There’s uncertainty in everything, be it life or your possessions. As we go for life insurance so should we do for our possessions like our Car. Getting car insurance is an indemnity. In case of an accident, the damages that the car suffers are repaired, and if need be, the replacement of the part with new ones is made, and in extreme cases where a total loss is established, the insurance company pays the entire sum assured, i.e. the monetary value for which the car is insured. Accidents are uncertain and cannot be predicted. So, by getting our cars insured we rule out the possibility of a financial burden that we may incur if our vehicle meets with an accident and is damaged.
In fact, according to the Motor Vehicles Act, 1988, it is mandatory for every owner of a vehicle plying on public roads to take an insurance policy to cover the amount, which owner has to pay as he is legally bound as a result of accidental death, bodily injury or damage to property.
Motor Vehicles Act, 1988:
The Motor Vehicles Act deals with the legal provisions applicable to the following:
- The registration of a vehicle
- The driving license of a vehicle owner
- Mandatory insurance required for a car
The Act only necessitates the third-party liability policy. In case you are caught driving a vehicle without a minimum of third-party liability insurance coverage:
- You will be required to pay a fine of Rs.1,000
- In certain circumstances, you may even face a jail term of 3 months
- Your driving license could be suspended
- The registration of your vehicle could also be suspended
So, it is important that you abide by the law and purchase a suitable insurance policy for your car.
Why do you need car insurance?
There are several reasons for doing so, indemnity against uncertain financial loss being one.
- Minimises your liability: Buying car insurance reduces the responsibility on you in the situation of an accident that results in damages to you and the other person’s property or even injury. A Third Party Insurance covers you against legal ramifications of an accident.
- Pays for the damages: Indian roads are an unpredictable place, you never know what will hit you (literally), and we can tell you this, repairing an accident damaged vehicle can quickly become a pocket burner. So, car insurance protects you from such uncertainties.
- Pays for medical expenses: In the event of an accident, there are significant chances of injuries that require medical attention. Cuts, bruises, fractures are the aftermath. Car insurance also protects you against expensive hospitalisation bills.
- It helps you stay stress-free: In case you are not a confident driver, getting your car adequately insured will help in reducing the stress of driving. Even for experienced drivers, car insurance is a necessity as they may get involved in accidents for no fault of their own.
What are the types of car insurance?
There are three types of Car Insurances in India:
Zero Depreciation Car Insurance
Zero Depreciation Insurance, also known as Bumper to Bumper Insurance offers complete cover negation the depreciating factor of your car. In case of an accident, you will receive full coverage for your vehicle with no deduction in the coverage amount due to depreciation. In short, the insurance company pays the total remuneration for your car. Zero Depreciation Insurance demands over 15% to 20% premium compared to the standard insurance policy. Zero Depreciation Policy is a must-buy for new vehicles
Comprehensive Car Insurance
Comprehensive car insurance offers cover against damage to the vehicle, death of the driver or passengers and damage caused by the car to a third party vehicle, property or person.
Third-Party Car Insurance or Third Party Liability (TPL)
Third-party liability insurance offers limited protection. This type of car insurance protects you only against the costs incurred from the damage done by your vehicle to another vehicle, property or person.
Recently, a proposal has been floated according to which, the insurance coverage of cars could be for five years and more in addition to the existing one-year insurance. The modalities of such a provision are yet to be finalised, but this will undoubtedly be beneficial for car owners who sometimes forget to get their vehicles insurance renewed in time. If a vehicle is not renewed in time, the interregnum between the date when the insurance cover ended and the date on which it is renewed is not covered by insurance. If during this interregnum, the car gets damaged because of an accident, no indemnity will be payable.
How much premium should I pay for my car?
There are various factors that affect the premium for your car.
- Policy Type– First and foremost, it depends on the kind of policy you are purchasing. The premium for TPI is significantly less compared to Comprehensive and Zero Depreciation. Whereas, Zero Depreciation costs over 15% to 20% greater than standard.
- The make, model, fuel type– Generally, diesel cars demand more premium compared to petrol cars
- The driver– Yes, the driver, his/her age profession also plays a role in deciding the premium for a car.
- Geographical location– the location of the car also has a role here. Urban cars attract more premium
What is not covered in my car Insurance package?
The first thing we’ll advise you is to check with your insurance provider for a better understanding of the terms and conditions for your insurance package. We also encourage you to carefully read the clauses mentioned while purchasing car insurance for your vehicle.
Below are some of the car insurance clauses and exclusions.
- Any issues related to the vehicle due to the general ageing of the car
- Consequential loss
- Mechanical breakdown of the vehicle
- Wear and tear of car parts such as tires
- The policy won’t offer any cover for the damages incurred from using the vehicle outside the geographical location of the country
- No protection will be provided if the person is driving without a license
- No cover will be offered if the driver was under the influence of alcohol or drugs
- Damage incurred to the vehicle during a war or nuclear attack
- The policy does not provide cover if the car was damaged while being used for purposes other than what was mentioned in the policy
How to make a car insurance claim?
Given below is the procedure to make a claim in case your car was involved in an accident or in any other valid incident.
- In case of an accident, you’ll need to file an FIR at the nearest concerned police station.
- As soon as the accident occurs, the driver or the passenger should note down the number plate of the other car in case of a crash with another vehicle.
- Contact your insurance company immediately.
- Submit the documents like RC, PAN, Aadhaar, a copy of FIR required by the insurance company to process the claim.
- File a claim with the insurance company and note down the claim reference number