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How to Renew Car Insurance?

IamCheated.com Research Team | September 11, 2018  5:43:pm

India is a fast growing market for the automobile industry, with the biggest names vying for a chunk of the market share. According to the 2018 report of the U.N World Urbanization Prospects, about 34% of India’s population lives in urban areas. For each middle income family, purchasing a car is an important milestone, and higher income families own multiple cars. 56,00,000 passenger vehicles were registered in India in the year 2017, with the average for the first half of 2018 standing at 2,50,000 cars per month.

Unsurprisingly, the massive number of cars and other vehicles plying on the roads has resulted in an equally large number of accidents. Nearly 400 deaths each day as a result of road accidents have raised concerns on the safety standards of cars being sold in India. A U.K based NPO – Global NCAP – which studies the quality of vehicles, has given a zero star rating to a majority of Indian Model cars. The manufacturers downscale the safety features of their cars, when they are made available to the Indian market, so as to reduce the price. Considering Indian consumers’ reputation of being price sensitive, this strategy enables the manufacturers to push their product into the market pretty easily.

Keeping this scenario in mind, it becomes painfully clear that Indian roads are very dangerous and unpredictable. The losses suffered due to damage to vehicles and death are immense. For this reason, car insurance becomes extremely important to safeguard against such losses by covering for repairs to vehicle and/or medical and hospitalization bills.

Third Party Motor Insurance has been made compulsory by Insurance Regulatory and Development Authority of India (IRDAI) and dealers generally arrange for a comprehensive cover for the car owner at the time of purchase of the vehicle. The problem arises when the time of renewal of this insurance comes around. Ignorance and lapse of plans are some of the reasons why motor insurance penetration is very low in India. In this article, we will take a look at some things to remember on renewing car insurance.

Types of Car Insurance

Car Insurance can be broadly classified into 3 types:

1. Third Party Liability Cover:

Made compulsory by the Motor Vehicle Act, this type of Insurance provides protection against the legal liabilities towards a third party. It covers damage to property and injury caused by the holder to another person, but does not cover for damages to self and property.

2. Collision Cover:

 Collision coverage provides compensation against damages caused to the car as a result of a collision. Damages from theft, vandalism or loss of the car are not covered under this scheme.

3. Comprehensive cover:

This type of cover includes all aspects. Damage to self and own vehicle due to collision, theft, loss, vandalism, third party liability coverage and hospitalization expenses for the accident, are all covered under this type of Insurance. A comprehensive cover with riders can also be widened in scope to include accessories, medical expenses, depreciation and so on.

Even though insurance covers are taken to protect against losses as a result of damage, injuries and third party liability, there are instances when claims will not be covered. It is important to know what these instances are, so the holder can exercise caution. The following features are generally not covered under a Car Insurance:

  • Loss or damage when the Insurance policy is not in force.
  • Losses as a result of operating the vehicle by a person without a valid driving license.
  • Damages from driving under the influence of alcohol or drugs.
  • Damages arising out of disregard for manufacturer’s rules and guidelines.
  • Normal wear and tear of the vehicle over time.

The first point states that the claim is not honoured if damages occur when the policy is not in force. This may seem pretty obvious, yet, as many as one third of car owners still operate cars without renewing their Insurance. Renewing a car insurance is not a difficult task and can be done easily. Here are some points to remember before renewing your car insurance:

1. Portability:

Motor Insurance Policies are transferrable (portable) from one insurer to another, with all the accrued benefits being transferable. In case you are unsatisfied with the current insurer, the insurance policy can be transferred to another insurer who suits your requirements. If you do transfer, check that all benefits have been duly continued.

2. Compare quotes:

You can fill in your requirements online and get quotes from insurers. This way, best prices and benefits can be chosen after comparing all the quotes.

3. Insured Declared Value (IDV):

Insured Declared Value (IDV) is the amount fixed by the insurer based on the current year’s market value of the vehicle. This is the amount reimbursed in case the car is stolen or suffers total loss.

4. No Claim Bonus (NCB):

If the insured has not claimed the motor insurance for an entire year, certain percentage (between 5 and 10%) of the IDV is given as bonus at the time of renewal. At the time of renewal, it is advisable to check whether this amount has been calculated and added correctly.

5. Add-on features:

Quite a number of add-ons can be taken at the time of renewal. Add-ons like Zero Depreciation Cover are very useful at the time of claiming, as this allows you to claim for damages without having the depreciation value deducted from the claim amount.

6. Claim Procedure:

Having a Car Insurance Policy that is easy to claim and reduces hassles is a great relief. For this reason, researching on the procedure of claims for each insurer, can save the insured a lot of time and energy.

7. Cashless Facility:

The cashless car insurance policy allows the holder to get the vehicle repaired at a garage without actually paying any cash. The insurer directly reimburses the garage for the repairs. At the time of renewal, check which insurer offers this facility and which garages are tied-up with them to ensure a smooth claim.

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Consequences of not having Car Insurance:

  • The most obvious consequence is that in case of an accident or theft of the vehicle, the owner will have to bear all the losses from his own pocket. Not only that, if the accident is caused by him, reimbursing for damages suffered by a third party will also be claimed from the owner of the vehicle.
  • As Third Party liability Insurance is mandatory, failing to carry a valid insurance, will attract the following punishments:
    • Suspension of Driving License
    • Suspension of the vehicle registration
    • Fine of Rs 1000 and/or imprisonment up to 3 months
  • If the holder fails to renew the Insurance, the accumulated No Claim Bonus (NCB) and all other benefits are foregone.

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