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So, you’ve bought yourself a brand new car. A proud moment indeed, given the amount of effort you put in to test-drive cars, short-list the ones that fit your budget and style, seeking expert advice on the car performance, looking at loan options and finally signing the papers.
Now obviously, you do have a motor insurance on your car, as it is mandated by law. But, here are some basics that you really should know about.
There are 2 types of Motor insurance policies:
One is a ‘Liability Only’ policy which is compulsory for all vehicles. This policy covers the legal liability that arises out of an injury /death and/or property damage of a third party (victim).
The other is a ‘Comprehensive Motor Insurance’ policy which provides cover for own-vehicle damage and third party liability. This will cover damages or losses from man-made tragedies like theft, riots, malicious activities, act of terrorism etc. Also, it will cover damages caused by natural calamities such as earthquake, floods, landslides, storm etc.
While third party insurance is mandatory in India, it makes a lot of sense to opt for a comprehensive cover.
Let me paint you a picture and yes, this has indeed happened to most people. You park your car and walk into a restaurant only to come back and see a dent in your car. A heartbreaking sight indeed!
The cost of repairing your car will set you back by a certain amount. However, if you have a comprehensive cover, your insurer will pay for the repairs.
Additionally, insurance companies are soon starting to realize that the customers’ needs have evolved and they simply cannot lure you with a vanilla policy. Smart insurers now provide add on riders which take care of costs that normally wouldn’t even cross your mind. These are added protection in terms of riders.
Some of the benefits you can look for:
Daily allowance: you get money for hiring alternate mode of transportation while your car is under repair.
Lost key/ lock replacement cover: cover to replace car keys, if lost or stolen. Cover for lock, if the car has been broken into.
Overnight stay at a hotel: you get paid to stay at a hotel if your car becomes immobile due to an accident.
Return to invoice cover: In case there is a total loss due to some accident, then there is always a difference between the ‘purchase price of vehicle’ and the ‘claim amount receivable’ under the policy. In such a situation, this rider provides for this difference amount.
No Claim Bonus Protection Cover: At times, people don’t file a claim because they risk losing their No Claim Bonus (NCB) bonus. In this rider, if the policy holder makes not more than one claim during the entire policy period, then the existing NCB can be retained. This cover protects your No claim bonus.
Depreciation Reimbursement Cover: This add-on cover offers full claim without any deduction for depreciation on the value of parts replaced.
Repair of rubber parts, glass, fibre and plastic: You can get damaged glass, fibre, plastic and rubber parts repaired without impacting your No Claim Bonus
Loss of baggage and personal belongings cover: you get covered by your insurer
Companies also offer discounts if you have installed an anti-theft device approved by the Automobile Research Association of India (ARAI).
Most companies may not cover you for:
Usual depreciation and normal ageing of the car
Any major loss or decrease in value of the car.
Automobiles including vehicles being used differently than in line with restrictions
Electrical / technical problem
Depreciation of consumables such as tubes and tyres
Damage by / to an individual driving any car with no legitimate license
Damage by / to an individual driving the car under the influence of liquor or drugs
How important is it to do some research before picking-up a car insurance policy and what can be the implications if you overlook the finer details?
For most people the most precious purchase after their house is a car. Imagine a scenario where you car is damaged! Your fault, someone else’s fault, doesn’t matter. What matters is that you need to get it fixed. Oops! The garage gives you an estimate that shocks the living daylights out of you. Suddenly your face brightens up; the thought that your car is covered under insurance takes away all your troubles away in a whiff. You stop flinching because your insurance company will pick up the tab. You call up your insurer and they send someone to evaluate the damages. Meanwhile your car is grimly parked at the service center. Two days later, you get a letter from your insurer stating that they cannot cover you for these damages, no reasons mentioned. Your instant reaction is to want to tear the policy documents into shreds and fling them at your insurer. Total waste of time, not to mention you will soon need your cheque book! You wonder why a certain colleague at your workplace or your friendly neighbor was covered by their insurer in a similar situation in the past. My bet is they had a better policy than you obviously do.
You swear to yourself, never again. You want it all, a policy that will cover you comprehensively.
“Can you switch to another insurer and transfer your No claim bonus?”
Yes, you can. Now armed with the right knowledge weigh your options out, seek advice from friends. Look for the lowest rates and the best features, discounts available (if any), if the insurance meets all your needs. Of course, comparison shopping is not so much fun when it is for an insurance policy. You’ve probably even been putting it off or considering skipping it all together. But do not fall into that trap because you know what they say “Fool me once, shame on you, fool me twice, shame on me!”
Motor policy, in India, can be issued only in the name of the registered owner. If you have bought a second hand car, you must transfer the insurance policy in your name and address; and it should match with the RTO records otherwise the claim is not payable. A fresh proposal form needs to be filled in. There is a nominal fee charged for transfer of insurance policy. If there is any discrepancy at the time of the claim, then there are high chances of your claim getting rejected.
If you have installed a CNG/LPG kit in your car or if there is any other change in the structure/usage of the vehicle, it should be registered with the RTO, entered in your RC. Make sure to declare it to your insurer as well.
Before you make a claim, keep these documents ready:
Proof of insurance - Policy document
FIR - in case of accident involving Third Party Injury or Damage
Original and a Copy of Registration Book
Claim form with the original estimate of repairs obtained from the workshop
Motor Driving License of the person driving the vehicle at the time
The other most dreaded time when you will have to turn to your insurer would be if your car gets stolen. Most certainly, you will panic and all hell will break loose. But fret not; your insurance will cover you for the car. Just ensure that you immediately report the theft at your nearest police station and to your insurer. In case the car documents are missing, contact the registration office and obtain duplicate RC book from the RTO. It may take you longer to get the settlement as the police and the RTO will investigate into the theft and try to recover your car. But soon, your claim will be settled.
Companies like TATA AIG, Royal Sundaram, ICICI Lombard and many more, offer car insurance. At the risk of overemphasizing, my advice is that you buy a comprehensive cover with additional riders; and look for insurers that offer cashless facility. Don’t naturally opt for the most affordable one as ‘cheap’ does not necessarily mean ‘the best’. Keep these simple steps in mind the next time your car insurance is up for renewal.