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Accidents are unforeseen and can happen at any time but the cost of repair can burn a big hole in your pocket. However, with car insurance, you can protect yourself from the financial loss that may result due to damage to your vehicle due to accidents, robbery, weather events or natural disasters.
According to the recent study of the Insurance Information Bureau (IIB), only 6.5 to 7 crores of vehicles plying in India have a valid insurance plan as against 18 crores of vehicles registered.
A car or motor insurance policy is a legal arrangement between the car owner and the insurance company in lieu of a premium. It protects the policyholder from a financial loss that he may have to bear in case of a car accident or an unfortunate incident. The damage resulting from the accident could be to your own car or to someone else’s vehicle or property, for which you are liable to make a payment. Both of these damages are within the scope of car insurance plans in India.
There are different types of car insurance plans in India with multiple additional benefits. Thus, it is important to review all the options carefully before investing in one.
There are two main types of car insurance policies:
Difference between Third-Party Car Insurance and Comprehensive Car Insurance
There are certain differences between Third-Party Car Insurance and Comprehensive Car Insurance Plans. You can read them and then decide which suits you better:
|Particulars||Third-Party (TP) Car Insurance||Comprehensive Car Insurance|
|Coverage||Covers the losses caused to the other person, property, or vehicle and not to your own vehicle|
Covers for the damages to your own vehicle (OD) + the damage to another person, property, or vehicle (TP)
Damage to your four-wheeler
When the vehicle was being driven-
When damage is caused when the vehicle was being driven-
|Add-on Covers||There is no such facility in a Third-party car insurance|
Various add-ons are available like-
|Advantages||Provides a financial cover and legal liability cover if you hurt someone/damage something accidentally||Provides a financial cover for your vehicle as well as financial and legal liability cover for third-party damages|
|Disadvantages||Damages to your car are not covered||You need to pay a higher premium than third-party|
Personal Accident (PA) Cover
Severe accidents can cause severe damage and lead to critical injuries, disabilities, and sometimes even death. Motor insurance provides a personal accident (PA) cover, which is a facility for the owner-driver. The IRDA has defined the cover at INR 15 lakhs.
Whether you opt for third-party insurance or comprehensive insurance, opting for a PA cover is compulsory.
PA is issued in the name of the car owner. However, the cover can be claimed only when the owner possesses a valid driver’s license. This cover pays for accidental death or disabilities.
In case of death of the owner, the insurance company will pay the nominee the entire amount of the cover, while in case of permanent disability the compensation is as follows:
|Coverage For||Percentage of Compensation|
|Loss of 2 limbs or 2 eyes or 1 limb or 1 eye||100%|
|Loss of sight or 1 eye or 1 limb||50%|
|Permanent Total Disability||100%|
Even if you have a comprehensive four-wheeler insurance policy, there are certain circumstances under which you would not be able to make a claim. These are called ‘exclusions’ in car insurance and following are the exclusions:
|Drunken Driving||No insurance company will accept your claim if you were drunk or under an intoxicant when the accident happened|
|Unauthorised Driving||Your claim will be rejected if the driver is without a valid Driver’s License|
|Deliberate Accident||If the accident has been caused purposely, the claim will be rejected|
|Malicious Use||If the car was damaged while using it for any anti-social/ illegal activity|
|Consequential Damages||Consequential damages that are caused after the accident are not covered under insurance|
|Negligence||An accident because of your own negligence, you won’t be able to claim the damages|
Damages that are caused because of normal wear and tear,
Mechanical or electric failure due to travelling
|Expired policy||If the policy has lapsed, your damages will not be covered|
|Excluded Add-Ons||You will not be able to claim the benefits that you do not have in your plan|
When buying car insurance online it is recommended that you know the basic parameters on the basis of which you can select the best car insurance online. Here’s a list that you may refer to when comparing car insurance plans online:
The cover is the most significant factor when looking for the best car insurance policy. The table given below illustrates the benefits mostly offered by both types of four-wheeler insurance.
|Third-party Car |
|Comprehensive Car Insurance|
|Damages to a third-party person||Available||Available|
|Damages to a third-party vehicle||Available||Available|
|Damages to third-party property||Available||Available|
|Personal accident cover||Available||Available|
|Cover on Repair Cost to own car from an accident||Not Available||Available|
|Cover on Repair Cost to own car from natural/man-made disasters||Not Available||Available|
|Car Theft||Not Available||Available|
|No-Claim Bonus (NCB)||Not Available||Available|
|Add-On Covers||Not Available||Available|
|Customization of coverage||Not Available||Available|
2. The premium of Car Insurance
A car insurance plan coverage can be extended by adding the additional benefits but that comes at an additional cost as well. Thus, while selecting a car insurance plan, you need to keep the coverage benefits in mind along with the premium for the same.
However, you need to understand that a cheap premium should not be the only criteria to select a car insurance plan, as a lower premium could possibly imply lesser coverage. You should thus weigh the benefits vis-a-vis the cost and then opt for the one which best suits your needs.
3. Insured Declared Value (IDV)
Insured Declared Value or IDV is the upper limit or the maximum sum insured of the compensation that you would be entitled to receive if your four-wheeler is damaged due to natural or man-made perils, stolen or in case of a total loss of your car. This amount is based on the condition of your four-wheeler and is fixed by the motor insurance company.
4. Incurred Claim Ratio
The incurred claim ratio is the ratio of net motor claims incurred in a particular year as compared to the total premium collected in that year. If the incurred claim ratio is very low, it means that the premium charged by the company is higher than the claims paid and if it is more than 100%, then the profitability of the company is affected.
5. Add-On Covers
Look out for a policy that offers the most add-ons at an affordable price. You also have the option to customize your plan to choose the add-ons you require.
6. No-Claim Bonus (NCB)
It is paid for not raising a claim in one entire policy year. It ranges from 20% to 50%, NCB is a discount you can utilize at the time of renewal of your policy if no claims were raised by you in the previous year.
7. The Network of Garages
With a comprehensive car insurance plan, you can enjoy cashless repairs of your car from the network garages. The more garages in the network, the better for you.
The process of comparing the various car insurance policies available online is quite simple. Just follow the steps given below:
Premium is the amount that is paid to the insurance company for the insurance it provides to your four-wheeler. To help you get an estimate of the car insurance premium that you would have to pay for a particular car insurance policy, an online tool called the premium calculator comes in very handy.
You simply need to open a car insurance premium calculator online and enter the car details and in a few clicks, it generates the premium quotes. It also gives you the options of add-ons and NCB.
To use a car insurance premium calculator, you need to follow the following steps:
The process of claiming four-wheeler insurance is a simple one, on the condition that you follow all the guidelines issued by the insurance company carefully. In case you have had a car accident, follow these steps and get the claim easily without any undesirable iterations and delays.
Car Insurance claims can either be Cashless or on Reimbursement
Today, in the market, there are numerous car insurance companies offering various plans. It can be overwhelming to select the right company. On the basis of all the parameters that we have discussed above, here is a list of the 5 best car insurance companies in India (2022):
|Company||Percentage of Incurred Claims (2018-2019)||Cashless Garage Network||Policies Offered|
|HDFC Ergo General Insurance||76%||Above 6800|
|TATA AIG General Insurance||78%||Major garages all over India|
|ICICI Lombard General Insurance||75%||Over 7800 garages all over India|
|Royal Sundaram General Insurance||85%||Over 4600 garages all over India|
|Digit General Insurance||76%||Over 1400+ garages all over India|
Since your four-wheeler insurance comes with an expiry date, renewing it timely is extremely vital. This careless slip-up can not only make a huge dent in the wallet, it is also illegal.
Ideally, you need to renew your car insurance plan before it expires. In order to renew your four-wheeler policy is an easy process, just follow the steps given below, and your policy will be good to go:
While renewing your motor insurance, you need to have a copy of the previous policy and a copy of the Registration Card, RC. However, it is prudent to keep the following documents handy:
However, if your car insurance policy has already expired, then your vehicle needs to be surveyed by the official surveyor of the insurance company before the policy is revived. This is because all accidental damages during the lapsed tenure would not be covered in the plan. Based on the report of the surveyor, the insurance company will decide whether to renew the plan or not.
Also, your No-Claim Bonus may be lapsed for an expired policy, if not renewed within 90 days of your previous policy expiry date.
Thus, make sure you always renew your car insurance policy on time so as to get maximum coverage benefits and save yourself from the hassle of a survey for revival.
A cashless garage is a garage that has a tie-up with the car insurance company. When you take your four-wheeler for repair in such a garage, the cashless cover takes care of the expenses.
It is important to check for cashless garages as:
Take a look at the list of the documents below:
a)A Copy of insurance policy
b) Driving Licence: if claim had occurred while plying on the road
a) For Commercial Vehicle, every 5, 3, 1 years depending on the class of vehicle
b) For Private car it is 15years in case of private car
Other than the above mentioned from case to case basis the requirement may vary
Following are the steps you need to follow if your car gets stolen:
It is advisable to keep these documents handy while making a claim:
Following are the factors that affect your car insurance policy:
If your car insurance policy has expired, your car will be inspected by the vehicle inspector appointed by an insurance company. Car inspection is a chargeable process, you can read more about the same in your policy document. However, it is advisable to renew your policy within 90 days of expiry, else you will lose the benefit of NCB.
Third party car insurance is a mandatory insurance policy that a vehicle owner must have. This policy offers a cover against any legal liabilities to third parties in case of an accident or damage. In case of death/bodily injury, the sum assured is unlimited. But in case of third party property damage, the liability cover is up to Rs.7.5 lakh.
Deductibles are a part of car insurance claim amount which is borne by the policyholder at the time of claim. During the process of claim settlement, the policyholder has to pay a certain amount from his pocket and the rest of the amount is paid by the insurance company, this is known as deductibles.
Compulsory Deductible: It is an amount which is mandatory by the Insurance Regulatory Development Authority of India (IRDAI). Based on a cubic capacity of a car engine, IRDAI has fixed a certain amount under Compulsory Deductible which is to be borne by a policyholder in case of claim. For private cars of 1500cc, the compulsory deductible is Rs. 1000 and for cars which are below 1500cc, the fixed amount is Rs.500.
Voluntary Compulsory Deductible: It is optional for a policyholder to opt. It is a certain amount that a policyholder agrees to pay from his pocket at the time of claim. It inversely affects your car premium amount. In case you have opted for a less amount of VCD, the premium of your car will increase. And, if VCD is higher, the premium will be reduced.
Yes, you can cancel your policy and can also get a refund. Before canceling your policy, make sure you have a valid/genuine reason to cancel the same. You need to think of the consequences of canceling your policy and then take an informed decision. However, in case you want to cancel, these are the basic steps you need to follow. Though different companies might follow a different process, basic steps remain the same:
Step 1: Inform your insurance company about your decision
Step 2: Based on your reason of cancellation, you need to submit the necessary documents
Step 3: Your insurance company will verify the documents. After the successful verification of documents, your policy cancellation request will be approved and a canceled policy will be sent to your mail ID.
In case of a refund amount, the exact turnaround time varies from companies to companies. However, within 14 working days you can get your refund.
Yes, unnamed passenger cover can also be taken as an add-on cover under Personal Accident Cover in comprehensive car insurance policy. To opt for this, you have to pay an extra amount and can provide protection to co-passengers in the car such as-family, friends or colleagues.
Third party car insurance only covers damages/loss and legal liabilities of third parties only and does not cover accidents and damages to one's own vehicle. The policyholder does not get coverage for his own vehicle hence third party cover is not enough.
Yes, it is mandatory for a policyholder to inform RTO as well as his insurance company regarding the changes done in the car.
There are some factors on the basis of which your car insurance claim can be rejected.
Depreciation is a reduction in the value of your car over a certain period of time. The reduction value of your car depends on the usage of your car. The unavoidable cost of wear and tear involved in the maintenance of a car is known as depreciation. Your car loses its value constantly due to depreciation. The insurance companies will only cover a certain portion of expenses incurred to replace the damaged portions of the car. The rest of the amount is calculated based on the cost involved in depreciation.
The best way to get an ideal car insurance policy is to compare multiple insurance providers online. Compare multiple quotes and then take an informed decision of purchasing the best policy.
Yes, under comprehensive car insurance policy,natural calamities like-flood, cyclone, earthquake, hurricane, etc are covered.
If the vehicle is in movable condition, you can shift the same to the garage. Else, if the condition is worse, you shouldn’t try to move the vehicle.
In case of theft, you need to inform your insurance company within 24 hours. And, in case of accidents, you need to furnish all the formalities within 48 hours.
No, you cannot buy add-on as standalone as they can only be sold with a car insurance policy. Hence, you must buy a car insurance policy, in case you want to buy the add-ons.
This type of cover provides services related to car breakdown in the middle of a road. With this cover, you can get proper assistance at any time of the day and night. You can get assistance regarding towing service, repairs, changing flat tyres, emergency fuel refueling, etc.
Yes, you can easily buy add-on covers online to have better coverage and enjoy maximum benefits offered by your policy.
Following are the exclusions in car insurance policy:
Comprehensive car insurance policy offers complete protection and better coverage as compared to third party insurance. Under this policy, not only the legal liabilities of third parties are covered but the cost of your own damage is also covered. Apart from this, the loss and damage caused by man-made activities and natural calamities are also covered under comprehensive car insurance policy.
In cashless claims, the insurance company will directly settle the claim with network garage and the policyholder doesn’t need to pay for the damages from his pocket. Whereas, in case of reimbursement claims, the policyholder firstly needs to pay the damages cost/expenses from his pocket to the garage and then can reimburse the same amount later from his insurance company.
When it comes to calculating the premium of a car, there are various factors to be considered. The premium of a new car would be different from an old car. Below are the factors that play a key role in the calculation of car insurance premium:
NCB in car insurance is the discount that a policyholder can get for not making a claim during the policy tenure. A car insurance policyholder can collect/accumulate up to 50% of NCB discount for every claim-free year up to 5 years.
|No. of Years||Discount|
|One claim-free year||20%|
|Two consecutive claim-free years||25%|
|Three consecutive claim-free years||35%|
|Four consecutive claim-free years||45%|
|Five consecutive claim-free years||50%|
Insured Declared Value is the current market price or value of your car. It is the maximum sum assured amount that your insurance company will compensate for the claim. IDV changes every year after adjusting the depreciating cost.
You need to evaluate your policy first and check how much cover or benefits you are getting. Understand your needs and if you feel like your policy cover is not enough, you can decide on including an add-on cover to your policy. Check various add-on covers and based on your actual need, you can choose to include as many add-on covers as you want in your policy.
Yes, you can avail discounts under car insurance policy. You can Voluntary Deductible discount and No Claim Bonus discount on your car insurance premium.
There are multiple benefits you can have if you buy your car insurance online
There are majorly 2 types of car insurance policies, i.e. Third Party and Comprehensive. All insurance companies offer both these policies to the customers. However, there is one more type of insurance policy available, i.e. Pay As You Drive which is also offered by many insurance providers.
No, there is no such limit. You can add as many add-on covers as you want in your car insurance policy.
No, you cannot pay your premium in installments. You have to pay the full premium at a time of your car insurance till your policy tenure.
Yes, you can get the same. For that, you need to get in touch with your insurance company.
A car insurance policy can be issued for a period of 1 year or multi-year. It is advisable to renew your policy before your expiry date to avoid any hassle in the future.
The price of each add-on cover varies and is dependent on several factors like vehicle age, vehicle type, location, etc. You can use an online calculator to know the exact cost of your premium.
Yes, you can opt for an add-on cover at any point of time and enjoy extra benefits.
Yes, it is mandatory to renew your third-party car insurance every time before its expiry.
You can renew your expired car insurance policy by submitting the required documents for the same. In case you want to change your insurance company, you can also do that and buy a fresh policy with a new insurance company.
No, it is not mandatory to opt for add-on covers only at the time of renewal but it is advisable to opt for them during that time.
Yes, you can make the changes related to-name/address rectification,registration number,change in vehicle/model, transfer of ownership, anti-theft device, change in RTO registration, NCB recovery, addition of hypothecation, etc. Based on your request, you need to submit the required documents hence can easily do changes in car insurance.
It stands for Automotive Research Association of India, wherein if a policyholder has installed an ARAI approved anti-theft device in his vehicle, whose installation is duly certified by this agency, he gets a discount of 2.5% on the premium of Own Damage, subject to maximum of Rs.500.
An endorsement is a written proof of an agreed change in the car insurance policy. This document incorporates changes in the terms of the policy.
No, you cannot take a policy until and unless your LPG/CNG kit is duly endorsed on the RC by the RTO.
You can choose from multiple modes of payments such as:
Credit Card, Net Banking, Debit Card, Cash Card, Cheque/Demand Draft
Incidents such as-Third Party Property Damage, Bodily Injury to Self/Third Party, Accidents , Theft must be reported to the nearest police station so that an FIR can be filed.
In such a case, the insured will have to pay the difference from his pocket as his insurance company will only pay the amount he is insured for.
Technically, personal accident cover is for the owner of the vehicle. But in case of an unnamed driver, the personal accident cover can be purchased separately as an add-on by paying extra premium.
No, you cannot opt for add-on covers in case of third party car insurance.
Yes, roadside assistance is available 24x7 in your car insurance policy.
Yes, there are certain exceptions under which you cannot get roadside assistance:
You are allowed to make a claim up to 4 times. That’s the maximum number of claims you can make under roadside assistance.
Yes, NCB is transferable if you change your insurance company at the time of car insurance renewal.
There are various ways to reduce your car insurance premium:
Yes, in case of selling, it is important to also transfer your policy to the new owner of the car just to avoid future hassle. The details mentioned in the registration document should also match the details mentioned in the policy document.
No, you cannot transfer your NCB to a new owner even if you have transferred your car insurance policy.
Yes, FIR is mandatory in such a case.
Your insurance company provides the soft copy of your policy at the time of purchasing the car insurance.Your soft copy is also a valid policy document.
No, it is not necessary to have a car inspection all the time. In case there is a break between your expired and new policy, your car might need an inspection.
Depreciation will be calculated as:
No, you cannot claim under grace period as your policy becomes inactive on crossing the expiry date. Thus, you are not covered against any risks under the grace period.
Modifications improve the look of your car thus the value of your car increase.If you consider adding those modifications in your car, you firstly need to inform your insurance company. Based on the modifications, your policy document will be updated by your company hence your premium will increase.
The exclusions are clearly mentioned in your car insurance policy document. You can easily read exclusions in your policy document to have more clarity.
Not really. The price of your car insurance policy depends on various factors such-type of policy you choose, tenure of your policy, make/model of your vehicle, add-on covers, etc. But the most important thing here is to know how much coverage you are getting irrespective of the cost of your policy.
Based on your IDV, the cost of your car insurance policy is calculated. So, if you declare a higher IDV, the premium of your car insurance will be high. On the contrary, if you declare a lower IDV, the premium of your car would be less hence you will receive a lower claim amount. Thus, it is important to declare the correct IDV of your car so that you can reap maximum benefits.
With age the depreciation of your car increases. Your car will be more prone to natural damages or wear and tear as it gets older and older. Thus, the age of your car will be taken into consideration while deciding its depreciation rate, which is calculated as per the table stipulated by the Motor Tariff Act.
No, because in third-party car insurance, the policyholder cannot claim for his own car damages. Thus, no IDV calculation is required. Since third-party insurance only covers third party damages and financial liabilities.
Based on the invoice value of your car, IDV is calculated. So, the cost you spend on registration of your car or buying a car insurance policy will not be a part of IDV calculation.
Cashless garages come into picture when you want to file a claim for your car insurance. With the help of cashless garages, the claims would be easier as no cash settlement is involved from your side. Your insurance company will directly settle the claim with their network garage hence a policyholder does not have to pay anything.
When a policyholder raises a claim, the insurance company assigns an inspector or surveyor to check the damaged condition of your car and other vehicles (if involved). After the physical verification is done by the surveyor, he prepares a report and submits the same to the insurance company. Based on that report, your company decided whether to approve or reject the claim made by you.
No, you cannot file a claim even if your policy had expired a day before the accident as your policy is not invalid. Thus, it is important to renew your policy on time to avoid the situation of claim rejection.
Yes, all car insurance policies come with Personal Accidental Cover, wherein the owner/driver of the car can get financial protection against bodily injuries hence a claim can also be filed.
Yes, you immediately need to inform your insurance company, if possible within 24 hours of the incident and all the legal formalities from your end should also be complete by then.
You should always buy car insurance by keeping in mind your requirements. With different insurance policies such as third-party, comprehensive and pay as you drive, you can get different coverage. Compare the pros and cons of all the policies and then decide what policy suits your needs.
Both claim procedures have their own merits, depending upon the suitability of the policyholder. However, the cashless claim procedure is considered to be easy and quick as compared to reimbursement claims.
You can easily check the status of your car insurance policy online. You simply need to follow a few quick steps:
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