Unfortunate incidents of road accidents and staggering statistics of gruesome deaths resulting from road rage often make it to the breaking stories or flash news that appear before us during breakfast. When we hear about these events, the lessons we should learn are many:
- Even if you drive safe on the roads, you are still at risk of being an accident victim.
- You can effectively dodge such incidents to a large extent by practising defensive driving.
- If you are setting out to some place where you are expected to reach on time, it is advisable to leave well ahead of time, so that unprecedented events like traffic jams do not delay you.
- Although the mental agony associated with injuries/loss of life in an accident cannot be balanced out with money, the availability of funds at the taxing time of an accident will be highly appreciated by the family of the victim. In line with this, it is advisable to purchase a motor insurance policy that protects your family from such financial losses.
What is Motor Insurance?
Motor insurance is a safety net that protects the insured from financial losses associated with the vehicle. As part of a motor insurance policy, an insurance company agrees to pay the policyholder a sum assured at the time of an incident that is covered under the plan. In return, the policyholder will have to pay premiums towards the policy at regular intervals.
Most insurance companies also reward diligent drivers through bonuses and discounts that can bring down the motor insurance premium to a large extent. The amount of coverage opted for also determines the amount that one has to pay towards motor insurance.
Why Should You Protect Your Vehicle with Motor Insurance?
The protection offered by a motor insurance policy is the main reason to safeguard your vehicle with it. However, in India it is found that most vehicle owners tend to buy motor insurance to abide by the law.
In fact, the Motor Vehicles Act, 1988, makes it mandatory for all vehicles on Indian roads to be protected with a minimum insurance cover. This is also referred to as a third-party liability insurance plan.
It is advisable to refrain from buying only the minimum level of insurance coverage for your vehicle and assess your insurance needs before settling on a plan. The most optimum insurance plan for your vehicle will ensure that you are financially protected in all eventualities. So, opting for a comprehensive insurance cover with suitable add-ons is highly recommended.
Some of the most significant reasons for buying motor insurance in India can be summarised as follows:
- It pays to repair the damaged vehicle - A road accident can set you back by a sizeable amount of money. Even common scenarios can result in serious damages to your vehicle. This includes a careless jaywalker forcing you to hit a sudden brake resulting in a collision or even a stray ball hitting the windshield of your parked car. If your vehicle was protected with adequate insurance coverage, you would not have to bear these expenses yourself.
- It brings down your liability - It is necessary for every vehicle on the road to be equipped with third-party liability insurance. This insurance cover protects you from legal issues in the event of an accident in which you were at fault. So, if your insured vehicle caused damages to a third party’s property or resulted in third-party injuries/death, your insurance company will pay for the damages and rescue you from legal repercussions.
- It offers hospitalisation cover - An accident involving the insured vehicle can result in serious injuries to the owner-driver. If the motor insurance includes personal accident cover for the policyholder, the expenses will be reimbursed by the motor insurance provider.
- It is available at a lower cost online - Insurance companies offer attractive discounts to customers who purchase motor insurance online. This is because the company makes substantial profits through online sales, as distribution and processing costs are nullified in such sales. It is also possible to pay premiums and renew policies online effortlessly.
- It offers compensation to the policyholder’s family in the event of accidental death - If an individual passes away in a road accident, his/her family will find it hard to sustain the same lifestyle, more so if he/she was the sole breadwinner. A motor insurance policy provides relief in such a situation, as it pays a good amount to the family of the policyholder in the unfortunate event of his/her demise.
Types of Motor Insurance
Motor insurance can be taken for two-wheelers and cars, including private and commercial vehicles. General insurance companies in India also offer motor insurance for used vehicles, based on the condition in which they are purchased.
- Car Insurance - Most of the leading general insurance providers offer car insurance for private and commercial vehicles. The insurance premium for commercial cars will be higher than that for private cars. Hence, it is necessary to buy the right kind of insurance for your vehicle, based on the purpose for which it is used. Usually car insurance policies are offered for a policy term of 1 year. The policyholder will have to get in touch with the insurance company to renew the policy after that.
- Two-wheeler Insurance - Almost all leading general insurance providers offer two-wheeler insurance policies.for the protection of bikes and scooters. The coverage offered by these policies are similar to that provided by car insurance plans. However, the policy term for bike insurance plans can be extended to 2 or 3 years.
The incidence of policy expiry/lapsation was seen to be high in the case of bike insurance. Long-term two-wheeler insurance policies were a solution to this problem. These plans are offered by general insurance companies to enable customers to enjoy insurance protection for an extended duration without the hassle of frequent renewals.
The coverage offered by a car insurance plan is similar to that offered by a two-wheeler insurance policy. A motor insurance plan can be purchased with any of the following coverages:
Third-party motor insurance - Also referred to as liability-only plan or act-only insurance, this is a basic insurance scheme that offers minimal insurance protection. It safeguards the policyholder from financial liabilities to a third party. This includes liability for injuries, death, or property damage of the third party.
Third party motor insurance does not offer insurance coverage for the insured vehicle itself. This insurance plan also does not usually include personal accident cover for the owner-driver of the vehicle. Since it offers limited coverage, the cost of a third-party insurance plan is low. This is also the minimum level of insurance a motor vehicle will have to be equipped with in order to ply on the roads (as per the provision under the Motor Vehicles Act, 1988).
Comprehensive motor insurance - This is an elaborate insurance cover offered by all insurance companies in India. It is also referred to as a package policy and it offers a wide range of coverage, as indicated in the inclusions section below.
The coverage of a comprehensive motor insurance plan can be amplified through the purchase of add-on covers. Some of the most popular riders in car insurance are zero depreciation cover, return to invoice (RTI) cover, consumables cover, No Claim Bonus (NCB) protect cover, and engine protect cover. It should be noted that unlike car insurance, some insurance companies in India do not offer an elaborate set of add-on covers for two-wheelers. So, you should check with your insurer on the riders available to protect your bike.
Motor Insurance Companies in India
Some of the leading public sector motor insurance providers in India are:
- United India Insurance
- National Insurance
- Oriental Insurance
The top private sector motor insurance companies include:
- Bajaj Allianz
- Bharti AXA General Insurance
- ICICI Lombard General Insurance
- Tata AIG Insurance
- IFFCO Tokio General Insurance
- Royal Sundaram General Insurance
Things to Consider before Buying Motor Insurance
Before you buy motor insurance to protect your vehicle, it is imperative that you follow certain steps to ensure that you are making a judicious purchase decision:
- Understand the coverage of the insurance policy - You should get in touch with the insurance company to understand the scope of coverage under the plan you are buying. Although accidental damage and theft are offered coverage under a standard motor insurance plan, there are several incidents or parts of the vehicle that will not be offered coverage. If you are buying insurance from an agent, speak to him/her and get a clear idea of the extent of protection offered.
- Get additional cover if required - Motor insurance companies offer add-on covers that can be used to enhance the protection offered by the base insurance policy. Explore the riders offered by your insurance provider and buy the covers that you think will benefit your vehicle.
- Inform the insurer of customisations - In case you have added a customised setup to your vehicle or have modified an electrical/mechanical part, ensure that you inform your insurance company of the same. Otherwise, the insurance protection offered by the policy may be nullified. Such updates will be reflected in the insurance policy in the form of endorsements that may or may not bear additional premiums.
- Compare car insurance between providers - This is a very crucial step in the purchase of a motor insurance policy that is often overlooked by buyers. You can easily compare the coverage and cost of motor insurance policies at neutral financial websites. Based on the comparison results, you will be able to narrow down on the most optimum insurance plan for your needs. So, keep in mind that buying car insurance from the friendly salesman at the car dealership may not always promise you the best insurance plan; policy comparison does.
- Choose voluntary deductibles wisely - Opting for voluntary deductibles can bring down your car insurance premium to a large extent. However, do not choose high values for voluntary deductibles, as you may struggle to make the necessary payment at the stressful time of a car insurance claim.
- Network garages - Motor insurance companies offer the facility of cashless repair of an insured vehicle at select garages throughout the country. These service centres are referred to as network garages and are affiliated to the motor insurance company. If your insured car meets with an accident, you can get it repaired at a network garage without having to pay for the repair work upfront. The finances will be settled directly between the insurance company and the service centre. It should also be noted that the service provided at network garages are usually of high quality. There is also a great level of transparency throughout the process. So, choose an insurance company that offers you this attractive facility.
Documents Required to Buy Motor Insurance
So you have bought your dream vehicle and are looking to insure it. When applying for motor insurance, you should keep all required documents handy so as to avoid any unnecessary hassles in the process. Listed below are the most important documents that all insurance companies will request you to submit:
- Personal details of the policyholder, such as name, age, occupation, address, gender, etc.
- Information on the policyholder’s driving license
- Registration certificate of the vehicle and the registration number
- Debit/credit card or netbanking details
- Proof of identity, such as Aadhaar, PAN card, passport, etc.
- Proof of address, such as bank passbook, driving license, passport, etc.
- Recent passport sized photograph of the policyholder
- Income proof, such as salary slips for the last 3 months
How are Premiums Determined for Motor Insurance Policies?
The amount that you receive as a motor insurance quote from your insurance company will reflect how risky you are as a driver. It also indicates several other aspects associated with your vehicle that are carefully calculated by the insurance provider before offering you the quote. Listed below are some of the key factors that determine your motor insurance premium:
- Your profession - The occupation of some people demand that they spend a lot of time travelling in their vehicles. This would drive their motor insurance premium up, as they are at risk for being involved in an unpleasant situation on the road.
- Your age - Age of the driver is one of the primary factors that insurance companies consider when calculating motor insurance premiums. It is assumed that younger drivers are more risky on the roads and may also be less experienced. Hence, drivers aged between 17 and 25 years will generally attract higher premiums.
The make and model of the car - The type of car you drive will have a bearing on the amount you pay towards motor insurance. In line with this, there are a couple of things you should evaluate before buying a new vehicle:
- Cost of the car - If you are looking to buy a high-end model, you should be aware of the fact that if it is stolen or completely damaged in an accident, you will have to spend a lot of money for the repair work. Expensive cars also have parts that are pricier to replace.
- Engine capacity - Vehicles with greater engine capacity attract higher third-party liability premiums. This increases the total cost of insurance as well.
- Customisations - In case you make any modification to your car, you should inform the insurance company of the same. The insurer will accommodate the changes under the coverage of the motor insurance policy and enclose an endorsement in the policy documentation. There may be a revision in the premium amount as well.
- Your area of residence - The locality where you live in and the use of the vehicle has a bearing on its insurance premium. If your place of residence is particularly notorious for thefts and other such crimes, then it is highly likely that you will be expected to pay a higher premium for motor insurance.
- The way in which you use the vehicle - The more you drive, the chances of getting involved in an accident will also be higher. If you are someone who uses the vehicle regularly, then you may have to pay a higher premium on insurance than an individual who keeps it parked most of the time. Hence, your annual mileage is considered by motor insurance companies while deciding on the premium.
- Your driving history - If you have been a diligent driver and have not raised any claim in a policy year, the car insurance company rewards you with a No Claim Bonus (NCB). This is a very attractive bonus, as it offers you a reduction in insurance premium at the next renewal.
- Voluntary excess - This is a deductible that a car owner opts for at the time of policy inception. If you select a high value for voluntary deductible, the premium on your car insurance will go down. However, you should ensure that you select a voluntary deductible value that you can afford to pay at the time of a claim. In case you do not choose a voluntary deductible, the insurer will pay you almost the entire claim amount. However, you will be paying a higher premium towards the policy.
The type of motor insurance you purchase - There are two types of motor insurance policies that you can buy:
- Third-party liability insurance
- Comprehensive insurance
The third-party liability insurance is the cheapest insurance plan. So, if you opt for such a policy, your motor insurance premium will be lower. However, the liability-only plan offers lower coverage than a comprehensive policy.
No Claim Bonus in Motor Insurance
All motor insurance companies reward conscientious drivers who refrain from raising motor insurance claims by offering them a No Claim Bonus (NCB) at the end of every policy year. The amount of NCB that one can accrue this way is as tabulated below:
|No. of claim-free years||NCB (as percentage of own-damage premium)|
It should be noted that when you buy your first motor insurance cover, you will not receive an NCB. If you have not raised any claims in the first year, you will receive an NCB of 20% (of the own-damage premium amount) at the time of renewal.
One of the most significant features of NCB is the fact that it is a bonus offered to the policyholder, and it is not tagged to the vehicle itself. So, if you sell your existing car and buy a new one, you will not lose the No Claim Bonus. Neither will you have to forgo it when you shift insurance companies.
In fact, you can transfer the NCB earned on an earlier motor insurance policy to a new one by preserving the bonus through an NCB retention certificate. Your insurance company will issue this certificate if you place a request for the same. Using the NCB retention certificate you can preserve the bonus for up to 3 years. Within this time, it should be linked to another motor insurance policy owned by the same person.
In some cases, insurance companies allow the transfer of NCB from one person to another. Consider a scenario in which you inherit a car at the death of its original owner. In this case, the car insurance company may agree to transfer the existing NCB under the car insurance to you, the legal heir.
It should be noted that the NCB is applicable only on the premium for own-damage cover under the insurance. It is not applicable to the third-party liability premium.
Protecting Your No Claim Bonus
If your vehicle has suffered a small damage such as a dent or a scratch, you should refrain from raising a claim under your motor insurance policy. You should always carry out a cost-benefit analysis before approaching the insurer, as it could otherwise prove to be a costly mistake.
If you raise a claim under your motor insurance policy, irrespective of the claim amount, you stand to lose your NCB. You will also be required to pay the amount corresponding to compulsory deductibles. So, before raising a claim, think about the NCB discount that you will lose out on and assess whether it would be more sensible to pay for the damages yourself.
Motor Insurance Add-on Covers
Motor insurance companies today offer a wide range of add-on covers that can be used to amplify the protection offered by a basic policy. You can opt to buy as much or as little coverage as you like, based on your affordability. Some of the popular add-on covers in motor insurance are as follows:
- Zero depreciation cover- This is one of the most popular motor insurance add-on plans today. This insurance rider is also referred to as nil depreciation plan or bumper to bumper insurance. If you raise an accidental damage claim under a basic motor insurance policy, you will not receive the entire claim amount from the insurer. The insurance company will deduct the depreciation on car parts and offer you the remaining amount. The zero depreciation add-on helps you receive almost the entire claim amount, without accounting for depreciation of car parts. This insurance plan is usually offered to cars that are less than 3 years old, and a maximum of two claims are admissible under this cover.
- Engine protect cover - This is a very useful add-on cover for high-end cars. Insurance companies offer this add-on cover to vehicles that are less than 3 years old. This rider offers protection for engine repairs that are not specifically related to accidents. People living in areas prone to waterlogging should ideally protect their vehicles with this add-on insurance.
- Return to Invoice (RTI) cover - This is a very useful rider that protects you from total loss of your insured vehicle. In case your vehicle meets with an accident that renders it completely damaged beyond repair, your RTI cover will ensure that you receive the actual invoice value that you paid at the time of purchase of that vehicle. If you drive long distances frequently or reside in an area prone to thefts, you should ideally opt for this insurance add-on.
- Loss of personal belongings cover - This add-on plan enables you to avail compensation for the loss of personal belongings such as electronic equipments, laptop, etc. from the insured vehicle.
- No Claim Bonus protect cover - This add-on cover protects your hard-earned NCB from being negated following a claim. It is offered to cars that are less than 3 years old. However, the insurer usually does not allow more than one claim under this rider in a policy year.
- Personal accident cover for the passengers - The comprehensive car insurance policy includes personal accident cover for the owner-driver under its coverage. But the same is not extended to passengers. This add-on cover offers insurance protection for the passengers in the event of accidents.
- Key replacement cover - This add-on cover can be of great assistance if the policyholder loses the keys of the vehicle. The insurance company compensates the insured for the cost of key replacement.
- Roadside assistance cover - This rider offers round-the-clock protection to the policyholder by offering services such as towing, flat tyre change, refuelling, arranging for a mechanic, etc.
- Consumables cover - Consumables are specific components that you use in the car, such as nuts and bolts, engine oil, screen washers, etc. At the time of a claim, you will see that these elements are often not covered under insurance. The consumables cover offers compensation for the replacement of these components.
- Daily allowance cover - This rider offers coverage for hiring an alternate car when the insured car is undergoing repair work at a network garage. The allowance will be provided for up to 15 days, and can range in value from Rs.100 to Rs.500 per day.
Insurance companies offer almost all the above add-on covers for private cars. But that is not the case with two-wheelers. It is advisable to check with your insurer on the amount of add-on coverage available for scooters and bikes.
How Motor Insurance Policy Add-on Covers Work
Add-on covers can be purchased from the same insurance company that has insured your car through a comprehensive plan. You will have to pay a higher premium corresponding to the extent of add-on insurance coverage you have opted for.
You will also be required to renew the add-on insurance plan when you renew your base policy. Motor insurance add-on covers offer you a high level of flexibility, as you can pick and choose the extent of coverage you desire. However, if you do not use it wisely you may have to bear high premiums each year.
Inclusions: What is Covered in Motor Insurance?
The coverage under different types of motor insurance policies can be tabulated as shown below:
|Coverage for||Third-party liability motor insurance||Comprehensive motor insurance|
|Liability for third-party injuries, death, and property damage in accidents||Yes||Yes|
|Personal Accident cover for the owner-driver of the insured car||Some insurers offer it under this plan, but most do not||Yes|
The protection offered by a comprehensive motor insurance policy is more extensive when compared to a liability-only plan. The coverage under comprehensive insurance includes the following incidents:
- Accidents that cause damages to the insured vehicle
- Accidents that result in financial liabilities to a third party arising from injuries, death, or third-party property damage.
- Theft of the insured vehicle
- Injuries/death of the policyholder in an accident
- Damages to the insured vehicle while it was being transported from one place to another through road, rail, inland waterways, air, lift, etc.
- Damages to the insured vehicle from natural disasters like landslides, floods, hurricanes, etc.
- Damages to the insured vehicle from man-made calamities like terrorist acts, strikes, riots, etc.
Exclusions: What is Not Covered under Motor Insurance?
The permanent list of exclusions under a motor insurance policy are as follows:
- Driving the vehicle on the road when the insurance policy is in expired status.
- Driving the insured vehicle under the influence of alcohol, drugs, or any other intoxicating substances.
- Driving without a legitimate driving license.
- Consequential damages, such as engine damage due to a neglected oil leak.
- Using the vehicle beyond its limitations, as stated by the manufacturer.
- Damages to the vehicle from war, invasion, nuclear disasters, rebellion, etc.
- Deliberate or staged losses.
- Using a vehicle protected with a private motor insurance policy for commercial purposes.
- Using the insured vehicle for unlawful activities.
There are some exclusions in motor insurance that can be included in the coverage if you opt for appropriate add-on covers. These are described below:
Wear and tear of the vehicle with age - A standard car insurance policy does not offer insurance coverage for the normal wear and tear suffered by a vehicle. This is one of the main reasons why the insurance company considers the Insured Declared Value (IDV) of the vehicle as the maximum claim payout. IDV is the market value of the car minus depreciation. So, effectively, the insurer is deducting the depreciation that your car has suffered over the years.
For partial loss claims, the insurance company considers the depreciation on car parts and reduces this value from the claim payout. In the case of total loss claims, the depreciation of the entire vehicle is considered, as per the standard schedule followed in the industry. So, if your car was stolen, the insurer only provides you the IDV as claim payout.
To overcome the deduction of the depreciation, you can opt for a zero depreciation cover that comes handy for partial loss claims and a return to invoice (RTI) cover that protects you in the event of a total loss claim.
Zero depreciation cover offers you the entire cost of car parts, without accounting for the depreciation. This add-on does not offer you coverage in a total loss scenario.
The RTI cover offers you the entire invoice value of the vehicle without any deductions for depreciation. This is relevant only for total loss claims.
- Electrical or mechanical breakdowns - One of the most expensive parts of your car is its engine. But the engine is not offered insurance protection even under a comprehensive motor insurance cover. You can opt to add an engine protector cover to your comprehensive car insurance policy coverage to insure your vehicle against electrical and mechanical damages that affect the engine. If you own a luxury car, the cost of replacement of car parts would be very high. In this situation also, it is advisable to armour the vehicle with this add-on cover.
- Roadside assistance - Some insurance companies do not offer the roadside assistance facility as part of the comprehensive car insurance plan. A 24x7 roadside assistance cover can offer you the much-needed help in the event of a tyre puncture in a remote location. This cover also protects you from other emergencies such as battery jumpstart, refuelling, medical help, etc.
- Accident cover for the passengers - Although a comprehensive car insurance policy offers you personal accident cover for the owner-driver, the passengers are not protected under this insurance. You can opt for the extended accident cover to safeguard the life of the passengers as well.
- Geographical limits - Almost all motor insurance policies specify the geographical limits within which the coverage is valid. If you want to extend the coverage to other countries like Bhutan, Bangladesh, Nepal, Sri Lanka, and Maldives, you can opt for an add-on at a nominal cost.
- Voluntary deductibles - A voluntary deductible is a part of the claim amount that the insurance company will not bear. The policyholder is expected to pay this amount upfront before the insurance kicks in and offers the remaining compensation.
How to Raise a Claim under Motor Insurance
If you are involved in a situation that qualifies for a motor insurance claim, you can get in touch with your insurance company to proceed with it. Motor insurance claims are of three types:
Own-damage claim - These claims offer compensation for damages to the insured car. So, if your vehicle has met with an accident that causes considerable damage, you should proceed with the claim process in the following manner:
- Inform the insurance company - It is important to ensure that the insurer is informed about the accident within 48 hours, as some companies do not honour claims that are raised after that timeframe. You can either call the insurance provider or get in touch with the insurance broking firm from where you bought the policy.
- Report the incident to the police - You should inform the police of the accident and file an FIR. An FIR is necessary to substantiate your claim in the event of car theft or if there was an accidental death.
- Evaluation of damages - Once the insurance company is informed of the incident, it will send a surveyor to conduct an inspection of the vehicle. Only after the survey is done should you move the vehicle to a service centre. It is advisable to get the vehicle repaired at a network garage as the service provided there will be reliable. There will also be a higher level of transparency throughout the claim settlement process.
- Claim settlement - After the service centre provides an estimate of the repair costs, the insurance company will provide approval for the repair work. Once the repairs are done, the policyholder will not be required to pay for the same, as the finances are settled directly between the insurance company and the network garage. The policyholder may have to pay the amount corresponding to deductibles and depreciation, based on the chosen coverage.
Third-party liability claim - If you are involved in an accident and have incurred damages, you can claim for compensation under the motor insurance policy of the third party involved in the accident, provided that he/she was at fault. In order to lodge a claim, you have to follow the steps mentioned below:
- FIR - You should first approach the local police station and file an FIR. Also keep a copy of the FIR with you.
- Policy documents - The next step is raising a claim under the insurance of the third party. For this, you will need the insurance details of the third party that you have collected from the site of the accident.
- Motor Accidents Claims Tribunal - All third-party liability claims are settled in the Motor Accident Claims Tribunal (MACT). You should file the claim at the tribunal closest to the place of the accident or at the one that is nearest to your residence.
- Claim amount - There is no limit on the compensation amount for death or disability under third-party claims. It usually depends on the earning capacity of the insured, the damages suffered by the victim, etc. and is decided by the tribunal. There is, however, a limit of Rs.7,50,000 on the maximum amount you can receive for property damage under a third-party claim. Expenses over and above this amount will have to be borne by the victim.
Third-party liability claims involve various parties and the case is adjudicated in court. Hence, the trial is a long-winded process that can extend up to several years. It is hence, advisable to settle such claims outside the court by getting into a mutual agreement with the involved parties.
Stolen vehicle claim - If your vehicle is stolen, you should immediately lodge an FIR at the nearest police station. Then intimate your insurance provider of the loss by raising a claim under your motor insurance. When doing so, you should submit the following documents to the insurance company:
- A copy of the vehicle’s registration certificate (RC)
- A copy of your driving license
- A copy of the FIR
- The first two pages of your motor insurance policy documentation
- A letter addressed to the Regional Transport Office (RTO)
The police department will try to locate the stolen vehicle. If they are unsuccessful in doing so even after 6 months, a non-traceable report will be issued. After this, the RC of the stolen vehicle will be transferred to the name of the insurance company. A letter of subrogation is required to be submitted as well. Once the insurer receives all the relevant documentation, the claim settlement will be done.
Tips to Lower Motor Insurance Premium Rates
Being the owner of a car implies that you will have to spend a considerable amount of time and money on adequately insuring it and maintaining it in top condition. But this does not mean that you have to go broke. Listed below are five ways in which you can reduce your motor insurance premiums:
- Reduce the insurance coverage for older cars - If you have a very old car, you can consider removing the own-damage section of the motor insurance. This is the part of the insurance that pays for damages to your vehicle and it also constitutes a large part of your motor insurance premium.
- Try to get a bundle of insurance plans - If you are planning to buy car insurance, you should check with your life/health insurance provider whether you would get a discount for purchasing motor insurance from the same company. This way, you will be able to save considerably on premium as well.
- Increase your voluntary deductible - Voluntary deductible is the part of a motor insurance claim that the policyholder chooses to pay before the policy provides the remaining amount. At the time of policy inception, if you opt for a high voluntary deductible amount, you can save considerably on motor insurance premium. However, you should ensure that the amount you choose will be within your budget in the event of a claim.
- Compare motor insurance policies between insurers - This is a very crucial step in the policy purchase process that is often overlooked by many buyers. You can compare insurance plans between companies at neutral financial broking websites. This way you will also get a clear picture of the coverage offered by various insurance plans in the market and the cost associated with each of these schemes. This process makes you better equipped to make a prudent purchase decision.
- Drive safely - It is good to practice defensive driving and refrain from talking over the phone while you are on the road. Safe drivers are provided a No Claim Bonus by insurance companies on an annual basis. The NCB can amount to a big discount on motor insurance renewal premium.
- Install security devices in the vehicle - All insurance companies offer premium discounts to customers if their vehicles are installed with approved security devices. The added security makes the vehicle immune to thefts and other such notorious activities.
- Get membership in automobile associations - Insurance companies offer discounts to drivers who are members of specific automobile associations in India. So, getting membership in these associations is a great way to save on motor insurance premium.
- Do not raise claims for small damages - Raising a claim under motor insurance implies that you will be forgoing the NCB that you have accumulated over the years. So, it is advisable to not raise claims for small dents and cracks, as the expenses for such repair work can be easily borne by you.
- Renew the policy on time - Motor insurance companies may charge higher premiums for the renewal of a policy that is already in expired status. So, it is advisable to renew your insurance on time.
- Transfer your NCB - If you are planning to shift insurance providers, remember to transfer your NCB to the new motor insurance policy by obtaining an NCB retention letter from your current insurer.
How to Renew Motor Insurance Online?
Almost all motor insurance companies today enable you to renew your policy online. The websites of insurance companies have the provision for the same.
- It is highly recommended to renew motor insurance online, as the amount of paperwork involved in the process is minimal. The policy is also issued instantly.
- You can make easy payments using debit/credit cards or even through net banking. It is also found that buying insurance online is more secure than purchasing it through an agent. Websites offering online purchase facility employ highly secure systems that follow global security standards. This way, your personal information is not compromised at any cost.
- One of the most significant advantages of renewing insurance online is the fact that you will always have a copy of the policy documentation online which can be referred to as and when required. Online policies are also protected from inadvertent losses or losses due to natural calamities.
- Most of the insurance providers who offer e-policies also provide discounts for online purchases. The insurer benefits from significant savings on online sales, as processing and distribution costs are mitigated to a large extent when middlemen/agents are eliminated. They pass on these benefits to the customer in the form of discounts on e-policies.
In order to renew motor insurance, you will have to follow these steps:
- Login to the website of the insurance company and select the menu option pertaining to policy renewal.
- You will be required to provide your current policy number and your email ID. Once you do so, a quote for the new policy will be offered to you.
- If you agree to the quote, you can proceed with the renewal of the policy. You may have to update additional policy details and your personal details as well.
- Once you have confirmed the accuracy of the information provided, you will receive a notification that the policy is renewed.
You can also choose to renew insurance through neutral insurance broking websites effortlessly. The benefit of doing so lies in the fact that such websites enable you to compare motor insurance between providers and select the most cost-effective one.
Motor Insurance Premium Calculator
A motor insurance premium calculator enables you to select the most suitable insurance policy for your vehicle. The tool is available at financial aggregator websites and at the websites of insurance providers.
The premium calculator tool makes the entire process of narrowing down on a motor insurance policy easy and hassle-free. Additionally, you can save a considerable amount of money on premium when you use this tool.
How Does the Motor Insurance Premium Calculator Provide You a Quote?
The premium for a motor insurance policy is usually calculated using the formula below:
Motor insurance premium = Own-damage premium + Third-party liability premium + Add-on cover premium - Discounts
Own-damage premium - The IDV of your vehicle bears a significant role in determining the own-damage premium. The IDV is the depreciated value of the ex-showroom price of the vehicle, as indicated in the table below:
Age of the vehicle IDV (as percentage of ex-showroom price) 0-6 months 95% 6 months - 1 year 85% 1 year - 2 years 80% 2 years - 3 years 70% 3 years - 4 years 60% 4 years - 5 years 50%
This implies that the IDV decreases with the age of the vehicle. This also results in lower insurance premium for the vehicle as it ages.
The third-party insurance premium for motor vehicles are fixed based on a schedule provided by the IRDA on an annual basis. The rates for 2017-18 for private cars are as shown in the table below:
Engine capacity Premium Not above 1,000 cc Rs.2,055 Between 1,000 cc and 1,500 cc Rs.2,863 Above 1,500 cc Rs.7,890
For two-wheelers, the third-party premium for 2017-18 is as per the table below:
Engine capacity Premium Not above 75 cc Rs.569 Between 75cc and 150cc Rs.720 Between 150cc and 350cc Rs.887 More than 350 cc Rs.1,019
The motor insurance premium calculator tool helps you determine the final premium for insuring your vehicle based on these values. The inputs to the online premium calculator tool are usually the following:
- The make and model of the vehicle
- Registration number
- Year of registration
- Type of policy, i.e., whether it is a fresh policy or renewal
- Name of the customer
- City of residence
- Phone number and email ID of the customer
Once you agree to the terms and conditions, you can click on the ‘Calculate Premium’ button and get an instant quote.
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FAQs for Motor Insurance
- Which motor insurance plan is suitable for me - comprehensive or third-party liability insurance?
- What is the validity of my motor insurance policy?
- Can I use my No Claim Bonus on two cars?
- Can I get a lower premium through any kind of discount?
As far as insurance is concerned, there is no one-size-fits-all solution. You should assess your insurance needs carefully and decide on a suitable policy.
If you are someone who does not drive too often, then your car must be parked in the garage most of the time. In this situation, you can take a third-party liability insurance cover for your vehicle. Also, if you have a very old car, a third-party liability insurance plan would generally provide you sufficient coverage. However, if you are an experienced driver who is on the road frequently, you should opt for a comprehensive insurance plan with a high value pertaining to voluntary deductibles.
If you have a private car insurance policy, you will have to renew it on an annual basis. In case, you are the owner of a two-wheeler, you can opt for an insurance cover with policy term of 1 year, 2 years, or 3 years.
Unfortunately, this is not allowed. The No Claim Bonus is a reward offered to diligent drivers by insurance companies. However, this can be attached to the motor insurance policy of one vehicle only.
Motor insurance companies offer you several discounts that can amount to lower premiums. Some of these include:
- No Claim Bonus discount
- Discount for membership in automobile associations
- Discount for online policy purchase
- Discount for installation of security devices in the vehicle
- Profession-based discount
- Discounts for policies purchased in a bundle from the same insurer
Yes, GST at a flat rate of 18% is applicable on motor insurance premiums, effective 1 July 2017.
A deductible/excess is a part of the claim amount that the policyholder will have to bear. Deductibles are of two types, i.e., compulsory and voluntary. While a compulsory deductible is an amount that the insured has to pay mandatorily at the time of a claim, the voluntary deductible amount is chosen based on his/her affordability. Voluntary deductible has a definitive impact on the motor insurance premium, while this is not the case with compulsory deductible.
Alterations to the coverage of a motor insurance policy are done in the form of endorsements. These are added to the policy document and may/may not bear a premium. An insurance endorsement may add, delete, or alter the policy coverage/ terms. This can be effective mid-term, at the time of policy purchase, or when the policy is being renewed.
An endorsement remains in force till the policy expires. It can be renewed along with the base policy. There can be endorsements such as that corresponding to a membership in an automobile association that may expire in between a policy term. The insurer will have to be notified of such a change as and when it is effective.
The premium for your motor insurance depends on the city in which the vehicle was registered. Even if you shift to a different location, the insurance premium will be based on the city of registration.
Yes this is possible. When you sell your automobile, you should make sure that the insurance policy is transferred to the new owner within a timeframe of 14 days. For this, you will need to update a proposal form and submit it to your insurance company. Along with the proposal form, you will have to furnish the evidence of sale, transfer of RC, forms 29 and 30, a copy of the previous policy, and the transfer fee. The insurance company will include an endorsement for ownership transfer in the insurance policy documentation.
In case the change of RC takes time at the regional transport office, you can proceed with the insurance transfer and later provide a copy of the new registration certificate to the insurer.
You can request your insurance company to issue a duplicate copy of your policy. But before doing that, you should first file an FIR at the police station and include a copy of this in the request for duplicate motor insurance. You will also be required to publish an advertisement in the newspaper announcing the loss of the document. Additionally, you have to execute a notarised indemnity bond in favour of the insurance company. This has to be done on a non-judicial stamp paper and submitted at the time of requesting for a duplicate policy.
Most insurance companies mandate that you submit the following documents at the time of a motor insurance claim:
For accident claims :
- Copy of the insurance policy cover note
- Tax receipt, copy of the registration book
- Copy of your driving license
- Estimate for the repair, if the work is not being done in a garage that is affiliated to the insurance company
- Payment receipts and bills in the case of reimbursement claims
- In case of a cashless claim, submit the Claims Discharge Cum Satisfaction Voucher signed across a revenue stamp
For theft claims:
- Original policy document
- Original registration book - This should be endorsed from the RTO, and tax receipt should be included
- Details of the previous insurance policy, i.e., policy number, period of insurance, issuing company
- All keys, warranty cards, and service documentation
- Copy of the letter to the RTO informing about the theft
For third-party liability claims:
- Form 28, 29, and 30 duly signed by the policyholder
- Form 35
- Letter of subrogation
- Consent for claim settlement as per the agreement
- NOC of the financing bank, if the claim is settled in favour of the insurer
- Claim discharge voucher that is signed across a revenue stamp
The insurance company may request for additional documentation, as seen appropriate.
This is a type of two-wheeler insurance cover that has a policy term that extends up to 2 or 3 years. It is offered by several leading insurance companies in India today.
If you are caught driving without a valid motor insurance policy, you will be penalised in the following manner:
- Your driving license and vehicle’s registration may be suspended
- You may be charged a fine of Rs.1000 and/or face imprisonment for 3 months
ARAI is the Automotive Research Association of India. ARAI offers technical expertise in certification, testing, research, and framing of motor vehicle regulations in the country. It works with the Indian government and plays a crucial role in ensuring that vehicles on the roads are safe and efficient.
All vehicles (including scooters) that ply on the roads in India should have valid insurance coverage.