Your Roadmap for the Best Car Insurance

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

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7 mins 52 secs
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Last Updated - May 15, 2023
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So, you’ve bought yourself a brand-new car. A proud moment indeed, given the amount of effort you put into test-drive cars, short-list the ones that fit your budget and style, seeking expert advice on the car’s performance, looking at loan options, and finally signing the papers.

Now obviously, you do have 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, acts of terrorism, etc. Also, it will cover damages caused by natural calamities such as earthquakes, floods, landslides, storms, etc.

While third-party insurance is mandatory in India, it makes a lot of sense to opt for comprehensive coverage.

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 comprehensive coverage, 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 who 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 an 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 policyholder 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 a full claim without any deduction for depreciation on the value of the parts replaced.

Repair of rubber parts, glass, fiber, and plastic: You can get a damaged glass, fiber, 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 aging of the car

Any major loss or decrease in the 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 tires

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 your 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 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, with 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 chequebook! 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, and seek advice from friends. Look for the lowest rates and the best features, and 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 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 the transfer of an 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 and 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 – A policy document

FIR – in case of an accident involving Third Party Injury or Damage

Original and a Copy of the 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 a duplicate RC book from the RTO. It may take you longer to get the settlement as the police and the RTO will investigate 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 facilities. 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.

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Jay Vasa is a content writer, who has got his core emphasis on insurance related information. The sole motive of writing articles is to spread appropriate information to the people regarding one of the important and discussed topic in today's time.