All you need to know about Car Insurance

“It can never happen to me” “My car can never be stolen” “I am an amazing driver,” really? Very often, people tend to believe that certain things can’t happen to them as they are just not meant for them. Unlike the speed of a car, there is nothing about it which can be controlled by the driver. But a person who understands the significance of having a car insurance would certainly not have to worry about anything as they are already under the control of a comprehensive car insurance plan which insures them and their vehicle at any point of time.

Consider this: Anish had recently purchased a brand new Hyundai i10. On his way home while he was waiting for his friend, suddenly a speeding truck came and bumped into the car, damaging the trunk and tail light. At that moment Anish was in a bewildered state of mind as he didn’t understand whether he should be thankful to god for saving his life, or whether he should feel sorry for the damage that had been done to his car. Though he was emotionally sad, but financially, he had no worry as he knew that the insurance company would pay the expenses as he had a comprehensive car insurance policy. Thus, at the end, he was happy that the car insurance company came to his rescue.

But if Anish didn’t have a comprehensive car insurance plan, he would have to borne the expenses from his pocket. Hence, having a car insurance policy saved him financially.

However, for people who are petrified of getting a car insurance thinking that understanding the cumbersome process is time consuming or availing the same is riddled with inconsistencies, then here’s everything that you need to know about car insurance and how it can be beneficial for you.

  • What is car insurance?

First, let’s understand what is a car insurance policy and how does it work

A Car Insurance is an agreement/arrangement between an insurance company and a vehicle owner. And having this type of arrangement/agreement means that the insurance company provides financial coverage for any damages caused to the car, third party or property.

In short, if the car meets with any damage, accident or is lost or stolen or if there is any damage to life or property, then in such a situation, the losses borne by the owner will be compensated by the insurance company.

There are two types of car insurance

  • Third Party liability cover:

In simple words, a third party cover provides you financial protection against any legal liability arising out of the accident of your vehicle. This type of cover includes death, damage, injury or property damage caused to a third party. This cover does not include any damage caused to your vehicle and is a legal mandate in India.

  • Comprehensive plan:

A comprehensive car insurance policy is a mix of own damage and third party damage that means that the insurance company provides end-to-end coverage for any damages caused to the third party or property or to the vehicle of the insured.

This type of policy provides overall protection against any damages caused due to natural calamities, theft, fire, accident or any other factors

With this type of policy, you can also opt for add-ons like medical expenses, accessories cover and engine protector.

What does a comprehensive insurance policy cover?

A comprehensive car insurance policy covers the damages or injury caused due to the following factors/ instances:

Own Damage:

  • Natural calamities like earthquake, flood, hurricane, typhoon, storm
  • Terrorism or malicious activities
  • Explosion, self-ignition and lightning
  • Acts of theft, accident or vandalism
  • Riots or strikes
    Damages caused due to fire, storm and flood.

Personal Accident Cover:

  • The policy also provides coverage for the bodily injuries caused to the insured as well as the individuals who were in the car at the time of the accident.
  • A comprehensive car insurance policy also covers the death and permanent disability caused to the policyholder.
  • A comprehensive insurance policy covers the insured even while he has hired a driver who is driving the car.

Third Party Liability Cover:

  • Injury Liability: If you accidently run over your car over someone and injure him/her in the process, then your insurer is liable to pay compensation for the treatment of that person.
  • Property damage liability: If you ram your car into someone’s property, then the insurance company is liable to compensation for the same. This is capped at Rs. 7.5 lakh.

What does a comprehensive insurance policy not cover?

A comprehensive car insurance policy does not cover the following factors/instances:

  • Normal wear and tear, depreciation, mechanical and technical breakdown.
  • Driving without a valid license and consequential losses.
  • Damage caused due to driver driving the car under the influence of drugs or alcohol.
  • Damage to tyres and tubes.
  • Loss/ damage caused by war, mutiny or nuclear risk.
  • Damage to tyres and tubes.

Is it necessary to buy a car insurance? Is it necessary to insure your vehicle?

The Motor Vehicles Act, 1988 makes it mandatory for every vehicle owner to purchase a third party liability car insurance to cover the damages caused by one’s vehicle to another person or property.

The primary reason to mandate the third party liability cover is to ensure financial protection should be provided to the victims of the road accident or cover the loss caused to the property. No vehicle in India is allowed to run on roads without a valid third party car insurance policy.

  • What is the penalty for driving a car without a valid car insurance policy?

As per The Motor Vehicle Act, 1988 the penalty for driving a vehicle which is not insured is Rs. 2,000 and imprisonment up to 3 months, or both.

*Source: Motor Vehicle Amendment Bill, 2017

  • How long is the motor insurance policy valid?

A motor insurance policy is generally valid for a year and you have to renew the policy by paying an annual premium each year.

  • On what basis is the car insurance premium determined?

The premium for car insurance policy is determined on the following factors:

  • Insured declared value (IDV)
  • Type of the vehicle
  • Manufacturing year of the vehicle
  • Age of the insured and cubic capacity of the vehicle

What is the procedure for filing a claim?

A claim settlement is a process that you need to follow to ask your insurance company to compensate for the losses incurred. Though people think that the claim settlement process is riddled with inconsistencies and difficulties, but staying calm would certainly ensure a hassle free experience. First, always check on the injuries. Check if there is any serious injury caused to the third party or property.

If your car has collided with another car, then always note the details of the vehicle- license, make and model.

If there is any loss of life, then do not touch the body

Procure the details of all the witnesses. Note down their names, addresses and contact details.

Call the police and register an FIR. This is mandatory to further carry out the process of third party claims.

Record your statement in the police station and inform your insurance agent or the company about the accident.

Call your insurance agent or company as soon as possible and take guidance on what all documents will be required.

You will have to submit a proof of loss i.e all the documents like your policy, medical and garage bills and copy of the first information report (FIR).So now that you know about car insurance, you should also know that you can easily buy a car insurance policy online and get an instant policy issued right in your inbox.

 

Post Author: Jennifer Slegg

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