How Does Cashless Garage Work?

The Indian Motor Vehicles Act, 1988 makes it mandatory for all vehicles on Indian roads to be equipped with a minimum motor insurance cover, referred to as the Third-Party Liability cover. This protects the insured from third-party bodily injury, death or damage to assets. In addition to this cover, the policyholder can append own damage insurance cover to the policy for added protection. This would convert his auto insurance policy to a comprehensive policy that safeguards him from a wide range of mishaps.

Cashless Services at Network Garages:

Today, insurance companies also offer cashless facilities at garages for claim settlement. Under the Cashless Insurance cover, the policyholder can get his vehicle repaired at any of the network garages that are included in the insurance company?s list. These garages have tie-ups with the insurer and they offer a unique advantage to the customer, as he is not required to pay the repair costs upfront. The insurance provider will be settling bills once all repairs are done.

However, the cashless scheme has one minor disadvantage. It is not possible to benefit from this facility if you are planning to get your car repaired at the nearest garage. Cashless services can only be availed from network garages, and these could be far away from your place of residence, or the spot of the accident.

No More Hassles During Repair Work:

In case your vehicle is involved in an accident, you should inform your insurance company of the mishap at the earliest possible time. You should also furnish all relevant documentation to the authorised garage and wait for the repair work to be complete.

In effect, you will not experience the hassles involved in getting the vehicle repaired, and it will be back in your hands as good as new. This is where you will be glad that you opted for cashless insurance, in the first place!

However, you will be required to bear the cost of compulsory deductibles agreed upon in the insurance policy terms and conditions.

How Cashless Garage Services Work:

Car insurance companies usually have tie-ups with prominent garages in a locality. When a customer purchases a policy, he is informed of the network garages that he can visit. The list of service centres will also be available at the official website of the insurer. Alternatively, insurance agents or the insurer?s helpdesk can provide you the list of network garages.

When a policyholder meets with an accident that causes damages to the insured vehicle, an inspection is performed on the car and a request is issued for cashless settlement of repairs. Once this request is approved by the insurance provider, the service centre repairs the vehicle and sends the bills to the insurer for the claim settlement. The insurance company reviews the bill and verifies that all charges are accurate. Once they complete the verification, the bill amount is paid to the garage.


The cashless car insurance policy is a very useful scheme, particularly when the need for repair is unprecedented. However, there are certain things that you need to be aware of when purchasing this cover:

  • The insurance provider will only bear the cost of repair for damages, as included in the auto insurance coverage. If damaged parts of the vehicle include those that are outside the policy cover, the car owner will have to bear these repair costs himself.
  • As indicated earlier, cashless garages are not available in all localities. You may have to travel a considerable distance to get your vehicle to a cashless garage. In this context, it is useful to avail the Roadside Assistance cover that helps you when your car needs to be towed to a garage, at instances like a breakdown in the middle of the road. This cover can be availed in addition to the cashless settlement cover, but these should be purchased separately.

In a nutshell, the cashless settlement cover is a huge advantage for car owners, particularly when repairs are necessary and there is a shortage of funds. Moreover, network garages are usually the most popular ones in the locality, and they offer premium repair services.

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

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