Motor or vehicle insurance is an insurance policy that protects the owner of the vehicle against any financial loss arising out of damage or theft of the vehicle. Motor vehicle coverage also includes damage caused to a third party or property. Motor Insurance is mandatory in India. Motor Insurance is available for both cars and two-wheelers. Owing to the low value of two-wheeler vehicles, their premium is very nominal.
Comprehensive Cover and Third Party Cover
A third party cover is a base insurance policy which covers only damage caused to a third party by the vehicle. Comprehensive car insurance is a complete car protection insurance policy. The generic cover includes damage to vehicle, loss and theft of vehicle as well as third party cover.
Coverage
The cover with car insurance includes:
- Damage to the vehicle caused due to accident, riots, strikes, malicious acts, earthquake, flood, storm etc
- Loss or theft of the vehicle
- Liability to third parties
- Personal Accident Cover available for owner-driver
What is not covered?
- General ageing, wear and tear
- Mechanical or Electrical Breakdown
- Damage caused by a person under influence of alcohol, drugs and any other intoxicating substance
- Damage caused by a person driving without a valid driving license
- Consequential loss
- Loss damage outside India
Factors which affect the premium
IDV: This is the cover amount of the vehicle. The cover is decided on basis of the value of the vehicle with depreciation adjusted.
Age: As a person matures, he becomes more responsible and with less tendency to drive rashly. Accordingly, the premium discount is provided.
Occupation: Discount on the premium is offered to people belonging to certain professions. The professions include medical doctors, chartered accountants etc.
Claim History: If you make no claim during your policy years, you can get a discount which is called no claim bonus and it ranges from 10% to 50%. Conversely, making too many claims can result in an increase in premium amount (loading).
Age: As a person matures, he becomes more responsible and with less tendency to drive rashly. Accordingly, the premium discount is provided.
Occupation: Discount on the premium is offered to people belonging to certain professions. The professions include medical doctors, chartered accountants etc.
Claim History: If you make no claim during your policy years, you can get a discount which is called no claim bonus and it ranges from 10% to 50%. Conversely, making too many claims can result in an increase in premium amount (loading).
How to reduce insurance premium for:
New Car: If you have a brand new vehicle, it makes sense to get comprehensive coverage with add-on covers. However, you can still save the premium amount by comparing car insurance premiums from multiple insurance companies.
Old Car: If you have an old vehicle, you can opt for a basic comprehensive car insurance plan. If the vehicle is too old, you can go for just third party car insurance. It will certainly save a lot of premium amount.
Claims
Claims
There are many ways to apply for a claim. The first and foremost thing about making a claim is to notify the insurance company as soon as possible. Then register the claim by providing requisitive documents like claim form, vehicle registration copy etc. Some insurers allow registration online.
Cashless Claim: If you take the vehicle to a network garage for repairs, the complete claim process can be cashless.
Cashless Claim: If you take the vehicle to a network garage for repairs, the complete claim process can be cashless.
Claim Reimbursement: If you take the vehicle to any other garage, you need to pay for the claim amount. After repairs, you can apply for claim reimbursement with the insurance company.
How to buy Car Insurance?
Option 1: You can contact an agent or broker and buy car insurance.
Option 2: You can insure directly with the current insurer by visiting their branch or doing it online.
Option 3: You can make a comparison on portals like Policy Bazaar and buy car insurance online.
Buying Insurance for brand new Car
Typically, insurance is offered by showroom representatives. But it is not mandatory to buy insurance from them. One can check insurance quotes online and buy insurance. It is preferable to buy insurance online as you can save on premium costs and also opt for better comprehensive cover. Buying Insurance for Second Hand Car or Pre-Owned Car. If you are buying a pre-owned vehicle, you can contact insurance companies and check quotes based on model and value. Vehicle inspection is required in most cases.
Glossary
Cover note: When you buy car insurance, you are issued a cover note for the vehicle which has a limited validity of around 1-2 months. Do get complete policy document as cover note expires soon and has no value after its validity expires.
Add-ons with Car Insurance
One can extend the coverage for car insurance by opting for add-ons. These add-ons will increase the financial coverage but an additional premium amount will be added to the base premium amount. Some of the popular add-ons available with car insurance are:
Zero Depreciation: There is a certain value to a part of the vehicle. When a claim is made, depreciation is calculated on these parts and the amount is paid accordingly. By opting for zero depreciation cover, the entire amount of the part is paid as a part of a claim.
Engine and Gear Box Protection: In case damaged is caused to engine parts or gear box of the vehicle due to water ingress-ion, leakage of lubricating oil etc, the costs for repair and replacement will be covered.
