10 Things about Car Insurance nobody told you

car insurance
Photo by Michael Jin

For many new car owners, insurance is a term that causes confusion and doubt. It is important to buy a good insurance policy from a good company so that you will be financially backed up in a time of a crisis. Here are 10 things that you must know about car insurance.

Mandatory third-party policy

A third party claim is commonly referred to as a liability claim because someone else is liable for the injuries suffered by the third party. The third-party policy is a mandatory document as stipulated by the Motor Vehicles Act. The third-party policy will cover any third-party liabilities which include injuries/death to third-party and damages caused to third-party’s vehicle or property.  If you are caught without this document, you will be liable to pay a fine of Rs.2000/- the first time and Rs.4000/- the second time.

Mandatory three years third-party policy for new cars

Since the new changes in the insurance sector bought in by the IRDAI, it is mandatory for new car owners to buy a third-party insurance policy for three years upfront.

Previously you had to buy an insurance policy valid only for one year. But due to the increased number of vehicles not renewing their policies annually, it has now become mandatory to buy the policy upfront for three years.

Buy Own Damage policy only with third-party policy  

An Own Damage policy will cover for damages caused to your own vehicle due to theft, fire, accident or other natural calamities.

If you are buying this standalone policy, you must have a valid third-party policy in place. If you only have own damage policy but no existing third-party policy, you will be liable to pay the fine.

Extend coverage of the existing Car insurance policy

You can extend the coverage of your third-party policy by buying an Own Damage policy. You can also further customise this policy with add-on covers offered by your insurance company.

IDV and Premium amount relationship

IDV is the amount that will be given to you by the insurance company when you raise a claim. You can customise this amount. But higher IDV means a higher premium amount to be paid and vice versa. You can find the optimum IDV for your car through an IDV Calculator.

Claim No Claim Bonus

No claim Bonus is the bonus amount you get in your premium when you don’t file any claims during the tenure year. This bonus is linked to the insurance policyholder and not the vehicle. Hence even if you change your vehicle or your insurance company, NCB will get transferred.

Insurance when you buy a second-hand car

If you are buying a second-hand car, ensure that you transfer the policy details into your name. If the policy has lapsed, buy a new on. Never drive without an insurance policy.

Car Insurance calculator

If you are looking to plan your finances and would like to know how much the premium will be for a particular IDV, you can use the car insurance calculator. This will give you a better idea upfront without having to buy the car insurance policy.

Buy and claim policy online

Companies like Digit insurance are now offering the entire insurance process online. You can buy and file a claim online with zero paperwork and physical presence. This way you can also avoid middlemen insurance agents.

Doorstep pick up and drop and cashless repair facilities

Apart from being online, there are also other perks such as doorstep pick up and drop for repairing your car and cashless repair facilities in selected garages. This makes repairing your car after an accident a less cumbersome process.

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