5 Commonly Asked Questions about Motor and Car Insurance

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5 Commonly Asked Questions about Motor and Car Insurance

29 May 2017
As a car owner, here are 5 questions you’ve always wanted answers to.

FAQ #1- What happens if I don’t make a car insurance claim for a whole year? 

No claim bonus (NCB) refers to the benefit extended by insurance companies to policy holders who have not lodged a single claim across the term of their motor insurance. This benefit is given in the form of discount on renewal premium of a certain percentage. Usually, it is 20% discount on premium for one claim free year, 25% for two claim free years, 35% for three, 45% for four and 50% for five claim free years! 

  1. FAQ #2Will my car insurance company give me a pay-out equal to the full value of my vehicle?  

IDV (insured declared value) refers to the maximum amount that can be paid to a policy holder when they make an insurance claim for a car that is stolen or totally damaged. The IDV is the sum insured, wherein the amount is fixed when the policy period for the insured vehicle commences. It is based on the listed selling price of a particular model and brand by the manufacturer, and includes local duties/taxes. The IDV amount excludes insurance and registration. 

 

The depreciation slabs used for calculating IDV are:              

Age of the Vehicle 

Depreciation Value in % 

Less than 6 months 

5 

More than 6 months but less than 1 year 

15 

More than 1 year but less than 2 years 

20 

More than 2 years months but less than 3 years 

30 

More than 3 years months but less than 4 years 

40 

More than 4 years months but less than 5 years  

50 

For vehicles aged 5 years plus, or obsolete 

Depreciation percentage differs between insurers 

 

  1. FAQ #3Is there a way to pay less/ save money on motor insurance premium?To answer that question, you first need to understand the key factors that affect car insurance premium, so you can get a fair idea of where you stand. For example, a smaller model may fetch lower premium. Similarly, modern auto technology and high end safety features may attract a discount on premium.   

But there’s another important thing to consider, and that’s voluntary deductible. Voluntary deductible refers to the minimum amount that the policy holder decides to bear when a claim is lodged. In case you have opted for a voluntary deductible of Rs. 20000; you have to bear the first Rs 17000.  

Why would you do this?  Because a higher deductible would make you eligible for higher discount. An inverse relationship exists between the premium and deductible; when the amount of voluntary deductible increases, the motor insurance premium reduces.   

  1. FAQ #4Could my insurance company reject my motor insurance claim? 

 

 

While it is rare, it is possible that your insurer may reject your motor insurance claim. There are a few reasons for this; for instance, if you have been using your car for any purpose other than what was stated initially (i.e. commercial use of personal vehicle or vice versa); if you made modifications to your vehicle (even addition of a roof rack or a paint job) and did not inform the insurer, etc. To make sure this doesn’t happen to you, here are 5 Reasons your car claim gets rejected. 

  1. FAQ #5What is the way out if my current motor insurance policy has expired? 

 

An expired motor insurance policy can be renewed once the vehicle inspection has been undertaken by the relevant authorities. Some insurance companies may ask for an additional premium loading (i.e. payments) in case your policy has reached its expiry date 45 days earlier. 

Related: Things to learn from car insurance case studies 
Do you have more questions about your motor insurance? Do send them to us; we shall be glad to answer them for you. 

 
 

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