10 Car Insurance Facts You’re not Aware Of

Buying a brand new car is not enough. Your responsibility doesn’t end here. To become a responsible citizen you should abide by the state rules, one of which compels you to have car insurance. That’s why without getting your prized possession insured with third party car insurance, you even can’t move it out.

Now the question is why is motor insurance important?

Apart from the compulsory clause, car insurance comes in handy in case your vehicle meets with an accident, collides or gets damages due to natural or man-made calamities. The insurer bears the repair expenses, where you pay a premium towards availing the policy benefits.

In short, you pay the insurance provider to come to your rescue by offering the financial shield during an emergency.

By saying that, if you are planning to insure your newly bought vehicle, these car insurance facts will surely amaze you! However, before digging into details, let’s consider the below types of car insurance:

Types of Vehicle Insurance

Majorly car insurance is of two types:

Third party insurance or Act Only Policy or Liability Insurance

Referred with multiple names, this type of insurance is mandatory in India by the Motor Vehicles Act 1988. This policy covers you for liability expenses arising out of accidental injury, death or property damage of a third-party. This policy is beneficial for the third party and doesn’t cover the damage to the insured vehicle.

Comprehensive Car Insurance

Comprehensive cover or own damage cover is extensive in nature. Apart from including third party liabilities, this policy also considers own damage to the insured vehicle due to natural and man-made calamities. The list of coverage includes accidental damages, theft, fire, earthquake, flood, explosion, strike, riots and so on.

Now that you know about the basic types of car insurance, let’s move to certain facts:

10 Auto Insurance Facts You Can’t Ignore

With plenty of insurance policies, choosing the right policy can be difficult. Only well-informed buyers make prudent insurance choices and save money. you can gather the knowledge about the product either approaching an agent or through the internet, reading insurance journals etc. however, some facts in this regards, can be handy towards a thriving deal.

Fact 1: The Mandatory Coverage

Third party liability insurance is mandatory as per the Motor Vehicles Act, 1998. Without valid insurance, you can’t drive your vehicle. This policy covers the cost of loss suffered by the third party where the insured vehicle is at fault.

Fact 2: Choose Accordingly

You can either buy third party insurance or club it with comprehensive insurance. However, to provide complete protection you should buy comprehensive insurance. Moreover, there are some add-on benefit covers, which further fortify your basic insurance coverage. This list covers Zero-depreciation, engine protector, roadside assistance, invoice cover, NCB protector etc. You can approach the insurance provider to avail those add-ons at the time of policy renewal.

Fact 3:  The Online Presence

Car insurance can easily be purchased and compared online. The online buying process is transparent and safe, where policy could be availed at an economical rate. By using a car insurance premium calculator you can compare the available plans and pick the suitable one. By approaching any of the web aggregators, you can get insurance quotes by analysing various parameters such as premium, coverage, features, claim settlement ratio etc.

Fact 4: Newly Introduced Long-term Car Insurance

As per the recent announcement on the tenure of car insurance, the buyers of new cars must buy insurance coverage at least for three years. This will save the policyholders from the hassle of renewing policy every year. However, timely renewal of your policy is essential to avoid consequences such as not getting coverage or paying a huge penalty.

Fact 5: Premium-deciding Factors

Car insurance premium plays an important role at the time of buying. Usually, the premium is decided based on certain factors such as make and model of the car, location, age, driving record, gender, marital status etc. based on the risk appetite of the insured and considering these factors, the premium is finalised at the time of buying. For example, while buying HDFC Ergo car insurance, you may have to pay slightly a higher premium for the location you’re residing, as it is recognised as an accident-prone area. However, by accumulating NCB bonus, you can reduce the premium at the time of HDFC ERGO car insurance renewal. Similarly, married people drive more carefully than youngsters do.

Fact 6: Claim Related Fact

In order to initiate a faster claim process, the insurer urges the insured to inform about the incident immediately. In case of an accidental case, an FIR is a must. With prompt action, fast claim settlement can be ensured.

Fact 7: Cashless Vs Reimbursement Claim

Car insurance claim can be settled through either cashless or reimbursement claim. However, settlement mode depends on the insurer and tie-ups with the various garages. As you can avail cashless claim facility on a network garage, if you opt for a non-network garage, the settlement will be through reimbursement mode. Hence, an extensive and stronger network is a big USP of the car insurance provider. In this regard leading insurance providers like Bajaj Allianz car insurance claims to have wide network list.

Fact 8: Every Claim-free Year Counts

You can earn no claim bonus for not claiming your car insurance. Let’s say you own Bajaj Allianz car insurance. By ignoring is normal dents or damages, you can earn NCB up to a minimum of 20 to a maximum of 50% at the time of Bajaj Allianz car insurance renewal. The NCB may differ from insurer to the insurer. However, you can get up to 50% bonus, which can be availed as an increase in the sum insured or discount on the premium for the subsequent year.

Fact 9: Bitter Truth of Claim Rejection

Your insurer holds the right to reject a claim basic on certain grounds. Some circumstances where a claim can be rejected include:

  • If the claim is made for any condition that is excluded by the insurer
  • If it is claimed when the policy is inactive
  • In case of an accidental claim, if the driver is found not carrying a valid DL while driving
  • In the case of geographical limitation, the claim will be rejected
  • If the driver found drunk while driving and met with an accident

Fact 10: New Fittings Ensure a Discounted Premium

Installing an anti-theft device or getting a membership of Automobile Association of India, you can avail discount on premium, even if you’ve settled for a higher premium. However, if you’re up to installing LPG/CNG kit the same should be declared to the RTO as well. Installing of these kits involves risks, so prior declaration helps you in ensuring fast claim settlement.

Wrapping it Up!

A high-quality car insurance policy ensures your peace of mind and financial security. HDFC ERGO car insurance, for example, offers the most comprehensive protection to your prized possession. When there is no control over unforeseen, the best way is to be protected financially. Spare some time, compare rates, and choose wisely. The aforementioned facts of car insurance will help you get yourself acquainted with the policy before you buy. Have a safe driving!

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