Availing a car insurance? Here’s everything you need to know

Availing a car insurance? Here's everything you need to know

While buying a car, we spend a considerable amount of time choosing the car we want to drive. The latest models, the features, the prices, we even compare cars in the same range of different companies. But we hardly spend time choosing proper car insurance which is going to help in an inadvertent situation.

The car insurance works on a “use it or lose it” policy. To avail the insurance, an individual must pay a yearly premium. The insurance works this way: If an individual met with a serious accident and want to claim, they can lose the premium amount paid for protection. On the other hand, a person can get a No Claim Bonus, which is a pretty substantial amount- starting from 20 percent of the premium in the first year to 50 percent in the sixth- which is why it’s sometimes advised not to claim for minor damages.

Insurers calculate the value of the insurance policy based on the Insured Declared Value (IDV) which is the maximum insured amount sum the insurer can pay you and roughly equals to the market value of the car.

The IDV is not a constant value and is calculated based on the showroom listed price. The IDV decreases when you renew your car insurance each year pertaining to the depreciation caused to the vehicle.

It is to be noted that quoting a figure less than the market price which enables you to pay a lesser premium, can also claim less for damages. Make sure you pay to renew your policy within the allowed 90 days or it may result in paying fines.

What does car insurance cover?

Any loss and damage caused to the vehicle due to natural calamities such as earthquake, tsunami, flood, typhoon, hurricane, storm, cyclone, landslides, etc. The insurance company will also pay for the damages due to man-made disasters like burglary, theft, riot, strike, terrorist activity, and any damage caused in transit via road, rail, or water.

The car insurance also provides for personal accident cover under which in the event of permanent disablement or in the unfortunate circumstance of your death, your insurer is obligated to pay coverage up to Rs 2 lakhs for any damage caused to the driver while travelling, mounting, or dismounting from the car. There is an optional additional cover for co-passengers that some insurers provide.

Under third party legal liability, the car insurance protects you against any legal liability of accidental damages that have resulted in permanent injury or death of a third party.

What does car insurance not cover?

According to policybazaar.com, generally, the comprehensive car (motor vehicle) insurance plan doesn’t provide the following coverage:

  • Ageing, wear and tear of the vehicle
  • Mechanical or electrical breakdown
  • Damage causes under the influence of alcohol, drugs and any other intoxicating substance
  • Damage caused by driver driving without a valid driving license
  • Consequential loss
  • Loss damage outside the geographical boundary of India

How to buy car insurance in India?

An individual can buy car insurance in two modes in India:

Online Mode- If you are not too keen on standing in queues and saving your time, you can buy car insurance online. This also gives you the advantage of comparing various car loans provided by different companies and making an informed decision. It is a transparent, hassle-free, economical and time-saving way of buying insurance.

Offline Mode- If you decide to buy insurance offline, you have to visit an insurance agent and the commission paid to the agents will be paid from your pockets.

Availing car insurance claim

With select insurers, you can claim online for the damages and moreover, you can avail their cashless garage facility for the repair of your vehicle, which basically means that you don’t need to pay a penny for repair as long as you avail the services at a garage that they have in their purview. You may also claim reimbursement for the car servicing if the garage is outside the insurer’s network.