Benefits of a Cashless Car Insurance Policy

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Cashless Car Insurance Policy

What is meant by a cashless car insurance policy? It offers innumerable benefits to policyholders. Here’s learning more about the same.

What is meant by cashless car insurance? 

Cashless motor insurance is a popular concept that has proliferated throughout the industry in recent years. It is a specific system where car insurers have tie-ups with authorized or network garages throughout the country. Hence, with a cashless car insurance policy, the customer can get a vehicle repaired at any such network garage without having to pay anything for the service. The insurance company will attend to the cashless insurance claim and directly pay the money to the garage.

Mechanisms behind cashless car insurance 

While buying the best car insurance in India, you should try to understand how the whole cashless procedure works. When you buy car insurance online, check for the availability of this feature above anything else. The best part is that you will not have to pay anything out of your pocket while getting your vehicle repaired at network garages of the insurance company. Here are the steps to be kept in mind:

  • The customer will buy his or her cashless car insurance policy from the insurance company and check out the list of network garages near his or her location.
  • If the vehicle suffers any damages due to an accident/mishap, then the customer may get the same fixed at any nearby network garage.
  • After finishing all the repairs, the insurer will be paying the amount directly to the garage or service centre.
  • The policy holder will only pay for the depreciation aspect of car parts that are replaced and some other deductibles. This will be a negligible amount that has to be paid for the repair job.

Understanding Depreciation Briefly

All vehicles witness depreciation with the passage of time. In fact, simply taking a new car out from the showroom will lead to its value coming down by at least 4-5% as per estimates. Depreciation is considered when claims are filed for thefts/losses of vehicles. Here are the basic guidelines for car components:

  • 50% is considered for those components with higher wear and tear including plastic and rubber parts, tubes, tyres, batteries, etc.
  • 30% is taken for all parts made of fiberglass.
  • 0-50% is the range for metallic components, depending on the vehicle’s age.

If there is an unfortunate accident and the vehicle has been damaged, then depreciation will be taken into account while the claim is filed. The cashless claim will be processed by the insurance company with the policy holder paying the depreciation difference.

Understanding more about deductibles

Even the best cashless car insurance in India may come with some deductibles. Here’s taking a look at the same:

  • Compulsory Deductible– It is a standardized and fixed amount that depends on the engine capacity of a vehicle and also its type. The basic compulsory deductible guidelines are fixed by the IRDAI (Insurance Regulatory and Development Authority of India). The private car rates are Rs. 1,000 for engine capacities till 1,500 cc and Rs. 2,000 for engine capacities till Rs. 2,000. Insurers may have higher amounts in this category in case the car is quite old. The component will not affect the premium for getting car insurance as well.
  • Voluntary Deductible– This is the optional sum selected by the policy holder while buying the car insurance policy in question. If the customer has chosen a higher voluntary value (deductible), then the premium for car insurance will naturally reduce. Yet, the customer will have to pay this amount while filing a claim. Hence, those who can drive confidently and safely will not have to raise claims frequently. Choosing a higher voluntary deductible is always sensible for saving money on premium payments.

How to file your cashless insurance claim

  • If the vehicle gets into an accident, inform the insurer immediately and file an FIR if applicable.
  • The insurance company will have the vehicle towed away to a network garage where there will be an inspection. You should not move your vehicle without taking permission from your insurance company.
  • The garage will give an estimate about the repair processes involved and this will be verified by the insurance company. After this part is over, then the company will give its approval for work to begin on repairs.
  • The garage will repair the car and submit all bills and cost details to the insurance provider and it will be verifying this information accordingly.
  • Once the entire verification procedure is completed, the insurance company will be processing the payout of the claim made by the policy holder in this regard.
  • The customer will have to pay the depreciation and deductible amounts which apply in this case.
  • The insurer will be paying the remainder to the network garage directly without any intervention required at the customer’s end.

In some scenarios, when a vehicle is damaged beyond repair and it does not make financial sense to get the same done, then it is a total loss scenario. The insurance company will then pay out a lump sum to the customer, equating to the car’s market value after taking depreciation into account. You should always check all these terms and conditions carefully before buying your car insurance policy.

Also Read: Importance of Cashless Garage Facilities for Cars in India

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Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

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