car insurance is basically a cover that protects you financially against any sort of vehicular damage, theft, or total loss caused to you or a third party. In India, it is mandatory to have a car insurance policy, and failing to do so can result in a penalty.
But to make sure you are covered adequately, you need to get the right insurance cover. How do you find a perfect car insurance policy?
Choosing a genuine insurance provider is the key to a seamless insurance experience. Purchase the policy from an insurer who provides all the benefits that perfectly matches your needs.
The next critical step is to understand how car insurance works so you won't encounter any snags along the way. Knowing how car insurance works ensures you're protected every time you're behind the wheel.
So, What is Car Insurance?
It’s a contract between the insurance company and you where the insurance company agrees to cover expenses incurred by you due to an accident, theft, or total loss in exchange for a certain amount of premiums payable by you.
It provides coverage for damages incurred to you and your vehicle as well as damages caused to another person or his property. The coverage depends on the type of policy you choose.
Types of car insurance -
Third-Party Only Policy
As per IRDAI, third-party insurance is mandatory for all registered vehicles in India. Third-party liability insurance covers you against legal liabilities that occur due to the loss/damage caused by you to another person's body or their property.
As the name implies, it gives you complete coverage. This type of insurance policy covers third-party liability as well as the damages caused to your vehicle. Additionally, you have the option to purchase add-ons to widen the coverage.
Standalone Own Damage Policy
This covers the damages caused to your own vehicle due to an accident, fire, rain, theft, etc. It is possible to file a claim under this policy to cover the expenses incurred for repair work. Various add-ons can be added to this policy. The only caveat is that you must already have a third-party policy in order to purchase this policy.
Now, Let’s See How Car Insurance Works.
Purchase A Policy
In order to purchase a policy, you must provide your insurance company with details like vehicle specifications and your personal information.
The insurer will provide you with a quotation based on the details provided by you. Check if it contains the following aspects as per your requirements -
Desired Insured Declared Value
The price you might receive when you raise a claim in case of theft or total damage to the vehicle.
Additional benefits that can be added to your existing policy at a certain extra cost, like a RoadSide Assistance Cover , No Claim Bonus Protector, etc. Examine if all the details related to you and your vehicle are mentioned accurately.
The insurance company will send you a policy copy after you pay your premium amount. As soon as you obtain the policy, double-check whether all of the information enclosed in it is correct or not. You can either keep a paper copy of the insurance in the car or carry a soft copy in your smartphone once you've validated your information.
Making changes or additions to the policy's existing terms is known as an endorsement.
Endorsements are of two types -
- Endorsements That Entail Additional Payments
Corrections that will impact your premium. For instance, changing the fuel type, transfer of ownership, etc.
- Non-Payment Related Endorsement
Corrections that do not have an impact on the premium. For example, name spelling corrections, changing your email address, etc.
If you notice any discrepancy in the policy copy after reviewing the paperwork, you can contact the insurer for correction. Requests can be sent to the insurer via mail, or calling or toll-free no., or by visiting the insurer's branch in person. The insurer may request a few documents, depending on the type of endorsement. After receiving the documents, the insurer will verify them and will update the details. An endorsement certificate with the revised changes shall be sent to you.
If your vehicle happens to undergo an unfortunate event like an accident, theft, or any similar mishap- you need to file a claim by raising a request in your insurance company in order to get the cover amount.
Here is a list of the steps you will need to follow -
- You Can File The Claim By Contacting The Insurer Through -
- Toll-free number, or
- By visiting their branch.
- The insurer will request you to produce the required documentation and shall appoint a surveyor to inspect the car.
- Once the inspection gets over, you can have your car repaired at your insurance company’s network garages. Please note that if you repair the vehicle before inspection, your expenses will not be covered by your insurance policy.
- If it is a cashless claim, then you will just have to pay -
- Compulsory Deductible Charges
An amount fixed by the insurer that needs to be paid by you compulsorily.
- Consumable Charges (If Any)
Consumables are components that are easily worn out and need to be replaced on a regular basis. A comprehensive motor insurance policy does not cover the cost of consumables.
- Depreciation Charges Of The Parts (If Zero Depreciation Cover Is Not Taken)
A car's market value depreciates as it ages. In the event of a claim, the depreciated value of the parts is deducted from the total payable claim amount.
- The rest of the claim amount will be directly paid to the garage by the insurance company.
- If it is a reimbursement claim, you must pay for all the charges first, and then the insurance company will reimburse the approved claim amount in your account after the repair work is completed.
car insurance is typically a one-year contract that must be renewed every year. When the policy expiry date approaches, you will receive a reminder message from the insurance company, and you can renew the policy at that time. You will have the option of renewing your insurance with the same insurer or with a different insurer.
To renew the insurance, you can -
- Call the insurer's toll-free number
- Go to their website and complete the renewal process.
- Cancellation & Refund
You may want to cancel your policy for various reasons. For example, if you are not satisfied with your insurer's service or if you wish to sell your car, you can apply for cancellation. It is possible to cancel your policy at any time. The insurance company will ask you to produce certain documents in response to the cancellation request.
The refund will be processed once the insurance company has validated the documents. It takes 14-15 business days for the money to be credited in your account.
The refund amount is determined based on the date of cancellation.
- If the cancellation request is made prior to the policy's commencement date, the entire amount will be refunded, deducting the admin charges (if any).
- If the cancellation request is made after the policy period has begun, the refund will be done on a pro-rata basis.
car insurance is not only a legal requirement, but also a protective tool that covers you financially at all odds. Whenever you buy a new vehicle, take some time to read the policy wordings thoroughly and invest in the cover that best suits your needs. Now that you know how car insurance works make sure you follow the necessary steps to ensure a hassle-free insurance experience.