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Car Insurance: A Comprehensive Guide 

You never know what your future holds and neither does your near-and-dear car. This is how insurance policy enters the picture. Accidents are accidents and when it takes place, there is a lot that stumbles upon the risk including one’s life. Thus, it is always recommended to buy yourself car insurance. Not to mention, that is mandatory in India. But what car insurance is and why is it important? If your head is loaded with questions related to car insurance then welcome to this section. In this article, you will find everything you need to know about car insurance including its importance, types and ways to buy one.

What is Car Insurance?

Car insurance, or call it motor insurance, is a type of insurance that is used to look after the protection of your car against unforeseen events like road accidents, natural calamities, deaths or any harm inflicted on third-party in any way. You need to pay a certain premium in order to use this scope and this cost depends on factors including the value of your car, its model and the type of plan. 

To a major extent, car insurance offers options for comprehensive, third-party and standalone own damage car insurance coverage which you can choose the most suited one from. One checkpoint to be noted about car insurance is that as per the Motor Vehicle Act 1988, it is mandatory in India. Anyways, getting your car insured helps you cut back on fear of losing it and you lead a relaxed drive. 

Why is Car Insurance Important?

When you are buying four wheeler insurance, you are buying peace for your future. Car insurance brings certain perks that you cannot deprive your car, your well-being and not to say, your finances of. In simple terms, it is a surefire way to avoid a big mayhem against your favorite car which includes the compensation for car damages, physical harm to  the driver/owner, legal penalties and any third -party liability and what not. 

Here are a few reasons why car insurance is important:

  • It pays for the damages incurred by your car in case of any man-made or natural conditions.

  • It provides medical expenses to treat injuries in case of any harm inflicted on the driver/owner or passenger.

  • It provides compensation if the insured car is stolen or has been destroyed by events like fire/explosion.

  • It also covers expenses that are meant for third-party liabilities. It includes expenses for property damage, medical expenses and legal charges. 

  • It brings a sense of relief and helps avoid the heavy bills in future.

Therefore, car insurance is never not important. With perks and ability to handle heavy circumstances in future with care, car insurance ensures mental as well as financial security. 

Benefits of Car Insurance

Since it is legally mandatory to have your car insured in India, the idea already has your mind stricken by the time you welcome your newbie. But on a common note, it is natural to pause and navigate to the benefits of car insurance that you will be able to emanate. If you are in the bubble of doubts whether the car insurance will prove its use to you or not, then here are some perks that you have been missing all this time.

Here are the advantages of car insurance:

  1. It offers damage repair and replacements

Whether it is your recklessness or someone else’s mistake, there has to be a certain amount to be paid for fixing the damage your car has bumped into. One of the important benefits of car insurance is that it looks after the damage cover and offers replacements to fix the ruined parts of your vehicle. This one is a benefit that counts a lot, given the huge number of road accidents and offers peace.

  1. It reduces the third-party liabilities

There is often the involvement of third-party when it comes to car accidents and thus, you become liable to pay for the damage done to the third-party. Another incredible benefit of car insurance enters here. If you have injured a bystander or damaged a car then this insurance will pay for the repair or medical expenses. Your car insurance will also give you a hand if there is any legal repercussion. 

  1. Legal and Medical Benefits

Car insurance takes the burden off your wallet if you have been met with any legal or medical situation due to a car accident. Your car insurance will protect you from any legal clause or penalties. Apart from that, you will have a huge relief with the medical expenses. 

If the Motor Vehicle Act 1988 did not make you realize the importance of car insurance then these advantages definitely will. 

Tips to Consider While Buying Car Insurance

Buying a car insurance plan isn’t a child’s play. There are lots of comparisons to weigh, calculations to make, needs to fulfill and not to say, the policy coverage, terms and conditions to read with your magnifying glass. Here are 5 important tips for buying a car insurance plan that you should not miss.

  1. Know what you need

Before anything else, this tip is a must. While planning to safeguard your car with an insurance policy, taking time to reflect on what you need is an important tip to remember before making the call. Know that there are different sets of plans to match different criteria. Thus, you must understand what you are expecting from the plan. it is essential to look into the liabilities that you are handling currently along with your savings and your dependents. Being mindful of such factors will help you with calculations and the next step. 

  1. Understand Different Types of Coverage

When it comes to the insurance policy, there are plenty of plans out there which you can read up on. These plans differ on factors including the cost, coverage and additional offers. However, the most sought after ones have to be:

  • Comprehensive plan

This plan is synonymous with the package policy and as the name suggests, it offers a big fat set bundle of offers. If you are opting for a comprehensive plan, your car will be backed by the coverage for any damage or loss due to the man-made or natural factors, accidents, fire, in-transit damages and theft. Besides, this plan covers third-party liability as well as the personal damage cover for the owner. 

  • Third-party liability plan

Another major type of car insurance is all about covering third-party liabilities. If your car has ended up with an accident and it involves damage to the third-party vehicle or its owner/driver then this plan will make sure you are protected from any legal liabilities occurred due to death, injuries or any property damage for a third-party. However, this standalone policy does not cover any offer favoring the insured car. On the top, it is mandatory.

While planning to buy  a car insurance plan, these plans tend to be the most convincing ones. However, factors like cost and what you do or do not need in this policy can determine if you are going for any of these two plans.

  1. Seek add-ons

Apart from knowing and understanding what your insurance plan covers, you should also ask the car insurance provider about the additional offers aka the add-ons. The add-ons, depending on your risk profile, provide covers for other events or causes, aiding a decent balance and a smart protection to several other grounds of loss/damage. It includes personal damage like any disability or injury, coverage for tyre protection, coverage for engine protection, road assistance and even the coverage for consumables to name some. 

  1. Compare and Act

Before you gear up your new beloved car island head out of the showroom, the dealer will offer you an insurance plan to have your four wheeler protected. Should you jump on it right away? A big no. There are ample options out there looking forward to having your vehicle safeguarded and while the plan offered by the dealer sounds like a quick plan, it might not necessarily be what you want and it might not be offered at a decent cost. Therefore, you should go through different plans and of course, different insurance providers first thing in this concern. Then you should lay a comprehensive comparison to be able to figure out which plan is perfect for you. 

  1. Go through the policy brochure carefully

Now that you know which plan you find most suitable in light of your expectations as well as the limitations, it is time to contact the insurance provider and further with the next step. Before you start filling up the form, have your eyes all wide and go through the policy brochure. This will help you get insights of what you are being offered and if there is anything that you are missing. On the top, you can seek the provider if you find anything that you haven’t been informed about already and know what you are getting into.

Additional tips to remember while buying a car insurance plan

Here are some additional tips that you should remember while planning to buy a car insurance:

  • Get a copy of your form.

  • Don’t be manipulated by your dealer to buy the insurance plan.

  • Seek and offer transparency. Be honest while telling what use does your vehicle serve to you in order to avoid penalties or cancellation of plan in future.

  • Know and consider the insurance package in order to have more than one car insured together and reduce the cost.

Types of Car Insurance Policy 

While planning to buy a car insurance policy, digging into different types of plans and the offers that fall under them helps you accentuate calculative decisions. So, what are the types of car insurance in India? Well, you will have your answer here with the introduction and key features of these three insurance plans.

Here are the types of car insurance plans which you can consider based on your budget and needs:

  1. Third-Party Car Insurance

Third-party car insurance policy, the liability only cover policy, is mandatory in India. This type of car insurance watches your back in legal matters when any damage to the third-party vehicle or driver/owner is involved. As the name already gives you the hint, this one is used to have your car protected from financial liabilities when any event related to third-party appears because of your vehicle. So, what does this must-have car insurance policy cover? Let’s take a quick check on that.

  • Property Damage: Third-party car insurance looks after the fixes to the damage done to the third-party property by compensating for it.

  • Medical Expenses: This insurance policy covers medical expenses to treat the injuries, permanent or partial disabilities.

  • Death Compensation: It provides compensation to the family of a deceased third-party person. 

  1. Stand-alone Own Damage Car Insurance

On contrary to the third-party car insurance policy, the standalone own damage car insurance policy only covers the expenses related to the insured car and the driver/owner. This insurance plan is can be used in the following cases:

  • Accidental Damages: This insurance type covers the damages incurred by your car due to an accident. 

  • Man-Made Calamities: Damages sustained by your car due to the man-made events like Air-strikes, Riots, Terrorist Attacks or Burglary will be compensated.

  • Natural Calamities: If you are opting for this type of car insurance policy, you will be able to fetch compensation for the car damages caused by natural situations like Earthquakes, Floods, Hurricanes, Landslides, Hailstorm, Typhoons and Lighting. 

  • Theft, Fire or Explosion: In case there is a total loss of your car due to theft, fire or explosion , you will be treated with a compensation as per the IDV of your car. 

  1. Comprehensive Car Insurance

Here comes the package plan. Comprehensive Insurance is an all-in-one insurance plan which takes care of both the third-party as well as the own-damage insurance coverage. If you are into adding big-fat protective layers to your beloved vehicle for future events, then you can have an introduction with this plan.

Here is what you need to about the Comprehensive Car Insurance Policy:

  • This feature-rich package provides all the coverage that falls into the diameters of standalone own damage.

  • Then there is third-party liability coverage which you are offered if you buy this type of car insurance policy. Apart from covering personal losses, this plan has the third-party expenses (property damage, legal and medical) all covered. It also includes the amount of up to Rs 7.5 lacs as compensation which is provided to the third-party in case of property damage.

Additional Covers for Car Insurance

Your choice to go for a comprehensive cover or a standalone own damage cover comes with an option for topping your plan with add-on coverage. All you need to do is pay a little extra premium and you get an entrance to the additional benefits which includes extending the longevity of your car insurance plan. 

There are a number of add-ons which you can choose as per your budget, requirements and of course, your wish. Here are some of the common add-ons that you can stud your insurance plan with and head for that one extra mile of protection:

  1. Road Assistance

This type of additional cover offers you services like taking your car for towing, fixing bolts or even providing taxi services. 

  1. Consumables

This additional cover provides aid to essential areas like oil, bolts, nuts etc. that are minor and not included in insurance plans.

  1. Engine Protection

In order to prevent any disaster on your way to the destination, the engine of your car needs to be taken care of and it is something that you won’t find covered in any standard car insurance policy. Additional engine cover offers you to protect any damages occurred due to that like leakage of oil. 

  1. Tyre Protection

Set of tyres are there to fulfill the purpose of your car and this add-on provides protection to them in order to let you accelerate peacefully. 

  1. Passenger

This add-on is all about protecting loved ones. It provides medical expenses to treat your loved ones in case of any injury. 

You can also avail more benefits using the zero-depreciation cover and in case of unrepairable detroyal of your car, you can seek a Return to Invoice cover in which you will be offered a complete refund based on the invoice. 

Top Car Insurance Companies and Claim Ratio

Insurers Name Claim Ratio (%)
Bharti AXA Insurance 89.09%
Future Generali Insurance 81.77%
HDFC ERGO 90.35%
IFFCO Tokio Insurance 84.37%
Liberty Car Insurance 102.56%
National Insurance 84.16%
New India Assurance 98.78%
Reliance General Insurance 107.49%
Royal Sundaram 84.85%
SBI General Insurance 80.37%
Shriram Insurance 70.91%
Tata AIG Insurance 75.63%
United Car Insurance 89.77%
Universal Sampo General Insurance 102.22%

Car Insurance Claim Process

Claiming for car insurance can be a tricky job. However, there are certain steps which you need to follow in order to reach the successful claim. When you end up in a car accident and your car is insured, you must inform the insurance company right away. Doing this will help you enjoy all the benefits covered by your insurance plan.  

We will scroll through the step-by-step guide to the car insurance claim process but before that let us catch up quickly on two types of claim settlement.

  • Cashless Claim

If you are opting for a cashless claim, it simply means that you only need to take your vehicle to the garage suggested by your insurer, pay the deductibles and leave the rest to be covered by the company. 

  • Reimbursements

In this type of claim, you need to use your own wallet and pay the expenses. Then you are required to submit original documents like all the bills, medical reports, photos etc. to process the claim. Once assessed, the insurer will subtract the deductibles and reimburse the amount that needs to be provided by them.

Here are the steps that you need to follow in order to claim your car insurance:

  1. Lodge an FIR

If the event your car is involved in is the case of fire, theft or road accident along with  damage to the third-party, then this one is a step that needs to be covered first thing after the event. You need to visit the nearest police station and file an FIR. After lodging FIR, the police will go through a detailed inspection on your car to look into the cause behind the damage. Besides that, it will record the details including that of the driver/owner, passengers, and all the witnesses. If it is just a minor case like dents or scratches on your car then you need not to perform this step and simply skip to the next important action.

  1. Collect the Proof

Capturing the snaps of the event proves to be a lot useful in claiming the insurance. You can simply click pictures of the vehicle damages and bodily injuries which will appear as valid proof at the time of the next step of your insurance claim process. 

  1. Contact the Insurer

Contacting and informing the insurance company about the accident should be an immediate step. Given the restricted timeline to claim insurance, your insurance will be at a risk of getting lapsed if you fail to follow the process immediately. You are required to submit important documents including the softcopies of driving license and car registration certificate,  a letter to RTO and first two pages of insurance policy along with the FIR.

  1. Submit Documents to the Insurance Company

Another step in the car insurance claim process is submission of all the required documents and data to the insurance company failing to be precise with which your claim settlement can get complicated. These super essential documents include copies of your driving license and car registration certificate, the proof of the accident, the snaps of car damages, and physical injuries. 

  1. Ask for a Surveyor

As you file a claim for insurance, you must ask your insurer to send a surveyor for inspection. If you are seeking a cashless settlement of your claim then the surveyor assigned to you will inculcate all the minor and major damages incurred by your vehicle. Further, your car will be assisted to the right garage which will help you make sure the car is perfectly repaired. This process usually takes up to 2 days.

So, that was a brief to the steps that you need to go through in order to claim your car insurance. After all the inculcations are performed, each detail is magnified and your situation gets verified to be genuine then you will receive the reimbursement or cashless coverage. While that is a sound good thing, it is advised that you read the insurance policy carefully and as many times as you need to ensure everything and avoid mishap at the moment when you least want it.

Inclusions and Exclusions in Car Insurance Cover

Counting the inclusions and exclusions in an insurance plan is one of the most crucial aspects to consider while planning to buy yourself a car insurance policy. 

Reasons Why Your Car Insurance Claim is Rejected

Since the insurer holds all the rights to accept or reject your claim for insurance, you are only a slip or two away to lose the settlement or make the situation become messier. Here are the possible reasons that can push your insurance claim towards a blunt rejection:

  1. The information you have provided to the insurer is found to be incorrect.

  2. You were on consumption of substances while driving.

  3. Another reason why your claim was rejected is because the documents you have submitted are found invalid.

  4. You went straight for car repair and failed to inform your insurer about that.

  5. The purpose you used the damaged car for was not mentioned in the policy.

  6. The insured car is second-hand and the insurance is still active in the name of its seller.

  7. The accident took place due to your recklessness.

  8. You violated certain terms and rules mentioned in the policy.

  9. Your car insurance policy is not active.

  10. Not reading the exclusions and inclusions in your plan is one of the reasons why your claim can get rejected.

How to Avoid Car Insurance Claim Rejection 

Now that you have gathered ideas on possible reasons why your car insurance claim gets rejected, it is time you see through a few ways to avoid the claim insurance. 

Here are the best ways to avoid claim rejection for your car insurance coverage:

  1. Do not drink and drive. Avoid consumption of alcohol or substance if you have to drive.

  2. Have valid documents including especially, your driving licence.

  3. Be well-read on everything that your insurance policy plan covers and all that it excludes.

  4. Read the entire policy document carefully.

  5. Have a copy of your insurance policy.

There were a few essential tips for successful claim settlement failing which you can end up scratching your head. Be mindful of each and every step at the entire process, being present with all that is required to save your time. 

Know More About

Car Insurance

You're eligible for a Car Insurance if you:

Are legally adult enough to handle it

Have still got it

Get a regular pay check

Make more than a basic buck

Your eligibility depends on:

Earn more than minimum income required

Maximum allowed Car Insurance is Rs. 10K to Rs. 45 lakhs

EMIs of other loans loweryour eligibility

Boost your eligibility by:

Pay off your credit card bills

Choose longer tenure loan up to 5 years

Nothing gets done without that paperwork (which we'll happily carry over to the bank for you, no sweat). Here's what you'll need:

  • 1. Photo ID and age proof
  • 2. Signed application form with photograph
  • 3. Residence proof
  • 4. Last 6 months bank statement
  • 5. Documentation for salaried applicants:
    • Last 3 months salary - slips
    • Form 16 or Income Tax Returns
  • 6. Documentation for self-employed applicants:
    • Last 3 years Income Tax Returns with computation of Income
    • Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account