TomorrowMakers ™

Car Insurance

04 February 2016
We’ve prepared for you a comprehensive guide to car insurance- it’s everything you’ve ever wanted to know, and more.

We spend so much time researching the latest model, the jazziest colours, the snazziest of safety features and we love it! But most of us know way too little about car insurance and all that it entails.

Here we’ve prepared for you a comprehensive guide to car insurance- it’s everything you’ve ever wanted to know, and more.


The concept of Motor Insurance

Car insurance works on a “use it or lose it” policy. To avail it, you have to pay a yearly premium. If you are fortunate enough to not have a serious enough accident to want to claim, you lose the premium amount you paid for protection. On the other hand, you get a No Claim Bonus, which is a pretty substantial amount- starting from 20% of the premium in the first year to 50% in the sixth- which is why it’s sometimes advised not to claim for minor damages.


Related: Key factors that determine your car insurance premium


The value of your insurance policy is based on the IDV- the Insured Declared Value of your vehicle, which is the maximum insured amount sum the insurer can pay you; it roughly equals the market value of your vehicle. So, when you buy insurance for a new car, the IDV is calculated based on the showroom's listed price. However, the IDV of your car is not constant.

When you renew your motor policy after a year, your IDV will decrease because of the rate of depreciation that is applied on vehicles between one and two years old.


IDV = (Manufacturers listing price - Depreciation)
(Accessories not included in the listed price - Depreciation)


You must remember, however, that it’s not advisable to quote a figure less than the actual market value- because even though you pay lesser premium, you can also claim less for damages.

Also, you need to renew your policy within a stipulated amount of time or risk having to pay heavy penalties. This period is usually 90 days.

What does Motor Insurance cover?
A comprehensive car insurance plan covers:



1. Loss or Damage Due to Natural Calamities:

Events outside of your control, such as lightning, earthquake, flood, typhoon, hurricane, storm, cyclone, landslide, etc.


2. Loss or Damage Due to Man-Made Calamities:

Man-made disasters like burglary, theft, riot, strike, terrorist activity, and any damage caused in transit via road, rail, or water.


3. Personal Accident Cover:

This secures your family's future in the event of a permanent disablement or in the unfortunate circumstance of your death. You can get coverage of up to 2 lakhs for any damage caused to the driver while travelling, mounting, or dismounting from the car. Some insurers also offer optional accidental covers for co-passengers.


4. Third Party Legal Liability:

Mandatory by law, this cover protects you against the legal liability of accidental damages that have resulted in permanent injury or death of a third party. It also covers damage caused to any surrounding property.


Related: 6 Motor Insurance terms you must know before you claim

What does Motor Insurance NOT cover?

Your insurers do everything so they can to protect you from negative consequences, but there are some exceptions. Motor insurance policies usually don’t cover:



  • You, when you’re driving someone else’s car
  • Your car, when someone uninsured is driving your car
  • Damage caused when the vehicle owner is under the influence of alcohol or drugs
  • Damage caused by the driver having no valid license / authority for driving
  • Deliberate loss or damage to vehicle
  • Loss/ damage due to war, mutiny or nuclear risk
  • Mechanical and electrical breakdown
  • What’s inside your car, unless it's property specific to the use of your vehicle like a radio player
  • Normal wear and tear and general ageing of the vehicle
  • Vehicles being used otherwise than in accordance with limitations as to use


Availing Car Insurance

With select insurers, you can shop for your car insurance and avail your claim online. Moreover, you can avail their cashless garage facility for the repair of your vehicle, which basically means that you don’t need to pay a penny for repair as long as you avail the services at a garage that they have in their purview. In case your vehicle is serviced at a garage outside their network, you can claim reimbursement for the same.


Related: What are the riders usually attached to insurance policies?


A word of caution before you begin

All aside, it’s absolutely essential you know what you’re signing up for, and if you have any questions, feel free to ask.  And, above all, drive safe.


Insurance Plans

Term plan

Term plan

Term Insurance Plans are pure protection plans which provide life cover at a nominal cost. These plans are the simplest type of life insurance plans.

Term plans with return of premium (TROP)

Term plans with return of premium (TROP)

If you have always wanted a term plan that rewarded you for surviving the term of the policy, a Term Plan with Return of Premium is the perfect life insurance policy for you.

Unit Linked Insurance Plan (ULIPs)

Unit Linked Insurance Plan (ULIPs)

Having a life insurance policy is not a luxury but a necessity. It ensures that the financial future of your family is secured no matter what happens.

Child plans

Child plans

Child Plans are specific insurance plans which help parents save for their child’s future expenses in a systematic manner.

Home Insurance

Home Insurance

Home insurance is a fairly new concept in India when compared to other types of insurance like life and health. We’ve thus created an easy to understand guide to Home insurance for your ready reference.

Car Insurance

Car Insurance

We’ve prepared for you a comprehensive guide to car insurance- it’s everything you’ve ever wanted to know, and more.

Health Insurance

Health Insurance

A prolonged illness and a sudden accident alike can greatly impact your financial stability. Choose the right insurance plan to protect you and your family against unplanned disasters

Whole life policies for dummies

Whole life policies for dummies

In case of whole life insurance, policy benefits are not restricted to a fixed term & extend to the entire lifetime of the policyholder.

Income protection plans: ensure your family is always protected

Income protection plans: ensure your family is always protected

In depth understanding of what constitutes monthly income insurance plans and how they can help ensure uninterrupted income for your family.


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