Clarify All Doubts Related To Car Insurance
If you own a vehicle in India, it is compulsory to get it insured under a valid insurance policy. A car insurance policy covers the financial liability which arises in case the insured car injures any third party or damages any third party property. Moreover, if the coverage of the policy is comprehensive, the loss suffered by the car due to accidents or any other calamities is also covered. The Motor Vehicles Act, 1988 mandate every vehicle to be insured before it is allowed to run on Indian roads. So, by default, vehicle owners have to invest in suitable motor insurance policies for their vehicles.The car owner is the policyholder who is required to pay the premium on an annual basis.
When it comes to motor insurance, there are different types of plans depending on the type of vehicle that you own.
Have a look –
- best plan There are a lot of car insurance policies available in the Indian insurance market. Each plan promises something better than the other. To know the difference between the different plans, you need to compare car insurance plans.
- Choose a higher IDV The IDV stands for your car’s Insured Declared Value. This value reflects the market price of your car after being adjusted for depreciation. Different policies fix the IDV in a different manner. That is why you see different IDVs offered for the same car. Ideally, you should opt for the highest possible IDV to maintain the value of your car.
- Get the best premium rates Just like the IDV is different across different car insurance plans, the car insurance quotes vary. Needless to say, you would want the lowest possible premium for your car insurance policy. You can choose the best premium rate when you get to compare the different plans before you buy one.
- Get extensive coverage The coverage features across different car insurance plans also vary. Some companies might have all the covers required for you while others might not offer so. If you want your plan to have all-inclusive coverage you should compare different plans and choose a plan which has the required coverage features at the best rates of premiums.
- Avail of higher discounts Car insurance policies offer attractive rates of discounts which help in reducing your premium outgo. To search for the highest rate of discounts you have to compare car insurance policy online because different plans allow different discount rates.
- Get cashless garage service Every car insurance company has a tie-up with a number of garages across the country. However, it is always recommended to go for a company that has an exhaustive network of such garages. When you compare car insurance policies online, you can hence compare which insurers have higher network garages available at your location.
- IDV – the IDV of your car is its market value after deducting the age-based depreciation. IDV reduces every policy year as your car ages. You should choose the highest IDV to enjoy maximum coverage.
- Coverage features– once you are done with the IDV of the policy, look at the coverage features promised under the plan. Try and opt for a plan which has all the coverage features inbuilt in it for the maximum scope of coverage.
- Premium rate– since you would be paying the premiums out of your pockets, try and choose a plan which has the most reasonable premium rate. When comparing premiums keep an eye out for the coverage features. Don’t skimp on the coverage to get a lower premium. The coverage vis-à-vis the premium should be balanced.
- Add-ons available – there are add-on covers in car insurance policies that provide great benefits. Look for the available add-ons to enhance the coverage of your policy.
- Discounts available– car insurance plans allow premium discounts for various factors. Look for the maximum discounts to minimise premiums
- List of networked garages– you can get a cashless claim settlement if you get your car repaired at a networked garage. The best car insurance policy would be the one with the largest network of preferred garages.
- Nylon/plastic parts, rubber parts, tubes and tyres, batteries, and airbags - 50%
- Fibreglass parts - 30%
- Parts made of glass – nil
- The amount of depreciation as per the rate prescribed in case zero depreciation cover is not availed
- The reasonable value of the salvage
- Compulsory and voluntary deductions under the policy, if insured have opted for it.
Why You Should Buy Car Insurance Online at Paybima?
Paybima is a website which offers you a wholesome beginning-to-end experience of buying car insurance online. Here are a few features that are exclusive to Paybima
- Find a customised list of four-wheeler insurance policies
- Easily compare car insurance policies online and choose the one which is right fit for you.
- Buy through the website which offers a variety of online payment options
- Don’t miss out on any renewals or premium dates with our constant reminders and updates about your policy.
- With our immediate assistance and swift serviceability, at PayBima we help you sail smoothly through your car insurance policy journey.
Different Types of Car Insurance Policy in India
A car insurance policy, as the name suggests, is a motor insurance policy taken for a privately owned car, i.e. a car that is used for personal purposes, not commercial ones.
Types of car insurance plansCar insurance plans are also sub-divided into different types. They are as follows –
Let’s understand the different types of car insurance plans in detail –
|Types of car insurance||Description|
|Third-party liability||This is the mandatory cover as required by the Motor Vehicles Act, 1988. This policy provides coverage against third party legal liabilities. It pays the required compensation for any death, injury or damage of property to any third party. For example, say your car hits an individual and causes physical injury. The financial loss suffered by the individual, due to the injury, would be covered by the policy. If the legal liability comes to Rs.50,000, the policy would pay the amount on your behalf.|
|Comprehensive cover||This policy covers the mandatory third-party liability as well as the damages suffered by your own car due to natural or man-made causes. For example, say your car hits another individual’s car and damages it. Your car is also damaged in the process. The liability suffered from damaging an individual’s car comes to Rs.1 lakh while the repair cost for your own car comes to Rs.50,000. In this case, the comprehensive policy would pay Rs.1 lakh liability to the third party whose car you damaged. Furthermore, for your own damages, the repair cost of Rs.50,000 would also be covered.|
|Pay-as-you-drive||This is a flexible policy wherein the coverage can be turned on and off depending on your usage of the car. You can turn the coverage on when you use the car and off when you don’t. This saves a lot on the premium cost that is otherwise payable for a policy wherein the coverage is always on. Premiums for these plans are calculated based on the kilometres you declare to cover in a year.|
|Long term liability cover||This policy offers third party liability coverage for a continuous period of 3 years. The policy is available only for new cars that are required to carry a long term third party cover as per IRDAI’s latest rules.|
|Standalone own damage cover||This policy covers only the damages that your car suffers. Third-party liability coverage is not allowed. A standalone car insurance policy can be purchased when you already have third-party liability insurance or you can buy them both simultaneously. For example, say you buy a new car. You would have to buy a long term liability cover on the same. Now, if you wish to enjoy coverage for your own damages too, you can buy a standalone own damage cover from the same or any other insurer. .|
|Bundled plan||A bundled policy is available for new cars. This policy allows third party liabilities for 3 years and own damage cover for one year. .|
Features of car insurance plansHere are some notable features of car insurance plans –
- the long term liability cover for new cars, all other plans are annual plans
- If you choose comprehensive car insurance plans, you can customize and enhance the coverage through optional add-ons
- Comprehensive plans also allow different types of premium discounts, the most notable of them being the no claim discount that you earn for not making a claim under the policy
- The premium for third party plans is fixed by the IRDA depending on the engine capacity. For comprehensive plans, however, the premium is determined by respective insurance companies. This is why premium varies across insurers and you should compare car insurance online before you buy comprehensive plans.
- The personal accident cover is mandatory under car insurance plans. However, if you already have a personal accident cover in your name, you can skip it.
- You can buy a standalone third party cover, standalone own damage cover and the personal accident cover from different insurers
- Every time the cover is renewed, you can switch insurance companies easily if you want
- You can buy car insurance policy online or offline
Coverage and exclusions in car insurance plans Here’s a look at the coverage available as well as the instances when the car insurance policy does not pay a claim –
|Coverage inclusions||Coverage exclusions|
|A third party policy would cover the following – |
Moreover, if you opt for the personal accident cover, coverage would be allowed for the following –
|Claims would not be paid in the following instances – |
Add-ons under car insurance plans
Add-ons are additional coverage features that are available as optional benefits in comprehensive car insurance plans. You can opt for one or more add-ons as per your coverage needs. Different insurance companies offer a different set of add-ons under their car insurance plans. However, some of the most common add-ons that you can avail of include the following –
|Roadside assistance||Provides 24x7 assistance in the case of breakdowns in the middle of nowhere. This coverage is especially necessary if you use your car in remote locations where pick-ups vans are not easily available|
|Zero depreciation |
|This add-on is also known as bumper-to-bumper coverage wherein the depreciation is not applied on damaged parts during claim payments.In the absence of this add-on, the insurer deducts depreciation on the different parts repaired or replaced which effectively reduces the claim amount and incurs out of pocket expenses.|
|NCB Protect||This add-on helps you protect your no claim bonus even after a claim is made. This coverage is especially necessary if you have a high NCB and you do not wish to let that go in case of a claim|
|Return to invoice||This coverage would help you to claim the invoice value of the car without any depreciation applied on the IDVin the case of total loss or theft of the car|
|This rider covers damages caused to the engine and gearbox especially due to floods or waterlogging. This coverage is especially necessary if you live in a flood-prone area or in areas with heavy seasonal rainfalls|
|This add-on extends the personal accident coverage to the passengers of the car. If the passengers suffer accidental death or disablement when riding in the car, the add-on would pay a lump sum benefit for the contingency suffered|
|Consumables cover||The cost of consumables is not covered when there is a claim. They form your out of pocket expenses. However, with this add-on, the cost of consumables would be covered by the plan|
|If you lose both the keys to your car, this add-on would cover the cost of replacing the lost keys with a duplicate set|
|If your tyres or tubes suffer damages in an accident, the cost of repairing or replacing them would not be covered. However, if you choose this add-on, such costs would be covered by the plan|
|Loss of personal belongings||In the case of theft or accident, if you lose your personal belongings that were in the car, the financial loss suffered would be covered by this add-on|
The concept of no claim bonus in car insurance
No claim bonus is an incentive provided by the insurer in case you do not have any claims made in a policy year. The incentive is in the form of a discount given on the Own Damage component of a comprehensive car insurance policy. This discount can go up to 50% of the OD value.
|Tenure of the Policy||Percentage of NCB that can be Availed|
|1st Claim-Free Year||20%|
|2nd Claim-Free Year||25%|
|3rd Claim-Free Year||35%|
|4th Claim-Free Year||45%|
|5th Claim-Free Year||50%|
However, NCB gets forfeited in the following cases:
- If there is any claim made
- If there is a break in the insurance period for more than 90 days
IDV in your car insurance policy
The Insurance Declared Value is the market value of the car and minus the depreciation. The cost of registration and the insurance premium is not included in the IDV. For accessories fitted externally and not by the factory, the value is added to the IDV. In case of a theft or accident which leads to a loss of the vehicle, you receive an amount equal to the IDV. The depreciation is applicable as soon as the car leaves the showroom. The general rate of depreciation is calculated according to the following table:
|Age of the Car||Rate of Depreciation|
|Less than 6 months||5%|
|More than 6 months but less than 1 year||15%|
|More than 1 year but less than 2 years||20%|
|More than 2 years but less than 3 years||30%|
|More than 3 years but less than 4 years||40%|
|More than 4 years but less than 5 years||50%|
|More than 5 years||Mutual value decided by the insurance policy and the owner of the vehicle|
Deductibles in car insurance plan
A deductible is an amount the policyholder pays for claims not covered by the car insurance policy. For example, if your vehicle is worth 100000 and your deductible is 15000, you will receive 85000 as compensation. There are two types of deductibles under car insurance plans – compulsory deductible and voluntary deductible. Let’s have a look at what they mean –
As the name suggests, the compulsory deductible is a mandatory part of your car insurance plan. In the case of every claim, you would have to pay the compulsory deductible out of your pockets while the insurer would pay the rest. According to the Indian Motor Tariff, the compulsory deductible for cars depends on their engine capacity and is as follows -
- Private Cars (Not exceeding 1500cc) 500
- Private Cars (Exceeding 1500cc) 1000
Voluntary deductible is not compulsory. You can choose it if you want to avail yourself of a premium discount. If chosen, the voluntary deductible would be applicable over and above the compulsory deductible. You would have to pay for both these deductibles and the insurer would, then, pay the remaining amount of the claim. For example, say the compulsory deductible in your policy is Rs.1000 and you opt for a voluntary deductible of Rs.5000. Then, you have a claim of Rs.25,000. In this case, you would have to pay Rs.1000 + Rs.5000 for the compulsory and voluntary deductibles respectively. The remaining Rs.19,000 would be paid by the insurance company