A car insurance policy protects the vehicle owner against the covered financial loss/losses due to damage/theft of the insured vehicle (as per the applicable terms and conditions). As per law, it is mandatory for car owners in India to buy car insurance – it fulfills vehicle owner’s legal liability arising due to bodily injury/ loss or damage caused to third-party/ property.

Why Motor Insurance is a Must in India

It reduces liability – Taking Third Party Liability (TPL) car insurance covers one against the legal ramifications of an accident caused by one.

It pays for hospitalisation – Instead of shelling out the high hospital and treatment costs from one’s own pocket in case of a major accident, one can get motor insurance to pay these expenses.

It compensates the family in case of a person’s demise – The most unfortunate outcome of a road accident is the car owner’s demise. A motor insurance policy can help to some extent to pay the family’s expenses after the unfortunate event.

Types of Car Insurance in India

Third-Party Insurance – Third-party insurance is a basic vehicle insurance which covers bodily injuries and damages caused to any third-party vehicle/property by the insured vehicle. A third-party vehicle insurance policy is mandatory.

Comprehensive Insurance – It covers third-party liability as well as own damage to the insured vehicle. This policy is optional. 

Car Insurance Add-ons – One can opt for car insurance add-ons offered by car insurance providers. It enhances the offered car insurance coverage and fulfills an individual’s insurance expectations. Car insurance add-ons are also known as car insurance riders or car insurance additional riders.

A few of many car insurance add-ons are:

Nil Depreciation Cover- When a policyholder files a claim, (as per applicable terms and conditions) it is processed after deducting the applicable depreciation. If the policyholder opts for a nil depreciation cover, no depreciation is charged .

NCB Protect Cover- This cover helps the policyholder to be eligible for No Claim Bonus even if they filed a claim.

Consumables Cover- There are a few consumable parts/ components/ substances such as nuts, bolts, ball-bearings, engine oil, AC gas, coolant, grease that are not covered under the car insurance policy. With this add-on, the insurance coverage is extended to consumables.

Engine Protection Cover- In case of damage to the engine, the repair/ replacement expenses will be covered by the insurance provider.

Return to Invoice Cover- In case of total damage, the policyholder gets the original on-road cost of the insured car.

Factors affecting Motor Insurance Policy Premium

 

Type of Insurance Premium

A comprehensive insurance coverage has a higher insurance premium. A third-party insurance offers basic insurance coverage and attracts basic insurance premium.

Car Model, Make, and Variant – As it differentiates one car from the other, based on the differences, the insurance premium is charged.

RTO – Car registration RTO influences the insurance – In India, car insurance premiums are computed on the basis of the location of vehicle registration. The locations belong to :

Zone A : Mumbai, Delhi, Chennai, Bangalore, Kolkata, Pune, Ahmedabad and Hyderabad

Zone B : The rest of India

Vehicles registered under Zone A attract higher premiums compared to vehicles cars registered under Zone B.

Insured Declared Value – It is the market value of the vehicle. If it is high, the insurance premium will be high and vice-versa.

Age – A higher premium is charged from young drivers as compared to the older drivers.

Claim History – If the applicant does not file any claim during the policy year, they will be rewarded a bonus known as No Claim Bonus up to 50%.

How to reduce Premium for Motor Insurance Policy?

One can reduce the premium for a motor insurance policy without compromising on the insurance coverage by doing the following:

Installing Safety Device(s) – This reduces the risk associated with the vehicle. As a result, the insurance provider offers a discount on the insurance premium.

Judicious Opting for Add-ons – Though add-ons provide enhanced insurance coverage, they attract an enhanced insurance premium as well. Thus it is judicious to only opt for the add-ons that fulfil one’s insurance expectations.

Taking AAI or WIAA Membership – The insurance buyers who have AAI or WIAA Membership can avail a discount on their vehicle insurance .

Refraining from Filing Small Claims – If one keeps on filing small claims, he/she will not be eligible for No Claims Bonus .As a result, higher insurance premium is charged .

 

How to buy Motor Insurance Policy in India?

There are two modes of buying motor insurance policy in India:

Online Mode – This is a transparent, hassle-free, economical and time-saving way of buying insurance from the comfort of one’s home. And one can use car insurance calculator to compare insurance premium of various plans.

Offline Mode – This is the traditional mode of buying car insurance. If one opts for buying car insurance from agents directly, it will be a time consuming affair and on the top of that, the commission they will get will be charged from the buyer.

Inclusions in a Comprehensive car insurance policy

  • Any damages caused to the insured vehicle is covered under the policy.
  • In few company policies, personal accident cover is included in the basic policy.
  • Man-made disasters are covered for situations like theft, riots, public protests, burglary, house breaking, terrorism attacks, fire, self-ignition, etc.
  • It covers natural calamities like landslides, earthquakes, floods, storms, etc.
  • Total loss or damage of the vehicle is covered wherein the insurer will pay the IDV value of the vehicle.
  • Damages done to the third-party person or property and the legal liabilities attached to it are covered too.

Exclusions

  • If the policy is not renewed or lapsed, until the policy is renewed , no claim will be covered as the policy is considered as invalid.
  • Mechanical and electrical breakdown
  • Consequential damage
  • Depreciation
  • Damages caused in nuclear war or attack.
  • Driving while intoxicated.
  • Normal wear and tear caused due to ageing of the car.
  • Personal vehicle used for commercial purpose
  • Malicious activity where in underage drivers without a permit driving the vehicle is not covered
  • Staged accidental losses

A few of the Best Car Insurance Companies in India

Bharati AXA Car Insurance

  • Offers instant car insurance policy and renewal online.
  • Wide spread cashless garage network of over 2500+ garages across India.
  • Offers a comprehensive coverage along with options of add-on covers to enhance coverage.

 

 Royal Sundaram Car Insurance

 

  • Offers a good and hassle-free pre-and post-sales services.
  • Comprehensive coverage along with an option of add-on covers for enhanced coverage.
  • Cashless garage network spread all over India with over 3300+ cashless garages .

Reliance Car Insurance

 

  • One of the largest business group Reliance Industries.
  • Comprehensive coverage and loads of features at an affordable price.
  • Extensive network of more than 3800+ cashless network garages nationwide.

TATA AIG Car Insurance

  • The car insurance is loaded with features for comprehensive protection and also optional add-on covers.
  • Nationwide coverage of cashless garage network with over 3800 cashless garages

Bajaj Allianz Car Insurance

 

  • Third party liability along with own damage cover.
  • Around 4000 cashless garage network and offers mobile app for round the clock road side assistance.
  • Quick claim settlement process.
  • Consistently received iAAA rating from ICRA demonstrating the highest claims-paying capacity.

Debalina Roy Chowdhury

Dilzer Consultants

Sources

https://www.tataaig.com/content/tagic/tagicRepositaries/tagicArticles/knowledgearticle/5-reasons-why-motor-insurance-is-a-must-in-india