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    How Motor Insurance Works?

    A Motor Insurance Policy is a contract between the insurance company and insured that safeguards the policyholder against financial loss in case of Fire, theft or accident. Car Insurance offers coverage for property like theft or damage of your car liability, legal accountability to others for property damage, death, bodily injury, the expenses for injury treatment etc.

    As per the Motor Vehicle Act, it is mandatory for vehicle owners to buy car insurance for their vehicles plying on Indian roads. Car Insurance or motor insurance covers for losses that you might incur if your car gets damaged or stolen.

    The premium amount of your car insurance is decided on the basis of Insured Declared Value or IDV of the vehicle. If you increase the IDV, the premium rises and if you lower it, the premium reduces but it is subjected to IDV schedule and respective Insurance company. It is important for any policyholder to compare various car insurance options before going for a car insurance renewal or buying a new policy.

    Key Benefits Of Car Insurance

    MOTOR INSURANCE - vector image of couple and 2 kids with dog

    Types Of Car Insurance :

    Third Party Liability Coverage

    This compensates the damages to a third party and their property. It’s best for those planning to insure their car just because it’s mandatory (but we wouldn’t recommend that!).

    Third-party liability car insurance safeguards you from any legal liability due to your own car’s involvement in an accident. Your insurance provider will compensate you for death, disability, injury, or property damage to any third-party. Therefore, you are protected from the financial liability towards the third-party.

    Third-party Liability Car Insurance is a mandate in India under the Motor Vehicles Act, 1988.

    Comprehensive Coverage

    This covers damages to the third party, as well as your own car. It is best for those wanting to cover for losses for accidents and incidents such as theft and natural disasters.

    A comprehensive car insurance policy provides coverage for third party liability as well as damages caused to your own car. In comparison with third party liability car insurance, a comprehensive car insurance policy offers extensive coverage, more benefits and covers the damages caused to the insured car in case of an accident, collision, theft, etc.

    A comprehensive policy can be further extended by opting for addon covers like accessories cover, engine protector, zero depreciation cover, etc. This type of coverage is the most popular as it offers end-to-end coverage and thus less stress for the policyholder.

    Additional Covers In Car Insurance :

    This additional feature offers compensation even for the depreciating value of your car. With this feature, you will not have to pay for the depreciation value of your vehicle’s parts. It is mostly valid on private cars and is subjected to a specic number of claims during the policy period. Compulsory and voluntary deductibles (as per the case) will be applicable despite zero depreciation cover. You can check with the insurance company for any terms and conditions before making the purchase.

    Consumables Cover

    Sometimes, a bunch of unforeseen expenses can drain all your savings. Consumables Cover. Includes all the expenses incurred on consumable items for any perils that are covered under the policy. Consumable items include screws, nuts and bolts, washers, AC gas, grease, lubricants, bearings, clips, engine oil, distilled water, oil filter, brake oil, and fuel filter are mostly covered.

    There are certain terms and conditions that are applicable to this add-on cover that varies from one insurance provider to another. It is mostly valid on private cars and is subjected to a particular number of claims during the policy period. You can check with the insurance company before making the purchase.

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    Engine Protection Cover

    An engine is one of the most important part of a car and engfine protection cover compensates the cost of fixing the indirect damage that are caused to the engine due to lubricating oil leakage and water ingression. It covers the Gear Box Parts, Engine Parts, and Differential Parts.

    No Claim Bonus Protection Cover

    For every claim free year, the insured is rewarded with a discount on the renewal premium. This discount is called – No Claim Bonus (NCB). It is cumulative and increases every year. It usually ranges from 20% to 50% and can save a substantial amount of money on the premium payable for your auto insurance.

    Let’s take an example if a policyholder doesn’t make a claim during the tenure of his auto insurance policy, he becomes eligible for No Claim Bonus, on the basis of which, a certain rebate is offered on the payable premium. With No-claim-bonus protection cover you can retain your NCB even after registering a claim during the policy term. The terms and conditions vary from one insurer to another.

    No Claim Bonus (NCB) in Motor Insurance :

    1. NCB is called as ' No Claim Bonus ' and it is to be availed only after completion of 12 months claim free period.
    2. NCB can be earned only in the Own Damage section of policies covering all classes of vehicles; but not on Motor Trade Policies (Transit Risks, Road Risks & Internal Risks).
    3. A customer becomes entitled to NCB only at the renewal of a policy after the expiry of the full duration of 12 months; provided Nil claims. That means, during the policy year, if the ownership changed; the new owner has to wait 12 months. And it is eligible only at the time of renewal.
    4. If there is an ownership change during the currency of the policy; NCB will follow with the Old Owner but not with the vehicle.
    5. If there is no ownership change; NCB can be valid for 90 days after expiry of the policy.
    6. NCB can be given after all kinds of discounts only.
    7. NCB will be applicable for the substituted vehicle also; subject to that substituted vehicle should be of the same class of vehicle (as per tariff).
    8. Where the Insured is an individual, and on his/her death; the custody and use of the vehicle pass to his/her legal heirs; the NCB entitlement for the Original Insured will pass on to such persons;
    9. The percentage of NCB earned on a vehicle owned by an Institution; during the period when it was allotted to and exclusively operated by an employee should be passed on to the employee, if the ownership of the vehicle is transferred in the name of the said employee.

      (In this case, a suitable letter from the employer is compulsory)

    10. In the event of the insured, transferring his insurance from one insurer to another insurer, the transferee insurer may allow the same rate of NCB which the insured would have received from the previous insurer.
    11. In an insured vehicle is sold and not replaced immediately, or laid up, and the policy is not renewed immediately after expiry; NCB if any, may be granted on a subsequent insurance, provided such fresh insurance is effected within 3 years from the expiry of the previous insurance.

    (The rate of NCB applicable to the fresh policy is as per the earned percentage under expiry policy)

    Key Protection Cover:

    Once in a lifetime everyone would have lost or misplaced their car keys. In such cases, the insurer can offer you the financial help by covering the costs incurred on replacement and repair of your car keys.


    Personal Accident Rider Benefit :

    Personal Accident Rider is an optional add-on benefit that can be added to the comprehensive auto insurance by paying an extra premium. This rider provides the policyholder with the coverage of medical expenses due to damage, personal injury or disability caused due to an accident.

    Roadside Assistance Service

    Mechanical/electrical breakdown –

    If the vehicle has broken down at home or on the road, the insurer will arrange for a mechanic to repair it at the site of the breakdown. The mechanic will assist the car owner with battery jump start, replacement of flat tyre, and other minor electrical or mechanical repairs. In case the car owner has been locked out of the vehicle, pickup and delivery of spare keys will also be provided.

    Towing –

    If the insured vehicle is involved in an accident, the insurance company will arrange for it to be towed to a nearby network garage or authorised service centre safely.

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    Flat Battery –

    Making an alternate arrangement so that your car starts moving.If the battery needs to be changed, the car insurance company will take care of the repair costs, although you need to pay for the new battery

    Spare Key –

    Arranging for pickup and delivery of spare keys or providing unlocking services by a vehicle technician, is provided by the car insurance company

    Flat Tyre –

    Getting a technician to repair/replace the tyre, or arranging to take the tyre to the nearest repair facility. If the tyre needs to be changed, you will have to pay for it although the repair costs will be borne by the car insurance company

    Fuel Assistance –

    Arranging for the supply of up to 5 litres of fuel (the fuel is chargeable) if your car has run out of fuel, or arranging for towing to the nearest garage in case of immobilization due to contaminated fuel.

    Also, Taxi and Accommodation benefits are provided if you are too far from the city so that you and your family are safe in the first place.

    Exclusions: What Is Not Covered In A Car Insurance Policy?

    • Loss or damage if a policy is not in force.
    • Gradual wear and tear of car and its parts.
    • Loss or damage to the vehicle when driven by a person without a valid and effective driving license.
    • Loss or damage to the engine as a result of oil leakage.
    • Accidental Damages caused while you were using your car for illegal activities
    • Loss or damage to the vehicle as a result of intoxication due to drugs, alcohol etc.
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    Documentation Required For Car Insurance

    Getting a car insured requires minimal documentation. For a new policy, you must submit the filled-up proposal form and copy of the Registration Certificate (RC). For renewals, you will need a copy of the RC (Registration Certificate) along with the copy of the previous insurance policy. Carefully fill in your complete details. This is an important step and will save you a lot of hassle during claim time.

    Car Insurance Claim Process

    • First and foremost, as the policyholder, you will have to submit a duly filled in claim form along with the requisite documents to the insurance company and inform the insurance company before you send the car to the garage for any repairs. The forms are available on the insurers’ websites as well as at their offices.
    • The insurance company will send a surveyor to assess the damages. The surveyor will prepare a report and pass it on to the insurer and you will also receive a copy.
    • If the damage is severe and requires immediate attention, then the surveyor will reach the spot of the accident at the earliest.
    • Based on the surveyor’s report, you can arrange for your car to be repaired.
    • After the work is completed, you will have to take the duly signed bills and documents from the garage and submit them to surveyor, who in turn will send it to the insurance company.
    • If all the documents are in place, the insurance provider will reimburse your bills
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    Car Insurance Claim Process For A Third-Party Claim

    • If a third party has sent you a legal notice asking for a claim, do not communicate with the party before informing your insurance company. Also remember not to make any financial commitments or out-of-court settlements before speaking to your insurer first.
    • Submit a copy of the notice to your insurer.
    • You will also have to submit copies of the RC book of the car, the driving licence and the FIR.
    • The insurer will verify the documents and assess the accident and if found satisfactory, you will get a lawyer appointed by them.
    • If the court directs you to pay the damages to the third party thereafter, the insurance company will directly pay the dues to the third party.

    Car Insurance Claim Process For A Stolen Car

    • First of all, file a complaint with the police and lodge a FIR.
    • Submit a copy of the FIR to the insurance company.
    • Once you receive the final police report, make a copy of it and submit it to your insurance provider.
    • The insurance company will assign an investigator. Cooperate with the investigator.
    • Wait for the claim to be approved
    • Once that is done, submit the RC book of your stolen car to the insurance company. The name of the owner will then be changed to the insurer’s name.
    • Submit the duplicate keys of the car and also a subrogation letter. You will also need to submit a notarized indemnity on a stamp paper.
    • Once all the formalities are completed, the insurance company will disburse the claim
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    It is very important to be well informed about the formalities related to making a car insurance claim. Whether you need to make a small claim due to a minor accident or a major claim due to the theft of your car, knowing the procedures will make the job a lot simpler for you.

    All insurance providers these days have a very good customer support network and so you must communicate with your insurer whenever there is a need. If you have any doubts regarding the claims, get them sorted beforehand so that your car insurance claim process goes smoothly at the time of a need.

    Keep the points mentioned above in mind and your job of filing and receiving a car insurance claim will become a lot simpler.