Car Insurance

Smart Ways to Reduce Your Car Insurance Premiums:

While choosing a car insurance, the car owner can take certain steps to get the lowest insurance premium possible such as:

• Members of the Automobile Association of India will receive additional discounts on premium.
• Discounts will be offered to those who install anti-theft devices in their car for safety.
• No Claim Bonus (NCB) will be given to the policyholder in the form of premium discounts at the time of policy renewal. Don't make small claims such as dents and scratches. If you have not made any claims in the previous year, you will be rewarded with a No Claim Bonus at the time of policy renewal.
• Purchase car insurance policy online to get discounts on your premium and to avoid paying distribution costs.
• Increase the voluntary excess to lower the premium.
• Insurance providers may reduce the premium to those owning more than one insurance policy with the same company.
• Pay the premium on time to avoid policy lapse. Make it a point to renew your car insurance policy on time. You can begin the renewal process 2 months before the policy expiry date. Renewal process has become extremely easy and fast now with the online renewal facility provided by most reputable insurance companies.
• Park the car in a garage to increase its safety and lower its insurance premium.
• A smart device plugged into the OBD of the car engine can record the car owner's driving history. The captured data can be used by the insurance provider to determine the insurance premium at the time of policy renewal. Therefore, drive carefully to keep low risk scores.
• Nominate an experienced driver of a suitable age for the insurance policy.
• Opt for traditional cars as sports cars attract higher insurance premiums due to the high accident-risk factor. Similarly, vintage and classic cars will have higher insurance premiums as they require a specialised insurance policy.

Checklist to Follow to Make Car Insurance Settlement Claims More Faster:

The documents needed for accident claims are:

• Duly-filled and signed claim form.
• A copy of your vehicle's RC.
• A copy of your valid Driving Licence.
• A copy of the first 2 pages of your policy document.
• A copy of the FIR.
• The original estimate, invoice, and payment receipt for cash and cashless garage.
• Stamp required in the case of a company registered vehicle.

The documents needed for theft claims are:

• Duly-filled and signed claim form.
• A copy of your vehicle's RC with car keys.
• A copy of your valid Driving Licence.
• A copy of the first 2 pages of your policy document.
• A copy of the FIR.
• RTO transfer papers, and Forms 28, 29, 30, and 35.
• Final report from the police mentioning that the vehicle cannot be located.
• Stamp required in the case of a company registered vehicle.

The documents needed for third-party claims are:

• Duly-filled and signed claim form.
• A copy of the FIR.
• A copy of your valid Driving Licence.
• A copy of the first 2 pages of your policy document.
• A copy of your vehicle's RC.
• Stamp required in the case of a company registered vehicle.

Reasons to Change Your Car Insurance Provider:

At the time of policy renewal, many policyholders consider changing their insurance provider under certain circumstances such as:

• If you want to get a lower premium that is not offered by the current insurance provider.
• If you are dissatisfied with the service provided by the current insurance provider.
• If another insurance provider offers better discounts, add-on covers, and customised car insurance policies than your current insurance provider.
• The Claim Settlement Ratio and after-sales service of the insurance company has to be taken into account when choosing an insurance provider.

Auto insurance makes up almost 70% of the general insurance industry. There are several auto insurance companies competing with each other to get the attention of the customers. Compare the various insurance policies provided by top insurance companies before purchasing the one that best suits your car insurance needs. ICICI Lombard, Bajaj Allianz, Reliance Car Insurance, Tata AIG, and Bharti AXA are some of the top car insurance providers in India.

Advantages of Bumper to Bumper Car Insurance:

If you have decided to buy a car, you would be looking to protect it with the most optimum auto insurance plan. With this in mind, you decide to purchase a comprehensive car insurance policy. In the future if you are in a situation where you actually have to file a claim, you would realise that the comprehensive car insurance plan is not complete protection. So where is the gap?

• A standard private motor insurance policy does not cover depreciation due to regular wear and tear of the insured vehicle. This implies that at the time of a claim, the policyholder is required to pay a part of the claim amount that corresponds to depreciation.
• Consequential damage, which is an indirect outcome of a direct loss, is not offered coverage under a comprehensive plan either.
• The amount corresponding to excesses/deductibles will have to be paid by the policyholder.

The depreciation pertaining to specific parts of a car would amount to quite a lot of money. You can get an idea of this if you read the fine print of your policy document. As per the existing Insurance Regulatory and Development Authority of India (IRDAI) guidelines, the depreciation on car parts is as follows:

In the realm of car insurance, the problem of depreciation has a definitive solution. Insurance companies offer bumper to bumper cover to customers who would like to avail extra protection. Also referred to as zero depreciation cover, this type of insurance can be added to the base policy to enhance its coverage.

If a car is insured using bumper to bumper insurance, there is total coverage for all rubber, metal, and fibre parts of the car without any deduction pertaining to depreciation. Some insurers also offer key replacement facility, emergency transport, and roadside assistance feature along with zero depreciation covers.

In a nutshell, a car that is insured with a comprehensive base policy and bumper to bumper add-on cover will usually be covered for the following incidents:

• Own-damage cover
• Third-party liability cover
• Zero depreciation on car parts
• Cost of emergency transport
• Roadside assistance cover
• Key replacement coverage
• Tow-away services

The zero depreciation cover is also referred to as depreciation waiver policy or nil depreciation cover.

Why is Bumper to Bumper Insurance So Popular?

Bumper to bumper insurance is one of the top selling add-on car insurance plans in India. It is popular due to the following reasons:

• First-time car buyers prefer opting for this cover, as they are wary of accidents and subsequent claims.
• Car owners who employ drivers and those who use their cars regularly also favour this add-on cover.
• Owners of high-end cars tend to protect their vehicles using a nil depreciation cover.

Key features of the zero depreciation cover include the following:

• Bumper to bumper insurance policies offer greater coverage; hence, the policyholder is required to pay extra premium (in the range of 10% to 20% of the base policy premium) to avail this benefit.
• The cover is offered only to cars that are below 5 years old.
• The zero depreciation plan has limitations on the number of claims that the policyholder can raise in a year. Details of the limits will be mentioned in the policy document and it varies between insurers.
• The plan does not protect the vehicle from engine damage due to oil leakage or water ingression. Also, standard wear and tear to clutch plates, bearings, and tyres are not usually covered.
• Other exclusions under the plan are mechanical breakdowns that do not result in an accident, coverage for consumables, and cover for consequential damages.
• At the time of a claim, the policyholder will be required to pay a component of the claim value that corresponds to compulsory deductibles.
• The exclusions that usually fall under a comprehensive motor insurance plan are also applicable to bumper to bumper insurance:
  • Coverage is not offered if the private car is used for commercial purposes.
  • The driver not having a valid driving license is excluded from coverage.
  • If the driver is driving under the influence of alcohol or drugs, the cover will not be valid.
  • If the driver is involved in illegal activities or malicious driving, cover is not offered under the plan.
  • If a claim is not raised within the specified timeframe, it will be rejected.

What is cashless car insurance?

The cashless insurance facility was first introduced in the health insurance domain. It has since gained a lot of popularity and has become an intrinsic part of the car insurance sector today.

If your car is insured with a cashless auto insurance policy, then you can get it repaired at any of the garages in the network of the insurance company. The settlement of the repair costs will be directly between the network garage and the insurance company. Effectively, you will not be required to pay for the expenses, except for a small amount that corresponds to deductibles and depreciation of the car parts.

How Does Cashless Car Insurance Work?

The cashless claim settlement facility works as described below:

• All car insurance companies are affiliated to network garages across the country. This enables customers to avail cashless insurance facility, irrespective of their location. In effect, the cashless facility is an easy and hassle-free method of settling an auto insurance claim.
• The list of network garages will be available at the website of the insurance company. You can also get in touch with the insurer to receive instructions on how to reach the nearest network garage.
• The cashless claim facility can be availed on the insurance of used cars as well. However, you will have to check with your insurer on specific details regarding this.
• If your insured car is involved in an accident, you can avail the cashless claim settlement facility at any of the insurer's network garages.
• The insurance company will pay for all the damages incurred, except the excesses that were agreed upon in the contract.
• The cashless claim facility is useful for individuals who do not usually have a large amount of cash on hand. Also, the entire process is completely stress-free.
• Some insurers offer the roadside assistance service along with the cashless claim facility. The free towing, pickup, and car wash services offered as part of this package is particularly useful if your vehicle is involved in an accident in remote areas.
• The quality of service offered at network garages is usually better than that available at local garages. Hence, at a network garage you can be assured that your vehicle will be repaired in a more transparent and satisfactory manner.

A policy under which you can avail the cashless claim facility may have higher premiums. Also, there are instances where the approval for cashless claim settlement takes time. In case the damage incurred by your car is a minor one or if you want to expedite the repair work, raising a reimbursement claim can be a better option.

If you plan to raise a reimbursement claim, you can take the car to a local garage for the repair work. Following this, you can raise the claim for reimbursement of expenses with the insurer after submitting all relevant documentation.

How to Transfer Old Insurance to Your New Car?

The purchase of used cars has been gaining popularity in India. It should be noted that the process of buying used cars not only involves selecting the right brand and model; it also includes a very important step - the transfer of car insurance to the new car owner.

When you purchase a used car, the first step would be the transfer of the registration certificate (RC). Ideally, the car insurance should also be transferred at the time of transfer of the RC. The car owner should raise a request with his/her insurance company for the insurance transfer.

Once the new owner has bought the car, the policy of the previous owner will not be valid.

As per IRDAI guidelines, the name and address on the insurance documents of a car and the RC should match. So, in the event of an emergency, the new car owner can recover the incurred expenses without too many hassles.

The following documents are needed to transfer car insurance:

• Copy of the registration certificate (Form 29)
• Old insurance policy document
• No Objection Clause (NOC) from the previous car owner
• New application form, duly filled in
• Inspection report - This will be created by the insurance company after vehicle survey

Car Insurance Transfer and No-Claim Bonus:

The No-Claim Bonus (NCB) is a reward given to a car owner for not raising any claims in a policy year.

• The NCB cannot be transferred between owners of the same car, as it is not tagged to the car itself. So, when you transfer the insurance of your car to a new owner, the NCB accumulated on the insurance will remain with you. The NCB can be preserved through an NCB retention letter that is issued by your insurance company. Later the preserved NCB can be used on the insurance of a new car.
• If an individual is transferring the insurance from his/her old car to a new vehicle owned by him/her, the NCB can be shifted, as there is no transfer of ownership.
• Individuals can also retain the accrued NCB when they are transferring car insurance between providers. For this purpose, the car owner will have to get an NCB retention letter from the old insurance company. When the car owner produces the NCB retention letter to the new insurer, the NCB can be utilised to get a discount in the new car insurance premium. The NCB can hence be preserved for up to 3 years.

The following documents are required to request for an NCB retention letter:

• Policy cancellation request
• Original copy of the policy and certificate of insurance (Form 51)
• Notice of ownership transfer (Form 29), if applicable
• Application for intimation and transfer of the car ownership (Form 30), if applicable
• Copy of the RC book with the new owner's name, if applicable
• Proof that the car was delivered to the new owner, if applicable

Car Insurance Myths You Should Know About:

Like all subjects of mass interest in the financial domain, car insurance also has several myths associated with it. Understanding the fine print in car insurance policy documents is hard. What is harder is differentiating between right and wrong when it comes to auto insurance myths.

Listed below are 10 of the most common myths surrounding car insurance, debunked for you:

Myth 1 - My old car is not prone to theft:

This is completely wrong. Several studies have revealed that car thieves target older vehicles as these are easier to steal. Older cars are less likely to have the latest safety features installed and hence, appear to be better targets for misdoers.

Myth 2 - Getting car insurance is a very strenuous process:

With the availability of online car insurance policies, purchasing auto insurance has become a stress-free activity. You can buy motor insurance directly from the website of the insurance company. Some insurers have introduced the Photo Quote option where you can share a photo of your old insurance papers and receive a renewal quote instantly. But the best option would be to buy car insurance from a neutral third-party financial website like BankBazaar.

At third-party websites, you can compare policies from different insurers, check your eligibility, and buy a plan that suits you best. The entire process is hassle-free with limited paperwork, and the policy purchase happens in a matter of minutes.

Myth 3 - If I transfer my car insurance to another insurance company, I will lose my NCB:

The NCB is a reward offered by an insurance company to a policyholder if he/she does not raise any claims in a policy year. It is not attached to the policy itself. The policyholder can utilise the NCB to avail a premium discount at subsequent renewals of the policy. If he/she decides to switch insurance companies, the NCB will remain intact. The policyholder can procure an NCB retention letter from the old insurance company. This letter enables the NCB to be preserved for a maximum of 90 days. Within this time, the policyholder should buy a car insurance plan from the new insurance provider and attach the NCB to it.

Myth 4 - Car insurance only offers protection against accidents:

In addition to offering coverage for accidents, auto insurance also protects you against events that are not under your control. Natural calamities like earthquakes, lightning, landslides, and floods are offered coverage under car insurance. Man-made disasters such as thefts, riots, burglaries, damages incurred in transit, and terrorist activities are also covered.

Myth 5 - The entire process of raising a claim and getting it approved is very inconsistent:

No, it is not. In fact, the claim settlement process is quite straightforward. You will be required to log in to your insurer's website and update a claim form. After you submit the form, you can track the progress of the application online. Within 24 hours of raising the claim, you will be contacted by the insurer. The next stage is the submission of supporting documents for the claim. If needed, you can request for assistance from your insurance company throughout the claim process. Insurers have dedicated customer service numbers where you can get clarification for all your queries.

Myth 6 - My friend was driving my car at the time of an accident. This makes him responsible for the damages:

The insured car that was involved in the accident is yours. This implies that you are solely responsible for the damages, irrespective of who was driving it. You will have to raise a claim with your insurer and see the claim settlement process through.

Myth 7 - My personal belongings inside my insured car are covered under the plan:

If your valuable personal property was inside your car when it was stolen, you are out of luck. Personal belongings stored in a car do not come under the ambit of the vehicle's insurance.

Myth 8 - The colour of the car has an impact on its insurance premium:

There is a belief that red cars are more costly to insure. The reality is that car insurance companies do not take into consideration the body style or colour of the car when deciding on the insurance premium. Several other factors such as make and model of the vehicle impact the insurance premiums to a certain extent, but not the colour.

Myth 9 - If my vehicle is stolen, then the insurer will reimburse an amount equivalent to the cost of a new car:

That is not how car insurance works. Insurance claims work on the principle of indemnity. This implies that after you receive the claim payout, you will be in the same financial position that you were in before the damage occurred. In the case of a stolen car, the insurance company will calculate the cost of your vehicle after depreciation. From this value the excesses will be deducted. The remaining amount is offered to you as claim payout.

Myth 10 - If my car meets with an accident, I have to pay for the damages from my own pocket and get it reimbursed from the insurance provider later:

The advent of cashless car insurance has revolutionised the way claim payouts are made in the car insurance sector. If your policy allows you to avail cashless car insurance, you can get your vehicle repaired at a network garage without having to pay for it. The payment will be settled directly between the insurer and the network garage. This is an easy and hassle-free claim settlement facility when compared to the process of reimbursement claims.

How to Verify the Authenticity of Your Motor Insurance Policy:

Most of the insurance frauds in India are committed by making false claims. However, there have been instances where the policies purchased were fake. This usually happens when customers buy insurance policies from agents who are not authorised to sell insurance.

It would certainly be devastating to an individual to learn that the policy towards which he/she has been paying premiums was fake. More often than not, this realisation happens at the crucial time of raising a claim.

Listed below are some ways in which you can tackle the frauds in auto insurance:

• Get in touch with the insurance company - The simplest way in which you can check the validity of a policy is by contacting the insurance company. You can send an email or contact their customer care number for the same. Alternatively, you can walk into the insurer's branch office and enquire about your policy.
• Ask for a receipt when buying - When purchasing a car insurance policy, always request for a payment receipt. This is particularly important when you are paying by cash. You should also verify whether the details on the receipt are accurate.
• Pay the insurance premium by cheque - Fraudulent activities can be mitigated to a certain extent if you refrain from paying premiums by cash. Paying for your insurance by cheque and addressing it to the right beneficiary will help you in the long run.
• Check the NCB, IDV, and deductibles - Once you receive the policy document, you should check whether the No-Claim Bonus (NCB), Insured Declared Value (IDV), and deductibles are as per the verbal agreement.
• Check the signature on the cover note/insurance proposal form - Always insist on signing the proposal form yourself. This also allows you to review the declared items in your policy. For instance, if your vehicle has a CNG kit installed, it should ideally be declared at the time of buying insurance. You can verify this when you attest the insurance proposal form yourself.
• Beware of fraud when you are offered an unusually low premium - You may have been looking out for a cheap car insurance plan. But you should be wary of buying a policy that comes with an unusually low price tag.
• QR code - IRDAI has mandated that car insurance policies should carry QR codes. If you install a QR code reading application on your mobile phone, you can verify the validity of a policy instantly.

Buy insurance online - There are several neutral third-party financial websites that offer you the facility to compare insurance policies and arrive at one that best matches your needs. This facility is offered absolutely free of any charges. Make use of this facility as much as possible. BankBazaar is authorised to sell insurance and this takes place through a highly secure process. The entire purchase activity is quick and hassle-free as well.

What Decides Your Future Auto Insurance Premium?

There are several factors that come into play when the insurer calculates your car insurance premium. Listed below are some of the most important parameters that determine your premium:

1. Type of insurance cover - Car insurance can be broadly classified into two types, i.e., third-party liability insurance and comprehensive insurance. The former does not offer coverage to the owner of the vehicle or for damages incurred by the insured car. The insurance cover is provided only for damages caused to third-party property or life in an accident.

Comprehensive car insurance offers wider coverage to the insured car. This cover includes damages incurred by the insured vehicle, in addition to third-party liability cover. The premium for comprehensive car insurance is higher, as it provides extra protection.

2. Geographical location - The city where the vehicle was registered has a direct bearing on its insurance premium. Also, if the car is usually parked in a locality that is prone to thefts, the premium for its insurance would be higher. Insurance companies have classified locations as insurance zones based on the risk that the car is exposed to. In metros, the rate of accidents and vandalism is high. This indicates that car insurance will be more expensive there.
3. Engine capacity - The third-party liability cover in car insurance is based on the vehicle's engine capacity. So, this is influential in determining your auto insurance premium.
4. Security features - If your car is equipped with the latest security devices, such as handle lock, gear lock, GPS tracking device, airbags, etc., the vehicle would be at a lower risk for theft. Insurance companies usually offer discounts in premium for cars that have security devices installed. These equipments should also be approved by the Automotive Research Association of India (ARAI).
5. Car accessories - If you have got add-on accessories installed in your vehicle, your auto insurance premium may go up.
6. Claim history - The premium that you would pay for your car insurance depends on whether you have raised a claim in the previous policy year. Policyholders with a history of claims would have to pay higher premiums.
7. Riders - Car insurance riders can amplify the protection offered by insurance policies. The customer would, however, be required to pay additional premium to buy riders.
8. Model of the vehicle - A customer will have to pay a higher premium for buying insurance for an expensive car. The registration date and year of manufacture of the vehicle also influences the premium amount. If the car has expensive spare parts, the premium will be higher as well.
9. Purpose of the car - If the car is being used for commercial purposes, the policyholder will have to buy insurance suited for commercial vehicles. This will come at a higher premium.

What to Avoid When Buying a Car Insurance Policy?

When buying auto insurance, it is important that you get the right policy for the protection of your car. You can amplify the coverage of your car insurance by adding riders to the base policy as well. Since car insurance is not a purchase that you make everyday, people are quite unfamiliar with the process. They usually do not know what questions to ask when buying insurance and how to get the best coverage at the most optimum price.

Listed below are some of the most common mistakes that people make when buying an auto insurance policy:

• Not buying enough coverage - It may be tempting to save some money by not purchasing a comprehensive car insurance plan. But this can prove to be a big mistake if you happen to get involved in an accident and are liable to pay a huge amount for the damages. To avoid such situations, it is better to get a substantial amount of insurance cover for your car. So, stay away from the ‘lowest price' trap.
• Not informing the insurance provider of customisations - In case you have opted for customisations on your vehicle, you should declare it at the time of insurance policy purchase. Even if you are thinking of allowing another person in your family to use the car, you should inform the insurer. Also, if there are any changes in the way the car is used, the insurer should be notified. Otherwise, you may be disappointed at the time of a claim.
• Not comparing policies from different insurers - It is a good practice to compare insurance policies offered by different providers and check your eligibility. This way, you will be better equipped when opting for a plan.
• Not reading the policy terms and conditions - When you buy a car insurance plan, it is important that you read through the policy documentation thoroughly. Keep track of what is included in the coverage and what is not.
• Buying coverage that you do not need - The friendly insurance agent may coax you into buying car insurance riders that you probably would not benefit from. So, it is advisable that you do a basic level of research yourself before buying a plan and add-on covers.
• Not looking at the reputation of the insurer - When buying car insurance, it is advisable to review the offerings from an insurance company and its claim settlement ratio. The customer service of the insurer you choose should also have a good reputation.
• Not revealing the truth to your insurance provider - You should always provide accurate information to your insurance company. If you fudge the facts in an attempt to get a better rate, you may even be denied a policy. Worse still, the insurer may come to know about the inaccuracies at the time of a claim and reject your claim altogether.
• Not updating your car insurance coverage after significant life changes - Certain changes in your life, such as a marriage or divorce could have an impact on your insurance needs. So, you should review your insurance coverage when you reach certain milestones and revise it, if needed.
• Not buying bundle insurance for discounts - Some insurers offer discounts to customers who buy multiple insurance policies from the same company. So, if you are planning to buy auto insurance, assess whether you will be needing health and life insurance as well. You could benefit largely by buying all required policies from the same provider.

What is an Endorsement for Car Insurance?

An endorsement in car insurance is an addition or amendment to an existing policy to improve/limit its scope.

• An insurance endorsement can be utilised to add, exclude, alter, or delete coverage under the plan.
• The endorsement can be issued at the time of policy purchase, at mid-term or at policy renewal.
• A car insurance endorsement remains in force till its expiry. It may be renewed under the same terms and conditions of the base policy as well.
• If you get a car insurance endorsement, your premium is likely to change. On expansion of coverage, you will have to pay higher rates. Coverage restriction such as exclusions will give you lower rates.
• Endorsements will be issued in the following circumstances:
  • When you have a life change, such as shift in car ownership, geographical location, etc.
  • When you are travelling using a rental car and would like to avail insurance for the rented vehicle.
  • When you have a shift in your budget.
  • When you add a CNG/LPG kit in your vehicle.
• When an endorsement is made in your car insurance, you will receive a new page i.e., an endorsement certificate, in your policy that details the changes in the coverage. The original policy will not be altered.

Types of Endorsements in Car Insurance:

Endorsements can be classified into two types, i.e., premium bearing endorsements and non-premium bearing endorsements. Under a premium bearing endorsement, the policyholder is required to pay an additional premium towards the policy. A non-premium bearing endorsement, on the other hand, would cause a reduction in the annual premium.

1. Premium bearing endorsement:

Events like transfer of ownership of the vehicle, addition of a Personal Accident cover, installation of electrical accessories, etc. can necessitate a premium bearing endorsement in your car insurance policy. A list of probable events and the documents required to include these as endorsements in a motor insurance policy are elaborated in the table below:

Event	Documents required
Ownership transfer	Endorsed Registration Certificate (RC) or signed Form 29 and Form 30 Letters from the buyer and seller A fresh proposal form that is updated and signed by the new owner A copy of the original policy A report of vehicle inspection The endorsement premium amount
Correction of the ex-showroom price of the vehicle, if incorrectly mentioned in the policy	Request letter from the policyholder Copy of the invoice If there is an increase in premium following the endorsement, the difference in premium amount needs to be paid
Addition of CNG/LPG kit	Request letter from the policyholder Endorsed RC Copy of the invoice of the CNG/LPG kit A report of vehicle inspection If a bi-fuel kit is added, there would be an increase in premium. The difference in premium amount needs to be paid
Addition of Personal Accident cover for passengers	Request letter from the policyholder RC, so that the seating capacity of the vehicle can be checked The premium amount for endorsement
Removal of an anti-theft device approved by the Automotive Research Association of India (ARAI)	Request letter from the policyholder Invoice copy of the device Since the removal of an anti-theft device increases the premium, the difference in the premium amount needs to be paid
Electrical accessories installation or removal	Request letter from the policyholder Accessories invoice copy A report of vehicle inspection Premium amount
Non-electrical accessories installation or removal	Request letter from the policyholder Accessories invoice copy A report of vehicle inspection Premium amount
Expansion of the geographical area to include Bhutan, Bangladesh, Nepal, Maldives, Sri Lanka, or Pakistan	Request letter from the policyholder Premium amount
Inclusion/removal of membership with automobile association	Request letter from the policyholder Proof that the policyholder is a member with the automobile association Premium amount when the membership is revoked or expires
Participation in rally	Request letter from the policyholder Premium amount

2. Non-premium bearing endorsement:

Events like correction of your vehicle's registration number, change in nominee details, mobile number change, etc. require a non-premium bearing endorsement. A list of probable events and the documentation needed for including these as endorsements in a car insurance policy are explained in the table below:

Event	Documents required
Chassis/engine/registration number correction, if it is incorrectly mentioned in the policy	Request letter from the policyholder Endorsed copy of the RC
Correction in the “type” of customer, if it is incorrectly mentioned in the policy	Request letter from the policyholder Copy of the RC / invoice
Correction in the name of the customer/corporate or prefix, if it is incorrectly mentioned in the policy	Request letter from the policyholder Copy of the RC / invoice
Correction in the customer's city/address/gender	Request letter from the policyholder Copy of the RC / invoice
Change in lease agreement, hire purchase agreement, hypothecation agreement	Request letter from the policyholder Endorsed copy of the RC NOC or sanction letter from the financial institution
Nominee details correction, if it is incorrectly mentioned in the policy	Request letter from the policyholder
Change in mobile number or contact details of the policyholder	Request letter from the policyholder

How Much is the No-Claim Bonus for Car Insurance in India?

The No-Claim Bonus (NCB) is a significant benefit that a car owner can receive from his/her car insurance company. This is a proposition that bring down your auto insurance premium by upto 50%.

If a car owner does not raise any claims in a policy year, he gets an NCB that amounts to a discount in premium The discount is offered at the time of policy renewal. The NCB increases each claim-free year according to the following table:

What are Consumables in Car Insurance?

Consumables are goods used in cars that need to be replaced on a regular basis, as they wear out or get used up. This includes materials such as nuts and bolts, screws, brake oil, engine oil, fuel filter, ball bearings, oil filter, air conditioner gas, lubricants, washers, grease, etc.

Consumables are not offered coverage under comprehensive car insurance policies. If you want coverage for consumables as well, you will have to buy a separate add-on plan that can be used to enhance the coverage of your base policy. You will have to pay an extra premium towards the car insurance consumables rider.

For a consumables claim to be valid under the add-on policy, it should adhere to certain conditions, as indicated below:

• The claim should be in alignment with the terms under the own-damage section of the comprehensive plan. So you should be familiar with the own-damage section of your policy document.
• Another condition that needs to be met is that the repair to the car consumables should be undertaken within 3 days from the date of theft or loss.

The consumables add-on policy is only offered to vehicles that are less than 5 years old. Cars that exceed this age limit are not eligible to avail this protection.

Auto Insurance Loyalty Rewards:

It is not uncommon that customers get lured through strategic advertising campaigns and promises of lower rates from insurance companies. But before you stray off from your current insurer, you should take stock of what you already have in hand. You may then realise that the perks of staying with your current insurance company far outweighs the benefits offered by another.

Advantages of car insurance loyalty:

• Loyalty discounts - Loyalty discount, also referred to as longevity, persistency, or tenure discount, is usually offered in the form of a small discount in premium. However not all insurance companies offer loyalty discounts. Sometimes, higher discounts are offered to customers who have spent a longer time being insured with a company. Several insurance providers also offer premium rebates when customers switch to avail their services.
• Accident forgiveness - Some insurers may offer you an accident forgiveness benefit. This is essentially a promise of not raising your renewal premium the first time you have a minor accident, provided that you remain claim-free for a significant amount of time preceding the mishap.
• Leniency and good service - Some insurance providers may be more lenient when long-time customers are involved in road violations, even when they do not offer accident forgiveness programs. Other perks of being a long-time customer include:
  • If you are a little late on your premium payment, the insurer is more likely to reinstate your policy without levying any penalties.
  • Insurers are more likely to address your concerns and offer resolutions in a more efficient manner.

Disadvantages of car insurance loyalty:

Some insurance companies use a technique known as “price optimisation” to penalise loyal auto insurance customers. Long-time policyholders are charged higher premiums because the insurer believes that they are less likely to switch to a different insurance provider for a better price.

In a nutshell, customers should look beyond discounts and loyalty rewards when opting for a suitable car insurance plan. Consumer reviews, customer service, cost of insurance, and the company's financial stability are more important factors to consider when deciding to stay with an insurer.

Why your Car Insurance Claim was Rejected:

Paying for the damages after a road mishap can be frustrating. But the situation in which your car insurance company fails to honour the claim can be totally devastating. To avoid last minute surprises, it is important to read through your policy documentation and be aware of the nuances in the fine print.

Listed below are some of the most common reasons car insurance companies reject claims:

1. Car insurance policy in lapsed status - If your policy was in lapsed status at the time of the mishap, the insurer will reject the claim. Hence, it is important to keep your auto insurance policy in-force without a gap of even a single day.
2. Delay in intimating the insurer - Car insurance companies mandate that all accidents be reported within 24-48 hours of occurrence. In case you forget to inform the insurer within this timeframe or use your damaged car after the accident, your claim is likely to be declined.
3. Driving without a valid license - The driver of any vehicle on the road should carry a valid driving license - this is the law and should be adhered to strictly. If your car was involved in an accident and you fail to produce a driving license at that time, your insurance claim will not stand valid.
4. Driving while you are drunk - Drunk driving is a serious traffic offense that can be penalised heavily. No claim can be raised if your were under the influence of drugs or alcohol when the accident took place.
5. Using the car beyond limitations - If your car insurance company learns that the accident occurred while you were using the car inappropriately beyond its limits, your auto insurance claim will be declined.
6. Undertaking repairs of the car without informing the insurer - This is a very crucial requirement that is often overlooked by car owners. If your insured vehicle is involved in an accident, you should inform the insurance company before proceeding for repairs. The insurer will send a surveyor to assess the damages incurred by the vehicle before it is taken to a garage. Failure to get the car surveyed can result in a claim rejection.
7. Car insurance not in your name - Car insurance companies mandate that the insurance policy and the registration certificate of the vehicle should be in the name of the car owner. Any mismatches in the information will result in the refusal of claim. So if you are buying a used car, ensure that the registration certificate and car insurance are transferred to your name.
8. Customisations to the car that were not included in the policy - If you have installed an accessory in the car that was not declared in the insurance policy, the insurance company may reject your claim. Claim refusal is possible even if the damage incurred by the car was not related to the installation.
9. Usage of the car beyond the geographical limit in the policy - Automobile insurers have segregated geographical zones for insurance. The metros such as Mumbai, Delhi, Chennai, and Kolkata are classified as Zone A. The rest of the country falls under Zone B. If the insured car was involved in an accident outside the zone specified in the insurance policy, there is a good chance that the claim for damages will be rejected.
10. Normal wear and tear - The normal wear and tear of a vehicle is not covered under a comprehensive car insurance policy. So, even if your claim was honoured by the insurer, you may not receive the full claim amount. The portion of the claim that corresponds to depreciation (due to periodic wear and tear) will have to be borne by you.
11. Consequential damages - If your car has suffered from a consequential damage, your insurer will not offer coverage for it.
12. Certificates for commercial vehicle - If a commercial vehicle's driver does not have valid road permit and fitness certificate issued by the RTO as on the date of the accident, then the claim can be rejected.
13. Misrepresentation of events - If you do not represent the facts accurately at the time of raising the claim or if there is a fraudulent document submitted, the claim will be rejected.

What are Voluntary and Compulsory Deductibles in Motor Insurance?

A deductible is the amount of money that the insured car owner pays in the event of a claim just before the insurance plan kicks in and starts paying the rest. Consider a scenario where the damages on your car would cost you Rs.3,000 for repair.

• If your car insurance policy states that the total amount you will have to bear as deductible is Rs.2,500, then the insurer will only provide you Rs.500 as claim payout.
• In case the expenses for the repair come up to Rs.2,500, you will have to bear the entire cost.

What is the necessity of a deductible? A deductible protects the insurance provider against small and unnecessary claims. It also ensures that car owners are more careful while driving, as they will be required to bear a pre-defined amount of the claim value. Additionally, opting for a large amount of voluntary deductible ensures that your premium is reduced by a significant amount.

Car insurance deductibles can be classified into two types:

1. Compulsory deductible/compulsory excess - This is a fixed amount decided by the insurance company, in accordance to the IRDAI guidelines. The compulsory deductible under a car insurance policy depends upon the engine capacity of the vehicle. The India Motor Tariff determines the standard rate for compulsory deductible as follows:

Private cars up to 1,500 cc	Rs.1,000
Private cars above 1,500 cc	Rs.2,000
Motorised two-wheelers	Rs.100

Older cars bear a higher risk of claim. So, the insurer may charge a higher compulsory deductible if the car is older. The compulsory deductible in car insurance does not have an impact on the premium.

2. Voluntary deductible/voluntary excess - The voluntary deductible is an optional amount chosen by the policyholder, wherein he/she agrees to pay a part of the claim amount before the insurer pays the rest. The policyholder chooses this amount based on his/her affordability and the risks on the vehicle.

The voluntary deductible is inversely proportional to the premium that you pay towards car insurance. This implies that if you choose a high voluntary deductible value at the time of policy inception, you will have to pay a lower premium towards the policy.

To summarise, the key differences between compulsory and voluntary deductibles are as shown in the table below:

Compulsory deductible	Voluntary deductible
No flexibility, as it is chosen by the insurance provider in line with the IRDAI regulations	It offers flexibility, as the policyholder can decide on this amount based on his/her needs
Does not affect the premium	High voluntary deductible implies that the premium will be lower
Does not affect the savings of the policyholder	Opting for voluntary deductibles has a long-term effect on the car insurance premium and hence, the savings of the policyholder
If the policyholder has not opted for voluntary deductibles, in the event of a claim, he/she only pays the compulsory deductible amount	Consider a scenario where the policyholder opts for voluntary deductibles. During a claim, he/she has to pay both the compulsory deductible and voluntary deductible amounts

So when should you opt for voluntary deductibles? If you are an attentive and experienced driver, then you will benefit greatly from the voluntary deductibles option. This is due to the fact that voluntary deductibles help you save considerably on your car insurance premium, and the chances of you getting involved in an accident are less. However, you should select the deductible threshold judiciously. Otherwise, you may struggle to pay at the time of a claim.

What is RTI in Car Insurance?

Depreciation is the reduction in value of your car with time. It can be due to the wear and tear that it experiences over the course. At the time of a claim, the insurance company calculates the market value of your vehicle as its Insured Declared Value (IDV).

IDV = (Amount you initially paid for the car at the time of purchase) - (Its value of depreciation) Considering that cars depreciate at a quick rate in the initial years, if you incur a total loss to your vehicle, in spite of the claim payout,you will lose a good amount of money as depreciation.

• RTI is add-on insurance that covers the gap between the cost price(invoice value) of your vehicle and its IDV.
• If your car is protected with this rider, you stand to receive the entire amount that you lost in the mishap, i.e., the on-road cost price of your vehicle.
• Usually, the cost of the RTI cover is 10% more than that of the comprehensive plan to which it is attached.
• RTI cover is not an option when you are intending to claim for small repairs to your car. It helps you retrieve the financial loss when your car is damaged beyond repair or is stolen. So, an individual who stays in an area where car-theft is common or someone who does not park his/her car in a secure place can opt for this cover. People who travel long distances frequently can also take this coverage.
• The RTI cover is not offered to cars that are more than 3 years old.

Third-Party Car Insurance Claim:

Not many car owners have a complete understanding of the third-party liability cover for which they have been paying premiums for a long time. Here we take a look at the coverage under third-party liability insurance and the claim process.

1. Coverage - In India, third-party liability insurance is mandated by the Motor Vehicles Act. Hence, a standalone liability policy is also referred to as ‘Act only' insurance. Such a policy does not offer coverage for the insured car or its owner. It offers protection to the car owner for damages caused to the life or property of a third-party, while using the insured vehicle.

So, if you are involved in an accident while driving your insured car, the third-party can raise a claim with your insurer. There is no limit on the liability for death or injury. However, the liability for damage to third-party property is a maximum of Rs.7.5 lakh. If the damages incurred are beyond this compensation amount, the balance will be borne by you.

1. If you are the third party hit by another vehicle, then you can raise a claim for damages from the insurer of the other person.
2. In case you have been injured, you can claim for medical expenses. You can also claim for the loss of earnings if you have been unemployed due to the accident.
3. If a life was lost in the mishap, the claim can include the charges for medical treatment before death.
4. In case there was damage to property, i.e., your car, you would have to submit the original bills from an authorised car service centre, the car inspection report, and the surveyor's report to quantify the loss.
5. If your claim is approved, you will be offered compensation by the other person's insurance company.
2. Claim process - Consider a scenario wherein you have been involved in an accident and are looking to raise a claim under the third-party liability insurance of the other person. The claim process under third-party liability insurance is not easy.
1. The process starts off by filing an FIR with the police and getting a charge sheet.
2. After this, you will have to go to an auto insurance claims lawyer. A case will have to be filed in the Motor Accident Claims Tribunal. You will have to approach the tribunal with jurisdiction in the area of the accident. Alternatively, you can approach the tribunal in the area where the defendant resides.
3. The court hears both sides of the argument and examines the evidence furnished before deciding on the liability.
4. If the decision in your favour, you will receive compensation for the loss.
5. Subrogation is the process by which the insurance company of one party pays for the damages incurred by the other party. This amount is then claimed as reimbursement from the insurer of the latter. This is possible only with comprehensive car insurance, and the insurer will decide whether to proceed with subrogation or not.

The claim process gets complicated based on the coverage of both parties. Let us take an example in which individual X has suffered damages to his car by individual Y's car in an accident. Listed below are different permutations of the coverage situation and the outcome:

• When X has only third-party liability insurance

Since the damages are incurred to X's car and he doesn't have comprehensive coverage, he can claim for compensation under the third-party liability insurance of Y's car. Also, X should establish in court that Y was at fault in the accident. In case the court decides in X's favour, he will not receive the complete amount. The claim payout will be the liability amount that is decided by the court.

• When X has comprehensive car insurance

X can choose any of the following options:

• He can raise a claim under the ‘own damage' section of his car insurance policy. Although this is the easiest method, it could result in the loss of the accrued NCB.
• He can file a case in the Motor Accident Claims Tribunal and fight a case in court on his own to get compensation under Y's car insurance policy.
• He can request his insurance provider to subrogate the case and fight in court on his behalf.
• When X and Y have comprehensive car insurance

A case for third-party insurance claim will only be subrogated if both parties have comprehensive car insurance and a death or disability was involved in the mishap. These claims will take very long to get settled as well. If the damages incurred by X is limited to his property, he should try to settle the claim out of court. In case this is not followed, he should ensure that the FIR is updated with an accurate description of the incident and keep original records of the expenses incurred to justify the loss.

Problems with Car Insurance Claims:

Policyholders usually consider claims to be a natural part of the outcome of purchasing a policy. You are right in expecting the insurer to stand by the terms and conditions mentioned in the policy documentation. However, you should be aware of the fact that the claim settlement process following an accident can be quite daunting. You should know about the issues that may crop up along the way, so that you are better equipped to handle them effectively.

Listed below are ten of the most common problems with auto insurance claims, for your reference:

1. Failure to inform the insurer immediately - The longer it takes for you to intimate your insurance company of the accident, the tougher it gets for the claim to be approved. Following an accident, you should decide quickly whether you want to raise a claim or not.
2. Not providing all information - It is crucial that you document all information related to the accident. You may need to capture photos and speak to witnesses for the same. It is also important to inform the police of the mishap and file an FIR.
3. Delay in determining fault - It is natural for each driver to blame the other for the accident. Even if an individual accepts the fault at the scene of the accident, he/she may change his stand after getting into talks with his/her insurer. You should, hence, be very cautious when a third-party is involved in the accident.
4. Not knowing how to proceed - It is important that you are aware of the car insurance claim process so that it goes smoothly and the payout is quicker. If you take some extra time at each step, you will be able to ensure that everything is in order. This practice can eventually save you a lot of time and effort.
5. Failure to purchase sufficient coverage - At the time of policy purchase, it is advisable to buy sufficient cover. Otherwise, you may be disappointed at the time of a claim.
6. Not revealing all details to the insurer - Some customers do not reveal all relevant details at the time of car insurance purchase. However, this can prove to be disadvantageous in the long run. If you are in a situation where you have to raise a claim, the insurer may identify that you had concealed information and penalise you for the same. This can even result in the rejection of your claim.
7. Selecting the garage - All insurers allow you to pick a garage of your choice where you can get your vehicle repaired. Most insurers recommend that you get the repair work done at network garages. This is because the insurance company will already have good relations with the service centres that are in its network. This way, it will be able to negotiate on better deals for the repair work, and even expedite the process.
8. Ambiguous terms and conditions in the policy - Some insurance companies have ambiguous terms and conditions in the policy documentation. So, it is important that you read through the policy and understand the coverage under it. In case you require any clarification, you can approach the insurer for explanation. Hence, you will be better equipped at the time of a claim.
9. Low offers - Insurance providers have claim adjustors who try to keep the cost to the company at a minimum. So, the first offer they make may be a very low value. Before you submit the claim, you should personally make an assessment of the amount you are willing to settle for. Do not agree to the first offer from the insurer unless it is in line with your expectations.
10. Delay in payment - Most of time, the claimant waits for the payment endlessly, without enquiring about the status of the case. If you experience a delay in receiving the claim payout, you should approach the insurer and check the reason for the same. The insurance company may be waiting for some documents from you. So, it is alright to ask questions and chase it up.

How to Negotiate with your Insurer on an Auto Insurance Claim:

If you have been involved in an accident, coping with the aftermath can be very difficult. This is particularly painful when you have suffered injuries or there are damages to your car. In any case, it is crucial to negotiate with your car insurance company in an effective manner so that you get what you deserve.

It should be noted that auto insurance providers may try to avoid paying you the entire claim amount, as they would always be looking to reduce costs. If, at any point, you feel that the negotiations are overwhelming, you can always seek the assistance of an experienced auto insurance lawyer. He/she will be able to help you navigate the negotiation and claim settlement process easily.

Here are some tips to help you negotiate with your insurer:

• Initiate the claim immediately after the accident - You should get in touch with the insurance company soon after the accident. This way, you will be able to recall all details about the mishap and report property damages or injuries accurately.
• Record the incident elaborately - It is useful to keep a file with records on the accident, arranged in a chronological manner. The file should also have a police report, records of visits to the hospital, car repair bills, and anything else that is associated with the accident. These documents will be very useful during the negotiations, and keeping them handy will expedite the claim settlement.
• Pre-calculate a fair settlement amount - Before you raise the claim, you should assess the damages that you have suffered and determine an amount that you think would be the worth of your claim. Remember to consider the following costs:
  • The medical expenses borne by you.
  • The income loss you suffered due to your injuries.
  • If you have been permanently disabled or will require medical care for an extended duration, take that into account as well.
  • Try to quantify the pain and suffering you went through after the accident.
  • The expenses incurred in repair or replacement of your car/car parts.
  • Cost of damage to other property in the accident.

Based on this information, you should decide on a minimum figure that you would settle for. In this aspect again, a car insurance attorney can be of help.

• Send a demand letter to the insurer - After you have identified what your claim is worth, you should send a demand letter to the insurance provider. Describe the accident, the injuries you suffered, the medical treatment you have availed, your ongoing health issues, damages to your car, and any other losses that resulted from the accident. Then you should inform the insurer of the amount you are demanding.

Since the insurance company is likely to settle on an amount that is 25%-75% lower than what you have demanded, you should take that into account when putting forth the claim. It is important that you have all relevant documentation with which you can support your claim. Any lack of evidence may jeopardise your chances of getting what you deserve.

• Refrain from accepting the insurer's first offer - When the insurance adjuster offers you an amount for the first time, it will most probably be too low. This may be a tactic that the company uses to see if the claimant is aware of the actual worth of the claim. You can ask the insurance adjuster to justify his low offer with specific reasons. Respond to the points raised by him/her in a reply letter and explain why you cannot agree to the offer. At this point, you should wait for the insurer to increase the offer. Later on, you may counter the offer from the insurance company with an amount that both parties can agree to.
• Stress on the points in your favour - When you are communicating with the insurance company, you should emphasize on your strong points. If you have been injured and will be suffering for a long duration, discuss how this is going to affect your finances and quality of life in the long run. If you have missed employment due to the accident, reinforce on the wages you have lost and how this has impacted your family. Ensure that the insurance company understands that you need fair compensation for your losses and injuries.
• Get all agreements in writing - You should note all your conversations with the insurer diligently. You can request for all settlement offers to be provided in writing. Ensure that all stakeholders are in agreement with a decision as well.
• Hire a lawyer, if necessary - If you are unable to arrive at a fair agreement even after negotiations, you may need to hire an attorney. An experienced professional will be able to evaluate your situation and assist you accordingly.

How Does an Auto Insurance Claim Affect Future Premium?

The number of car insurance claims you file directly impacts your premium. So, the greater the number of claims you have filed, the higher are your chances of getting a rate hike. Some insurers may also not renew policies under which too many claims have been raised.

But raising a motor insurance claim does not always imply that you will have to bear the burden of increased premium the following year. There are several yardsticks that car insurance companies use to determine whether there will be a premium hike following a claim:

• The seriousness of the accident - If your car has been damaged to a large extent from the mishap, then the chances of a premium hike at the next renewal are high. The insurer will be making a larger payout for the damages, and hence, it deems it necessary to increase the premium.
• The driver at fault - If the accident occurred due to your negligence, then it is highly likely that your car insurance premium for the next year will rise. In case the other driver was at fault, you may not see a hike in premium, as well.
• Value to the company - Car insurance companies consider safe drivers to be cheaper to cover.
  • If you have been driving safe for a long time, you may not see such a dramatic hike in your renewal premium. The same applies to you if you have been associated with the insurer for an extended period of time.
  • If you are someone with a poor driving record, then the insurer will most likely increase your premium.
  • Some insurance companies offer accident forgiveness if a customer maintains good driving history. Under this program, the driver is not penalised with rate hikes for his/her first accident.
• Auto theft - If your car has been stolen for which you raise a claim, the insurer will make the claim payout. Following this, your insurance premium for the following year is likely to increase, as the insurer has provided you a huge payout as compensation. After an incident like this, your insurance company may also classify you as a high risk individual to cover. This implies that all your future premiums will be higher.

In addition to the above, the possibility of an insurer raising the premium rate also depends on its own policies and regulations. Irrespective of the situation, if you minimise the number of claims, you will be protected from increase in insurance rates. A thumb rule to follow would be to file claims only if you suffer from a catastrophic loss. You should refrain from raising claims for small damages. Apart from protecting your premium from a spike, it will also preserve your hard-earned NCB.

Important Information Regarding The Cancellation of a Car Insurance Policy:

There are several different reasons due to which you may want to cancel your car insurance policy. Some of the major reasons are as follows:

1. You intend on selling your vehicle to purchase a new one.
2. Your vehicle is stolen.
3. Your vehicle is too old.
4. You are not satisfied with your present insurer.

Regardless of the reason for the cancellation of your car insurance policy, you will have to intimate your insurer if you are sure you want to cancel your car insurance. Your insurer will commence the necessary procedure for cancellation, which generally takes between 7 and 15 days.

Your insurer will help you with the entire cancellation process. Some insurers ask their policyholders to submit a document for cancellation along with their signature. Some insurers tend to ask their policyholders to send an email regarding the same. Regardless of the approach taken by your insurer, you will have to provide them with a signed declaration after which they will proceed with the cancellation. The company will then send you a letter or email to confirm the cancellation. The letter or email will also contain information regarding the due refund.

Refund and Certificate:

In case you plan to cancel your car insurance policy when the expiry is date is nowhere round the corner, you will be eligible for a refund. Make sure you check for the same. Also, get in touch with your insurance company to return the policy certificate. Doing so will make it easy at the time of purchasing a new car insurance plan. It will also help retain your No Claim Bonus.

Applying for a New Car Insurance Plan:

Car owners across the country are mandated to have insurance. It is important to ensure that you are covered by a new car insurance policy as soon as you cancel your current car insurance. If not, you will be penalised for driving without insurance. Apart from the penalty, you will also be liable for each and every property damage or personal injury incurred by a third party in case you are involved in an accident. Moreover, your premium payment will be significantly higher at the time of purchasing a new policy. It is therefore crucial to stay insured at all times.

Cancelling Car Insurance Renewal:

It is possible to cancel your auto insurance renewal in a hassle-free manner. Since car insurance is mandated by law, the insurer will have to be shown that a new policy has been bought to replace the current policy.

• All insurance providers offer you a minimum free-look period, also referred to as the cooling-off period, that extends up to 14 days. During this time, you can review the terms and conditions in the policy documentation to see if everything in it is as per the agreement.
• In case you are dissatisfied with anything in the policy, you can return the same back to the insurer before the free-look period expires.
• You will have to specify the reasons for the policy cancellation request and also return the original policy document to the insurer.
• The insurance company examines the case, and if found valid, will cancel the policy within a week.
• If you return the policy after the cooling-off period, the insurer will charge you a certain amount for the cancellation. This amount depends on the number of months that have passed from the start of coverage.
• Most insurers do not accept policy cancellation requests after the completion of 8 months.

The Importance of Insured Declared Value:

Insured Declared Value (IDV) is essentially the current market value of your car. It represents the highest amount payable by the insurance company if your car was totally damaged or stolen during the policy term. Hence, it also translates into the maximum amount that you can claim under your motor insurance.

The insurance company uses the following details to arrive at the IDV:

• The registration details of the car
• The city where the car was registered
• The first date of purchase or registration
• The current registration type, i.e., private or company-owned
• The make, model, and manufacturer
• The engine capacity
• The ex-showroom price of the car

IDV and premium:

The own-damage part of the car insurance premium you are liable to pay is directly proportional to the vehicle's Insured Declared Value. So as your car ages, the IDV reduces. This leads to lower premiums as well. The schedule of depreciation of a car is as detailed in the table below:

Points to note while declaring the IDV of your car:

• As the owner of the car, you should be aware of its IDV.
• You should not understate the IDV in order to get a lower premium on your car insurance. If the IDV is lower, your insurance coverage will be lesser as well.
• It is also not advisable to overstate the IDV. A higher IDV does not imply that you will receive a higher price when selling the car or raising a claim. Although the claim amount depends on the IDV, it is also regulated by the type of loss.

How Does Car Insurance Work When You Get Into an Accident?

If you are involved in an accident while driving your insured car, in all probability, you would be in a state of disbelief. During this trying time, you should refrain from getting worked up and do the following to the best of your abilities:

• Check if there have been injuries - Get help in calling the ambulance and the police. You should also file an FIR, which is a mandatory document if a third-party insurance claim is to be processed.
• Take note of the details of the other car - You should record the registration details, make, model, etc. of the other vehicle involved in the accident. If the other driver was at fault for the accident, you can also get the insurance details of that vehicle.
• Details of witnesses should be recorded - Get the names, contact numbers, and addresses of all the witnesses present at the spot of the accident. This may be useful later on in the claim settlement process.
• Record all details pertaining to the accident scene - You can click pictures of the accident scene using your mobile phone. Photos of the damaged vehicles, other property, and stakeholders will be very useful later on in the claim process.
• Inform the insurer of the mishap - You should call your insurance provider and inform about the accident.
• Stay clear of making decisive statements - You should refrain from making statements to the insurance company or the police, if you are not sure of what you are saying. Everything that you say will be recorded and may even be used against you later on. In line with this, you should not accept the fault for the accident if you are unclear about it. Another important thing to note is that you should not lose your temper or get into a verbal argument with the other party. This may result in the claim process evolving into something more complicated than it already is.
• Get the vehicle towed to a garage - Your insurer will have tie-ups with several network garages where you can get your vehicle repaired post an accident. It is particularly useful to select a network garage, as it offers you quality service and has a tie-up with the insurer. This way, you will not be required to pay for the repairs up front. The finances will be settled directly between the insurer and the network garage. Alternatively, you can choose to get your car repaired at a service centre of your choice. In this scenario, you will have to pay for the repairs and then raise a reimbursement claim later on.
• File your claim with the insurance company - The following documents will be required at the time of filing the claim:
  • A copy of the car's insurance policy
  • FIR
  • Updated claim form
  • Copy of the car's registration certificate
  • Copy of your driving license
  • The estimate of repairs
  • Medical bills
  • The original ‘No trace report' from the police (only in the case of car thefts)
  • Attested RTO transfer papers (only in the case of car thefts)
• Claim settlement - The insurance company examines your documents and determines the validity of the claim. The payout is offered following this.

When Should You Not Raise a Car Insurance Claim?

Consider a scenario in which you were involved in an accident that did not cause significant damages to your car. Would you use your right to claim under auto insurance? You should be aware of the fact that filing a claim would impact the No Claim Bonus (NCB) that you have accrued over the years. It may also have a negative effect on your renewal premiums.

Yes, deciding as to when you should claim insurance and when you shouldn't is tricky. But here, we provide you all the details you need to know to make a wise decision at the time of a mishap.

Things to consider before filing a claim:

Industry experts are of the opinion that there are no hard and fast rules for raising a claim. But it is important to do some calculations yourself when deciding to claim insurance.

• Insurance is purely based on the concept of risk. So, if you fall in the high-risk category, you will be required to pay a higher premium. A poor claim history is one of the most important factors that influence premium rates. Frequent claims also have a direct adverse impact on your NCB (and the discount it translates into). So be very careful before filing a claim.
• Another factor you should consider is the deductible amount, i.e., the compulsory and voluntary excesses. At the time of a claim, you will be required to pay the compulsory and voluntary deductibles from your own pocket. After this payment is made, the auto insurance kicks in and pays the remaining claim amount. So, assess the quantum of loss and identify whether it is worth raising the claim.

It is advisable to not raise claims for small damages to your insured car. This is due to several reasons:

• If you file car insurance claims frequently, your claim history will be negatively impacted. In such a scenario, insurers can hike premiums at renewal. Some insurance companies even deny coverage for such risky drivers, resulting in a rejection of your request for car insurance renewal.
• As mentioned above, check whether the total amount corresponding to deductibles is close to or less than the claim value. If so, you stand to lose more than you would gain when you file a claim. In this case, you should refrain from claiming insurance and pay for the damage repair yourself.

In a nutshell, you should follow this rule of thumb - only make claims in the event of a huge loss. There is no point in raising small claims for damages such as a scratch or a small dent on the bumper.

You may also contact your insurance advisor for guidance before filing a claim.

Car Insurance FAQs:

1. Is owning a car insurance policy mandatory?

Yes. According to prevalent motor vehicles laws in India, every vehicle plying on Indian roads must be insured.

2. Is it possible to purchase car insurance online?

Yes. Infact, the option to buy car insurance online is often highlighted by most compliant insurers as a surefire means to stay covered 24x7 and never run out of the applicable coverage.

3. How do insurers calculate the applicable car insurance premiums?

When deciding upon the applicable premium amount, many factors are at play. Different companies charge different rates, based on differing criterias, when it comes to own damage cover. Also, deductibles and the IDV factor play a part when the premium amounts are decided upon. Shop around, and find a policy that best matches your requirements- ideally, avoiding a scenario wherein the premium might be less but the deductibles are high and the coverage and IDV are low.

4. What is ‘No Claim Bonus'?

No Claim Bonus, or NCB in car insurance is the benefit awarded to the insured for not making any claims during the previous policy period. Currently, this bonus ranges from 20% on the Own Damage premium upto a maximum of 50%. Note that this doesn't apply on liability premium.

5. Is service tax applicable on the premium payments?

Yes. The applicable service tax is in line with the regulations set by the Insurance Regulatory and Development Authority of India (IRDA).

6. What documents must always be available in the vehicle for ready inspection?

1. Copy of the Driving Licence of the individual driving the vehicle.
2. Insurance Certificate.
3. Copy of the vehicle's Registration Certificate.
4. ‘Pollution Under Control' Certificate.

7. What must I do if I lose my insurance policy?

Getting a duplicate copy of your insurance policy is very easy. You could either approach your insurer's office for the same or, if you have procured the car insurance online, print-out the soft-copy of the policy that was forwarded to you.

8. What is IDV?

The Insured's Declared Value (IDV) refers to the current market value of your vehicle as fixed by your car insurance company. The IDV comes in handy when claims are raised in cases of theft or total loss of the vehicle. Your insurer arrives at your vehicle's IDV by pitting the manufacturer's listed selling price against the commonly adhered to depreciation percentage.

9. What is Zero Depreciation Cover?

Commonly offered as an Add-On, the Zero Depreciation Cover offers full settlement on your claim without the usual deduction affected for depreciation (or periodic reduction in value of the vehicle/automotive parts due to natural wear and tear caused due to normal usage). Deduction due to depreciation is a common factor with the normal car insurance.

10. Why car insurance premiums differ from company to company?

Car insurance premium rates differ from one company to another based on their own internal protocols. The company calculates your premium based on these factors- a) The risk posed by you to the insurer, b) the insurer's operational costs, c) the estimated money that the insurer is likely to pay as settlement through the year.

11. What are the factors to consider before buying a car insurance policy?

1. Brand and track record of the insurer.
2. Coverage and the fine print.
3. Customer service- both offline and online.
4. Customization, perks and discounts.
5. The clincher- Price!!

12. How to calculate car insurance premiums?

The simplest way to calculate your car insurance premiums is with a good Car Insurance Premium Calculator. While most lending banks offer this facility on their websites, competent third party calculators are also readily available.

13. What is covered under third party motor insurance?

Third party motor insurance doesn't cover you and your vehicle. Its major purpose is to protect you against any liability that could arise from your vehicle's involvement in an accident that led to the loss, damage, injury or death of third party property or individuals. Summing up, the following is covered-

1. Damage to third party property.
2. Injury or death of a third party (individual(s)).
3. Accidental death and/or permanent total disability of the insured vehicle's owner/driver.

14. I have shifted to a new place. Is it necessary to update my registration address on my car insurance? How do I do it?

Of course it is necessary to update your change of address at RTO as well as inform your motor insurer. You can get in touch with your insurance provider via their toll free number, email or in person. You can do this online as well. Just go to the official website and enter the details in the required columns.

15. How do I go about transferring my car insurance from one firm to another?

After informing your current car insurance provider, please submit the documents mentioned below.

1. Transfer of Policy (Sale of Vehicle)
2. New RC duplicate copy /form 29-30
3. Old policy document
4. NOC from the last insured
5. Transfer Charge - INR 50
6. Duly filled new application form, collected from the company.
7. Inspection of the car

16. I am eligible for a No Claims Bonus (NCB). But I earned it when I went abroad. Can I still avail it?

Being a safe driver, you certainly deserve a reward. But when it comes to earning it abroad, there are some slight variations to the eligibility. An insurance user can be granted a No Claims Bonus (NCB) on a new car insurance plan taken out in india as per the eligibility earned overseas. But this is applicable only if the scheme is taken out in india within three years of expiration of the international car insurance plan, depending on applicable provisions of NCB as per these rules and regulations.

17. Can I get medical cover for bodily harm or demise of the passenger(s) commuted in my car? Should I buy separate cover for that?

This is exactly why third party cover is mandatory for all car owners. Car insurance is there to safeguard you when the unforeseen occurs. But when your own actions on the road cause a mishap, this cover becomes even more crucial. And yes, medical expenses are also covered in the third party car insurance, mandatory for all car owners.

18. My car insurance policy application was rejected. What do I do?

There are several insurance providers in India. You can compare various insurance policies online and apply for an insurance policy from a different provider. Third-party insurance plans are mandate for all vehicles in India. Therefore, you can purchase a third-party insurance and not have to worry about rejection.

19. How does car insurance excess work?

When you make an insurance claim, you will have to pay certain amount of money called the excess if the accident was caused by you. You will have a compulsory excess and a voluntary excess that will combined together to form your car insurance excess. Compulsory excess is the amount you have to pay when making a claim and voluntary excess is the amount you volunteer to pay towards the repair costs.

20. How is car insurance cost calculated in India?

The IDV and NCB is taken into account while calculating car insurance costs in India along with other discounts and offers.

21. Do car insurance premiums increase after an accident claim?

Yes, your car insurance premium is bound to rise after an accident claim. Even a single auto insurance claim will result in an increase in your premium for the following year.

22. How does car insurance payments work?

You have to pay a premium to keep your policy active. The company will send you a bill with due date and amount. You will be charged a service fee for the bill. You can go paperless to avoid the service charge. If you can't make full premium payments then you can opt for monthly, quarterly or semi-annual payment modes. Some companies offer grace period to pay your premium. If the premium is not paid within the grace period then your policy will lapse.

23. How are car insurance claims paid?

An insurance adjuster will assess the damage of your car and estimate of the repairs will be submitted to the insurance company. In the case of a cashless garage, the company will pay the garage directly. Otherwise, the claim settlement amount will be mailed to you in the form of a cheque.

24. How are car insurance rates calculated?

Car insurance rates are determined based on data such as your age, gender, marital status, driving experience, driving history, geographical location, claims, mileage, and credit score.

25. How does car insurance work after an accident?

If you aren't seriously injured, make note of the details of the accident. Seek medical help in the case of physical injuries to your body, co-passenger or third-party. File a police report. Contact your insurance provider, register a claim online or at the branch with a duly-filled claim form and the necessary documents to support your claim. The company will send an insurance adjuster to assess the damage and come up with an estimate of the repairs. After which, the company will follow up with the claim settlement which includes the excess you have to pay. The claim amount will be sent to you in the form of a cheque or paid to the garage directly in the case of cashless garage facility.

26. How do car insurance companies make money?

Insurance companies make money via strategic investment and risk management. The premiums paid by the policyholders are invested by the company in equity and money market instruments. Not every policyholder makes a claim, therefore it is a profit for the company if it doesn't have to settle any claims.

27. How to make car insurance claims?

Contact your insurance provider, register a claim online or at the branch with a duly-filled claim form and necessary documents to support your claim. The company will follow up with the claim settlement which includes the excess you have to pay to obtain the claim.

28 How do car insurance deductibles work?

Deductibles is the amount of money you agree to pay in the case of a loss or damage. For example: If your proposed deductibles is Rs.5,000 and the cost of repairs is Rs.8,000. You will have to pay Rs.5,000 and the insurance company will pay the remaining Rs.3,000. Higher the deductibles, lower the premium.

29. Are car insurance premiums going up?

The IRDAI has proposed up to 50% hike in premium rates for car insurance from April 1st, 2017.

30. Are car insurance claims public record?

Your new insurance provider can obtain your insurance claim records from your previous insurance provider.

31. Are car insurance claims taxable?

As per Income Tax Act, 1961, car insurance claims are not taxable if the claim amount is obtained for damages caused due to riot, theft, floods, earthquakes, accidental fire or road accidents.

32. Are car insurance payments tax deductible?

Only if the car is used for business purpose will the car insurance premiums paid by you be tax deductible.

33. Where do I get car insurance quotes?

Car insurance quotes can be obtained online through the insurance company website.

34. Where to check car insurance policies?

You can check and compare car insurance policies on third-party websites like bankbazaar.com or the official websites of the insurance companies.

35. Where is car insurance mandatory?

As per the Motor Vehicle Act, 1988, a third-party insurance is mandatory for all running vehicles on Indian roads.

36. What is an accident forgiveness option?

After an at-fault accident, the accident forgiveness option ensures there is no increase in your insurance rate.

37. Which car insurance companies are the best?

ICICI Lombard, Bajaj Allianz, Reliance Car Insurance, Tata AIG, and Bharti AXA are some of the top car insurance providers in India.

38. When does a car insurance policy expire?

If your car insurance premium is not paid within the due date or provided grace period then your insurance policy will lapse. It's advisable to renew your car insurance policy by making premium payments on time every year.

39. Why do car insurance premiums increase every year?

Car insurance costs rises every year depending on the company costs in policy distribution, loss in investment, fuel prices, etc. Your insurance premium can go up depending on the age and value of your car, your driving history, and the claims made.

40. What is the PUC Certificate validity for new cars in India?

For old cars, i.e., the ones that were bought on or before 31 March 2010, the Pollution Under Control (PUC) Certificate should be renewed on a quarterly basis. The validity of the PUC Certificate for new cars is 1 year. Vehicles that were bought on or after 1 April 2010 are considered to be new cars under this classification.

41. How many times can car insurance be claimed in a year?

As long as a car insurance policy is in force, there is no restriction on the number of claims that can be raised in a year. However, the number of claims allowed under add-on covers like NCB protect, zero depreciation, etc. are limited. You can find more details on these limits in the policy documentation.

42. What is the difference between salvage loss and total loss?

Total loss: When an insured vehicle is totally damaged, or destroyed to an extent where it cannot be repaired or recovered for further usage, it is said to be a total loss. Salvage loss: As indicated above, when a vehicle is severely damaged, or totalled beyond repair, it is declared as a ‘total loss’ by the insurance company. Under such circumstances, the vehicle cannot be driven on public roads. However, if the vehicle is restored or rebuilt again and made roadworthy, it will be allowed to be driven again and will bear the tag of ‘restored vehicle’, ‘rebuilt vehicle’, or ‘reconstructed vehicle’. The rebuilt vehicle will also get a salvage loss tag.

43. What is a certificate of insurance?

A certificate of insurance (COI) is the document issued by your insurance provider when you buy an insurance policy from them, or renew an insurance policy with them. The certificate of insurance is a token of proof for your insurance purchase. The certificate is furnished with all the details related to the insurance policy such as, the type of insurance, the coverage provided by it, name of the insurer, policy number, tenure of insurance, and name of the insured.

44. Is the insurance premium dependent on my city of residence?

Yes, the city you are residing in will have a direct effect on the premium that you pay. Rural areas are less likely to have accidents as the traffic congestion is less. Hence, the rates of premiums are less if your car is registered in a rural area. Urban areas with a high population are usually more congested and thus the rates of accidents are higher. Since, insurance companies ascertain the premium rates based on the risk involved, the rates will be higher in urban areas or metro cities than rural areas. Another factor on which the insurance rates are dependent is the area in particular. Your insurer can figure out the amount of thefts and accidents in the area where your vehicle is registered using your PIN code. Areas with more thefts, vandalism issues, accidents, etc. will have a higher rate of premium.

45. What is meant by policy term in car insurance?

Period of policy/policy term is the tenure for which an insurance policy is valid or active. During this tenure, your car will be covered under the policy. The starting date is basically the date of inception of the policy and is usually valid for a year. The policy will be valid till the ending date and has to be renewed once the coverage tenure is over.

46. I have purchased a used car. Can the insurance of the previous owner continue while the car ownership has been transferred to my name?

No, it is not possible to continue a car insurance in the name of the previous owner even after the ownership is changed to your name. It is mandatory to have the same address furnished for the registration and insurance of the car, in order to make a claim. It is important to change the name and address to enjoy the benefits of the insurance policy.

47. What are the disadvantages of not buying car insurance?

The following points can be quoted as the disadvantages of not having a valid insurance policy for your car:

1. Invite penalties: Having a valid insurance policy for your vehicle is compulsory as per the Motor Vehicles Act, 1988. If you are driving without insurance, be prepared to pay a hefty fine for breaking the law.
2. Pay third-party losses: Having car insurance ensures that the losses incurred by a third party on their property will be covered under the policy. The insurance company will cover the expenses that are to be borne by the policyholder. In case you do not have an insurance policy, you have to pay off the expenses from your own pocket.
3. Pay for own losses: If your car was involved in an accident, there are high chances that your vehicle has undergone certain losses. No matter how small or big the loss is, you have to bear the expenses for the repairs if you don’t have car insurance. These expenses are covered under a comprehensive insurance plan otherwise.
4. Legal complications: If your car does not have an active insurance plan, you might be penalised heavily and might also be imprisoned for not having an active policy. This is in addition to the financial loss that you have to bear to repair your vehicle.
5. Loss of No Claim Bonus: If you had an insurance plan for your vehicle earlier and you decided not to renew it, you will be losing the No Claim Bonus (NCB) that might have accumulated in the past policy tenure.

48. My car insurance application was rejected. What should I do now?

If your car insurance application has been rejected, you should look for another insurance provider immediately. There are a number of public and private sector insurance companies in India and most of them offers car insurance as a product. The best thing to do would be to approach another insurer and get a quotation for your vehicle insurance policy. Remember to check for quotes online through a third-party website and compare between all the options there. Using this method, you might end up getting a better deal altogether.

49. My car insurance policy has expired. Will my NCB be retained?

Yes, you are eligible to retain the accumulated NCB or No Claim Bonus. If the insurance policy is renewed within 90 days of its expiry, the NCB can be availed. You will lose the NCB if you renew the policy after the 90-day period.

50. What document should I submit to avail my No Claim Bonus?

If you are renewing your insurance policy with your current insurer, you do not need a proof. Your insurance company will have a complete record of the claims that you have made and the NCB accrued. You would need a proof of no claims only if you are renewing your insurance with a different insurance provider. In this case, you can ask your previous insurer to issue a letter confirming the No Claim Bonus accumulation.

51. What type of insurance do I need if my vehicle has an additional CNG/LPG kit?

If your car has an additional CNG/LPG kit it has to be insured separately. You have to declare the additional fittings at the time of making the insurance policy proposal.

Calculate your Car Insurance Premium Easily:

Your car is one of the most expensive purchases you would make in life. So, it is prudent to protect it with adequate insurance coverage. Apart from that, the Motor Vehicles Act, 1988, makes it mandatory for all vehicles in India to be equipped with a minimum of third-party liability insurance.

The cost of car insurance largely depends on the IDV of the vehicle, its model and age, the cubic capacity of the engine, and the geographical zone in which the car was registered. Almost all car insurance companies have an online premium calculator using which you can identify the amount of premium that you will have to pay towards a motor insurance policy. For premium calculation, you have to provide details such as the name of the car manufacturer, the model number, car sub-type, fuel type, date of registration, year of manufacture, etc. Once you submit these details, you will get an instant quote for the insurance.

Zero Depreciation Cover - The Most Popular Add-on Car Insurance Plan:

At the time of an auto insurance claim that includes replacement of car parts, an insurance company calculates and applies the rate of depreciation to car parts before settling the claim. The depreciated amount will have to be borne by the policyholder. This is applicable to a comprehensive car insurance policy as well, because the coverage provided by such an insurance plan does not include depreciation on car parts.

However, a comprehensive car insurance policy can be enhanced through add-on covers by paying extra premium. One of the most popular add-on insurance covers in the auto insurance domain is the zero-depreciation cover. Also referred to as nil depreciation cover or bumper to bumper insurance, this add-on plan enables you to recover the entire cost of replacing car parts without having to pay for depreciation. This cover is only offered to cars that are less than 5 years old. This article educates you on the nuances of the zero depreciation cover.

Maruti Car Owners, Your One-Stop Shop Destination for the Ultimate Car Insurance Package:

If you own a Maruti car, then you should get it adequately insured through the solutions offered by Maruti Insurance Broking Private Limited. Maruti Insurance has tie-ups with renowned car insurance companies in India to provide you the best products and services.

While your car is insured with an appropriate auto insurance policy from Maruti Insurance, you can get it repaired at any of the Maruti Suzuki service centres throughout the country. These service stations offer advanced amenities and infrastructure to offer you a smooth experience each time.

You can also renew your existing auto insurance policy at the website of Maruti Insurance Broking Private Limited in a hassle-free manner. The claim process and the procedure for adding endorsements to your policy are quick and convenient as well.

Third-Party Car Insurance or Comprehensive Cover - Which One Should You Choose?

Car insurance can be broadly classified into two types, i.e., comprehensive insurance and third-party liability insurance. If you are conscious about the cost of auto insurance and would like to limit it to a minimal level, then third-party liability insurance is the best option for you. Although it is the cheapest form of motor insurance, it has limited coverage. If you desire complete protection for your vehicle from accidents, thefts, man-made and natural disasters, and third-party liability, then you should buy a comprehensive car insurance policy.

This article explains the inclusions and exclusions in comprehensive and third-party liability insurance plans. It also enables you to get a detailed insight on these insurance schemes so that you are better equipped at the time of a policy purchase.

Time to Renew Your Car Insurance? Here is All You Need to Know to Get it Done:

An auto insurance policy is a safety net that protects you, your family, and your cherished vehicle from unforeseen incidents like accidents, theft, loss of life, etc. So, it is imperative that your vehicle is equipped with adequate insurance coverage.

Buying auto insurance is important, but consistently renewing it without any gap in insurance coverage is what matters the most. An auto insurance company rewards a car owner for driving safely and not raising claims by offering him/her a No Claim Bonus. However, if you are not diligent in renewing your car insurance policy on time, you may stand to lose this hard-earned benefit that can actually bring down your renewal premium by up to 50%. Some insurers also refuse to renew the insurance of old cars that have a gap in insurance coverage.

This article educates you on the A-Z of car insurance renewal. You will also be enlightened on the pronounced advantages of renewing auto insurance online.

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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017