case you are travelling outside the state of registration of the vehicle, you should carry the original documents.
Car insurance premiums vary based on different factors, and each insurance provider has its own yardstick for determining it. The premiums basically depend upon the insurer’s assessment of how risky the driver is, the cost the company incurs while conducting business, and the amount of claims the insurer would pay out during a financial year. Other factors that insurers use to determine the premium are:
Insurers attribute different weightage to these deciding factors. Since every insurance provider rates a driver’s risk according to its own criteria, the quotes may vary significantly.
Some companies may offer promotional rates to customers from time to time. This will also reduce the premium by a substantial amount.
You would have to inform your car insurance provider of the change in address. The insurer will not change the address in the original policy. Instead, it provides you an endorsement certificate. This would fall under the category of non premium bearing endorsements.
If your car insurance policy is in-force and you have observed a claim-free year, you are eligible for a No-Claim Bonus. Using this bonus, you can get a reduction in premium for the next policy year. If you plan to sell your car, you can get an NCB retention letter from the insurer that will preserve the NCB for 3 years. Within this time, you can use it on the insurance of another vehicle that you own.
Car insurance applications are rarely rejected. Usually the insurer will offer you a policy with modified terms at an extra premium. If the customer suffers from a serious illness that is not permanent, the insurer may request him/her to submit the application after a few months. The policy will then be offered at a higher premium as well.
In case an insurer has rejected your application, it is unlikely that another company will approve it. When you apply for a car insurance policy, the application form itself will have a column where you will have to update whether you had applied for a policy before and if there were any instances of rejection. In case the second insurer approves your policy application, you will be charged a premium that could be two to three times higher.
When you purchase motor insurance, you will have to pay the premiums on the due date. Most car insurance companies offer flexible payment options that will be suited to everyone’s budget. If you are unable to pay the full amount in one go, you can opt to make regular payments at monthly, quarterly, or half-yearly frequencies. When a premium payment is due, you will be notified of the due date and payment amount. Some insurance providers offer you the option of paying online. This way you can benefit from not having to pay the service fee.
There is no set rule on how auto insurers process claims, so the procedure may differ greatly. However, most insurers undertake the following steps when processing claims:
For cashless claims:
For reimbursement claims:
In both the above cases, it is crucial to file an FIR after the accident and submit it to the insurer to support your claim.
In auto insurance, a customer pays a fixed sum of money to the insurance provider in exchange for financial assistance at some point in the future. However, the service may not be rendered at all.
Car insurance companies make money through a clever combination of risk management and the use of funds in a strategic manner.
So consider an instance where a policyholder gets into an accident that results in a payout of Rs.1 lakh. If the policyholder has paid premium that amounts to Rs.12,000, this would indicate that the insurer is at a direct loss of Rs.88,000. But in reality, the insurer does not incur such a loss because managed risk spreads this financial burden over the remaining members of the group, who haven’t raised any claims.
After the GST implementation on 1 July 2017, the total amount you pay for auto insurance has risen. This is because the service tax on the premiums paid earlier were 15%. Now that the service tax has been replaced by GST, the rate charged is 18%, an increase of 3% in total premium. In addition to that, the Insurance Regulatory and Development Authority of India has recently indicated that car insurance premiums will rise by 16%-50% in 2018.
No, car insurance claims are not public records, these are business records that can be obtained through a subpoena.
Taxability of a motor insurance claim payout depends on whether the amount received is ‘capital’ or ‘revenue’.
The tax implications of car insurance payments are as follows:
All auto insurance policies have a defined policy period. This is the duration for which the coverage is active. The start and end-dates of coverage are specified in the policy documentation. A policy term does not automatically begin at the start of a calendar year. The policy term for car insurance in India is 1 year and it depends on when the coverage under the plan commences.
Increase in car insurance premiums can be classified into two categories:
For vehicles that were purchased on or before 31 March 2010, i.e. old cars, the PUC Certificate will have to be renewed on a quarterly basis. For all vehicles purchased from 1 April 2010 onwards, i.e., new cars, the PUC Certificate will be valid for 1 year.
There is no restriction on the number of auto insurance claims allowed in a year, as long as the policy is in force. However, there are restrictions on the number of claims raised under add-on covers such as zero depreciation, NCB protect, etc. You can check the policy terms and conditions for more details.
Fitting a CNG or LPG kit in your vehicle is a major change which will have to reflect in your insurance policy as a policy endorsement. If you don’t inform your insurer regarding the kit, your insurance claim when raised will be denied and your insurance policy will be declared as void.
Your insurance policy is calculated based on certain parameters, a few of them are listed below:
Third-party car insurance is a legal agreement between the insurer and policyholder where the insurer promises to protect the policyholder from unforeseen liabilities due to third-party injuries, third-party vehicle damage and external property damage.
Comprehensive car insurance is a legal agreement between the insurer and policyholder where the insurer promises to protect the policyholder from unforeseen third-party as well as own damage liabilities.
The following are a few of the documents that need to be submitted at the time you raise the claim request:
A voluntary deductible is part of the insured amount that you agree to pay from your side at the time of claim settlement.
Yes, your geographical location impacts your insurance premium since the standard of living varies from one place to another. Places with high standard of living will have high insurance premiums too. Also, few of the place may be more accident prone than the others, in such cases the more accident prone areas will have higher insurance premium than the others.
If you have any correction/change to be made in your insurance policy, you can do it through policy endorsement. You will have to submit a letter with the details of your endorsement along with valid proof to your insurer.
Third-party liability cover provides a limited insurance coverage whereas comprehensive cover offers an extensive insurance coverage. You can opt for either of the covers based on your insurance needs and the kind of car your own. As third-party coverage is limited, you can avail this insurance for low end cars or second-hand cars. When it comes to luxury cars, it is always wise to opt for a comprehensive cover as the cost of repair/replacement is high for such cars.
Car insurance comes with a number of add-on covers that add value to the base policy. Out of the add-ons available in the market, the most favoured ones are return-to-invoice cover, zero-depreciation cover, No Claim Bonus (NCB) protect and engine protect.
A car insurance policy tenure is the time period during which your car insurance policy remains active unless you use the complete claim amount. Your car insurance policy can be for 1 year or 3 years depending on the car insurance policy being offered by the insurer.
Yes, you can cancel your car insurance policy and get the existing insured amount debited to your account, provided you have not raised any claim 30 days prior to the policy expiry and have an alternate car insurance for which you can produce valid proof.
Depreciation in car insurance refers to the reduction in the value of your car due to its regular wear and tear. Depreciation affects the car parts as well as the car on the whole. The depreciation rates vary for different car parts and cars. As your car ages, its value will also depreciate.
A cover note is a temporary document provided by the insurer to the insured until the original insurance policy is issued. The cover note will have the details of the policyholder and insurance policy and is valid for 60 days from the date of issuance.
Yes, you can transfer your accumulated NCBs provided you have purchased the new insurance policy within 90 days of your previous policy expiry.
There are a number of discounts one can avail to reduce one's insurance premium, a few of the discounts are listed below:
No, once you buy a second hand car, it is necessary that you insure the new car in your name, else your claim request will be denied. For the car insurance to be valid, your name should reflect in the RTO records as well as your car insurance policy.
Salvage is the total value or loss/damages to your car post a mishap. Total loss is when your car has undergone severe damage/wreck and is in a state where it can’t be repaired.
A cashless claim is offered by the insurers who have tie-ups with certain authorised garages that can provide car services to the policyholder, post a mishap. Post all the repair work is done, the insurer settles the cost for the repairs directly with the garage.
In case your insurer doesn’t offer cashless claim settlement or if you are unable to locate a cashless garage nearby post a mishap, you can take your car to the nearest garage for repairs and pay for the repairs yourself. After you have made the payment, collect the invoice and payment receipt, and submit them to your insurer. The insurer will review the submitted documents and reimburse the amount you spent for your car repairs.
You have to submit the following documents to avail the cashless claim service:
Apart from the above basic documents, you also have to submit other necessary documents mentioned in your insurance policy document.
Insurance certificate is a document issued by the insurer and contains all the relevant information about your insurance policy. Issuance of this document is mandatory as per the Central Motor Vehicles Rules and should always be present in the vehicle.
When you sell your car, you can either transfer your insurance policy to the buyer’s name or you can cancel your insurance policy. Either way, if you have accumulated No Claim Bonuses you can retain them and transfer them to your new insurance policy, if any, within 90 days of policy expiry.
For any change or correction to be incorporated in your insurance policy, you need to submit an endorsement letter along with relevant proof and other necessary documents. The insurer, post review of the documents and letter you submitted will make the necessary changes in your policy.
To add a Hypothecation you need to submit your car’s endorsed RC copy or a letter from the respective bank.
To delete a Hypothecation you need to submit your car’s endorsed RC copy to the bank or submit the relevant documents along with the NOC to your insurer.
If you want to transfer your existing insurance policy to your new car you will have to contact the nearest branch office of the insurer and ask them to make the relevant changes to your insurance policy document which may include a change in the insurance premium too. You might also have to submit the sale letter and insurance policy document of your previous car.
No claim bonus is a discount on insurance premium offered by the insurer to the insured as a reward for every claim-free year. The percentage of discount provided increases with each year, for a maximum of 5 years. At the end of the first claim-free year you are eligible for a 20% discount which increases in the consecutive years upto a 50% discount provided at the end of the 5th claim-free year.
Yes, your NCBs accumulated overseas will be accepted provided you purchase the car insurance in India within three years of your overseas insurance policy expiry.
IDV also known as Insured Declared Value is the market value of your car post depreciation at the commencement of your car insurance policy.
Yes you can switch from third-party liability cover to comprehensive cover at the time of policy renewal after your car passes the insurer authorised inspection.
Yes, you can renew your car insurance with another insurer along with your accumulated NCBs .
To transfer your insurance to the new car owner you need to submit the following documents to the insurer:
You can use the No Claim Bonuses provided the employer transfers the company car to your name. The employer will also have to submit the relevant documents for the same.
Owning a car is a dream for most of us, so why not choose a good insurance policy to protect that dream? With the number of various car insurance policies available in the market today, the task of choosing an appropriate car insurance policy could get a little daunting. Hence, it is important to jot down your your motor insurance expectations and accordingly compare different insurance policies. This will help you choose one that best serves your car insurance needs, one that protects you from unforeseen liabilities as well as offers you maximum benefits.
Renewing your car insurance policy is as important as purchasing a new one. Most of the vehicle owners forget to renew their car insurance on time which results in a lapse of the insurance policy thereby discontinuing the financial protection. Car insurance policy renewal can be done both online and offline. Policy can be renewed within a month of its expiry. You have the option of renewing your policy with a different insurer or switching from a third-party liability cover to a comprehensive cover when renewing your insurance policy.
When you renew your car insurance policy online from the insurer’s official website or a third-party insurance website, you can use the premium calculator to calculate your car insurance premium. Premium calculator is nothing but a built-in tool that uses the information you provide for the calculating parameters to calculate and quote your car insurance premium. This makes it easy for you to decide which insurer to purchase/renew your car insurance policy from.
It is important to do your research and compare different insurers as well as the insurance policies offered by them before you go ahead and purchase/renew your insurance policy. There are a number of parameters based on which you can determine which insurer satisfies your insurance needs the most. Top insurance providers are determined based on their incurred claim settlement ratio, status of grievances, solvency ratio, etc.
Zero depreciation is one of the optional riders offered by the car insurers. This cover is also known as ‘Bumper to Bumper’ or ‘Nil depreciation’ cover because it subtracts the depreciation factor on car parts from the insurance coverage. This implies that in case of a mishap, you will get the full claim amount for the replacement/repair of the damaged car parts without the depreciation factor affecting the claim sum in anyway. Zero depreciation completely covers the replacement/repair of car parts that are made of fibre, metal, rubber or wood. The cover comes with certain exclusions such as not covering for engine damage caused by oil leakage or water ingression. Any mechanical or electrical breakdown, consumables or oil change are not covered under this policy. This cover is definitely necessary for luxury cars due to the high cost of replacement/repair.
Insured Declared Value is the present market value of your car after taking its depreciation into account. It is the maximum insured amount that the insurer can pay at the time of claim settlement.
The IDV is determined based on the following details:
The equation to calculate the vehicle’s IDV:
IDV = (Ex-showroom price- depreciation) + (Price of extra accessories-depreciation of the accessories)
Car insurance can be of two kinds, third-party liability cover and comprehensive cover.
Third-party liability cover:
It is an agreement between the insurer and the insured where the insurer promises to cover the third-party liabilities incurred as a result of a mishap by the insured in exchange for an insurance premium. The insurance plan covers the following:
This insurance plan does not offer protection against Own Damage liabilities
Comprehensive Car Insurance:
It is an agreement between the insurer and the insured where the insurer promises to cover the third-party liabilities as well as the own damage liabilities incurred as a result of a mishap by the insured in exchange for an insurance premium. The insurance plan covers the following:
No Claim Bonus is a discount on insurance premium awarded to the insured by the insurer for every claim-free year. In case the insured raises a claim request, the insured loses all the accumulated NCBs on his/her insurance policy. To protect the insured from losing the accumulated NCBs, one can add the No Claim Bonus Protect cover to the comprehensive car insurance plan. This way, even in the event of claim registration, the policyholder does not lose the accumulated NCBs.
Motor Insurance is a legal agreement between the insurer and the vehicle owner (policyholder) where the insurer promises to financially assure the insured at the time of a vehicle mishap like accident, natural calamities, etc. Motor insurance applies to cars, bike, trucks, etc. In India, under the law of Motor Vehicles Act, it is mandatory for every vehicle owner to insure his/her vehicle with at least a third-party motor insurance. Motor Insurance protects you from the liabilities you may incur due to a mishap while driving your vehicle. Motor insurances are of 2 kinds, comprehensive and third-party motor insurance.
Two-wheeler insurance, as the name suggests, is a motor insurance exclusively for two-wheelers. Two-wheeler insurance can be taken for a motorcycle/scooter. The increasing number of two-wheeler accidents has made it crucial to have a two-wheeler insurance. Also, as per the Motor Vehicles Act, it is mandatory to insure your two-wheeler with at least a third-party liability cover.
Recently the compulsory personal accident cover (CPA) was unbundled by the Insurance Regulatory and Development Authority of India (IRDAI). According to experts, this move is likely to bring a lot of relief to those who have availed CPA from January 1, 2019.
Earlier the insurance company had been asked by IRDAI to increase the cover amount to Rs.15 lakh for CPA and issue long-term policies. However, it remains to be seen how the insurance companies will implement this new rule.
IRDAI last week had announced the unbundling of the CPA cover and had directed the insurance companies to issue standalone CPA cover for people who own a vehicle. CPA cover will be available with both comprehensive policy and third-party liability policy. However, those who have already purchased a CPA with a cover of Rs.15 lakh need not purchase it again when they buy a new vehicle.
17 January 2019
The Renault-Nissan alliance did not result in good performance in the year 2018 in India. The only models that fared well are the Duster and the Kwid. The newly launched, Captur, did not receive a good response as expected by the French car manufacturing company. However, both, Nissan and Renault have prepped up for the new year and offer great deals for cars from Micra to Duster. The Renault Kwid is being offered with a warranty cover for the fourth and fifth year as well as an exchange discount up to Rs.20,000. With a major discount of Rs.30,000, a cash discount of Rs.20,000 for select models, a corporate discount equal to Rs.5,000, and free car insurance for the first year, the Renault Duster is expected to push sales further this month. The Renault Lodgy is being offered with a discount equal to a whopping Rs.1.5 lakh. Also, this car comes with free insurance for the first year after purchase. The Renault Captur is being offered with discounts up to Rs.1.2 lakh. The Datsun Redigo is being offered with cashbacks, corporate discount, and exchange benefit taking the maximum discount amount to Rs.30,000. Along with this, the company is offering free insurance for one year. Among the Nissan cars, the Micra and Sunny are being offered at maximum discounts equal to Rs.55,000 and Rs.54,500 respectively. The discounts include cash discount, free insurance, exchange discount, and special discount.
14 January 2019
Data released by luxury car manufacturers such as BMW India, Mercedes Benz India, Audi India, Volvo Cars India, and Jaguar Land Rover India (JLR) has showed that despite attractive discounts and schemes, the cumulative sales of luxury cars only increased by 4.9% to a total of 40,863 units in the year 2018. In comparison, in the previous year, 38,950 luxury cars were sold in India.
Officials from these companies mentioned that increased insurance costs, tighter liquidity conditions, and higher lending rates in the second half of 2018 could be a factor for the meagre increase in sales.
Mercedes Benz sold a total of 15,538 cars in the year 2018. In comparison, the car manufacturer sold 15,330 units in 2017. BMW Group India sold 11,105 cars in 2018, which was 13% over the number of cars the company sold in 2017. Audi is expected to release its sales figures shortly.
Jaguar Land Rover sold a total of 4,596 units, which was up by 16.2% from the previous year. Volvo Cars India sold 2,638 units, which was an increase of 30% from the number of units sold in 2017.
9 January 2019
In order to lure customers to get their hands on their dream model manufactured by Skoda, the car manufacturer has rolled out a string of irresistible offers for the month of January 2019. As announced by the car manufacturer, they will offer an exchange bonus for the MY2018 Rapid model including free insurance and a loyalty bonus up to Rs.25,000. For the MY2019 Rapid, customers will get an exchange bonus of Rs.25,000 and an additional loyalty bonus of Rs.25,000. For the Skoda Octavia, buyers in the month of January will get a loyalty bonus up to Rs.25,000. For the MY2019 Superb and Kodiaq models, the car manufacturer has announced a loyalty bonus of Rs.50,000 and for the MY2018 Superb model, buyers will get a complimentary bonus as well as a loyalty bonus.
7 January 2019
Car sales have been affected profusely this year due to the ever-increasing fuel prices, tight liquidity situation, as well as the change in IRDAI’s regulations that made car insurance more expensive for car owners. Most car manufacturers are witnessing either a drop in sales or a one-digit growth. The biggest car players in the country, Maruti Suzuki and Hyundai Motors were also affected by the weak buyer sentiment. While Maruti Suzuki recorded growth at the rate of 1% for the month of December, Hyundai recorded 4% growth. Honda cars also reported a growth of 4% for the previous month selling a total of 13,139 units. Tata Motors suffered a decline in domestic car sales by 8% for December 2018. While it sold 54,627 units last December, it sold only 50,440 this December. Toyota Kirloskar Motor India had reported a 15% decrease in sales for the month of November but saw a whopping 10% rise in sales for the month of December 2018. When compared with the sales figures of Maruti Suzuki, Toyota, and Hyundai, Toyota made the highest sales at 9% for the period from April 2018 to December 2018.
2 January 2019
ICICI Lombard General Insurance has recently introduced an AI-backed solution that enables instant policy renewal of lapsed or expired two-wheeler insurance policies. The artificial intelligence based solution was developed in partnership with Microsoft and it is expected to benefit ICICI Lombard’s customers in the long run.
The AI-based feature will allow customers to capture images of their car (for which the insurance cover has already lapsed or expired) and upload it to the company’s ‘insure’ mobile app. The images will be analysed by the AI module, which will detect any damages that have been sustained by the vehicle. Post this, the break-in policy proposal will either be recommended for verification or accepted.
Mr. Sanjeev Mantri, who serves as the executive director of ICICI Lombard, announced that this solution would make the renewal of lapsed/expired policies more convenient, consistent, and real-time for customers, thus enhancing a user’s purchase experience.
This solution was developed by ICICI Lombard using the various offerings that are present on the Microsoft Azure platform such as the Azure Container and GPU-enabled Data Science Virtual Machines and open-source technologies like Tensorflow and Docker.
20 December 2018
The Insurance Regulatory and Development Authority of India (IRDAI) has relaxed its norms for the mandatory purchase of personal accident insurance along with vehicle insurance. Now, instead of buying personal accident coverage as a ‘bundled insurance’ with vehicle insurance, vehicle owners can buy any kind of personal accident coverage separately based on their preference.
In September, IRDAI came up with a ruling that it is mandatory for vehicle owners to buy personal accident insurance for Rs.15 lakh along with vehicle insurance. For this personal accident coverage, they have to pay an additional premium of Rs.750 per year. Earlier, IRDAI mandated personal accident coverage of Rs.1 lakh and Rs.2 lakh for bike riders and car drivers, respectively.
This relaxation in rule came into effect after the IRDAI consulted with various vehicle owners who already had personal accident insurance. Moreover, many vehicle owners had more than one vehicle. This ruling saved them the trouble of owning multiple personal accident policies.
13 December 2018
Premiums of car insurance and two-wheeler insurance policies might be lowered starting from FY20-21 as the Insurance Regulatory and Development Authority of India (IRDAI) is considering a proposal to stop its practice of deciding third-party insurance premiums.
At present, the insurance regulator fixes the premiums for third-party liability insurance policies. These premiums remain standard across insurance firms. If the IRDAI discontinues its practice of pre-deciding third-party insurance premiums rates, motor insurance providers will be able to offer discounts on the third-party premium, thus making the product more attractive to prospective policy buyers.
For the current fiscal, the insurance regulator increased premiums of third-party liability insurance policies by almost 28%.
10 December 2018
The new Tata Harrier is a model many car enthusiasts have been waiting for. The wait is almost over as all the details of the brand new Tata Harrier were revealed by the manufacturer. The price, though not officially revealed, is estimated between Rs.16 lakh and Rs.21 lakh as per a reply to a tweet by the company. While the base model will be priced at Rs.16 lakh, the top-end variant is likely to be priced at Rs.21 lakh. This cost estimate includes registration as well as car insurance costs. After the change in regulation by the IRDAI with regard to the minimum duration of a car insurance policy, general insurers are expected to roll out car insurance policies with a minimum tenure of 3 years. Hence, the insurance costs have burdened the on-road prices of cars. The Tata Harrier has an engine capacity of 145PS power and 350 Nm torque. The 6-speed gearbox transmits the power to the front wheels. The SUV comes with a twin digital screen, one on the centre console and another behind the steering. The car has several safety and security features along with new features that enhance the comfort and convenience of driving the vehicle.
4 December 2018
Leading automaker Renault has announced a lot of year-end discounts for various models in its lineup. This is the best time to buy new Renault cars as the discounts offered by the company range to the tune of Rs.2 lakh on certain models. These discounts come in the form of cash discounts, exchange benefits, insurance discounts, corporate discounts, etc.
Renault’s flagship SUV model Captur comes with a maximum discount of Rs.2 lakh, which are offered in different forms. Renault Lodgy comes with a maximum discount of Rs.1.55 lakh for customers. Among the other popular models in the company’s lineup, Renault Duster and Kwid have maximum discounts up to Rs.1.05 lakh and Rs.40,000, respectively.
There are many automakers that offer year-end discounts for customers to clear their old stocks and make way for new versions. Considering the level of discounts available for these models, this the best time to buy a new care if you are planning to buy one.
3 December 2018