- Date : 18/09/2020
- Read: 4 mins
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.
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.
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.