10 things you should know about your Car Insurance Policy

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10 things you should know about your Car Insurance Policy
Car insurance is a package deal that comes along with your decision to buy a car. Whether you buy a brand new car or a used one you cannot ignore attaching an insurance policy to your vehicle. Ironic isn't it that the car you buy must be insured even if the one behind the wheel (you) might not be!!

Irony apart, insurance is a technical subject, a fact that makes it really unattractive. But, since you can't dispose of it, why not know a few things about your car insurance policy? You might save a few bucks in the process! Here is a list of 10 must know facts about your car insurance, let's take a look:

1. Types of plans

There are two types of plans available in the market. One is called Third Party policy which is mandated by law. It covers your legal liability to a third party against any bodily injury/death or damage to the third party's property. It does not cover losses faced by you for your own vehicle. The second one is a Comprehensive plan which, apart from covering your legal liability towards any third party, also covers expenses incurred for damage to your own car or yourself. Damages paid towards third party property are limited to Rs. 7.5 lakhs but there is no cap on the compensation to third party against death.

2. Risks covered

The following risks are covered under car insurance-

* Damages due to natural disasters (earthquake, floods, etc.)

* Damages due to man-made disasters (fire, theft, etc.)

* Damages suffered while travelling.

3. Risks excluded from cover

The following are excluded from the scope of your policy-

* Normal wear and tear.

* Depreciation

* Electrical or mechanical breakdown

* Using your private car as a taxi.

* Accident caused while driving without a license or under the influence of alcohol.

* Loss suffered outside India. (However, you can pay an additional premium of Rs. 25 to increase the extent of coverage to include the neighboring countries.)

4. Premium determination

The premium depends on the make and model of the car, class of the car, age, fuel type, place of registration, type of plan opted (third party or comprehensive). Moreover, if you install safety measures like cruise control, air bags or anti-theft devices, you can reduce your premium amount.

5. Riders

Insurers offer a host of riders to be attached to your policy to increase the scope of cover. Certain riders trending in the market are:

* Depreciation shield - all the plastic/rubber/nylon/fiber glass parts are subject to huge depreciation. This shield ensures that your claim amount would be the original value irrespective of the depreciation suffered.

* 24*7 assistance - this rider offers assistance from the insurer 24*7 in case of any problems you face.

* Engine protection - you will not be eligible for claim for any loss to the engine due to water seepage. But this rider solves this problem and ensures claim settlement in such a scenario.

6. Insured declared value called IDV in short; this is the value that you get in case of theft or total loss of your vehicle. It is calculated as the listed selling price of the manufacturer less depreciation as per the age of the car.

7. Voluntary excess - This is the amount required by you to pay in case of any claim. You can choose any amount as voluntary excess and in case of claim (of any value), the company will pay the claim after deducting the voluntary excess. Higher the amount you choose lower will be your premium.

8. No claim Bonus - If in any policy year goes claim free, you get a discount on your premium for the next year. This is called NCB and it increases with every claim-free year.

9. Claims - Whenever you suffer a loss, you need to notify the insurer who then sends a surveyor to determine the claim. The claim can be cashless or can be reimbursed. If you get your car repaired in one of the company's network garage, it can be done cashless; otherwise, you will have to incur the expenses which would later be reimbursed by the insurer.

10. Portability - You can change your insurer if you wish without affecting the insurance cover on your car.
These factors warrant a look when you are buying a plan for your car. You might actually benefit from your plan while at the same time saving a great deal on your premium amount.

Written By: Deepak Yohannan
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal.

For more articles by Deepak Yohannan, please visit MyInsuranceClub.com.
You may contact him directly on Twitter: @dyohannan

Read more about: car insurance, premium, bonus
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