What is car insurance, types of motor insurance, car insurance companies

What is car insurance?

Car insurance also known as motor or auto insurance in some countries, is a protection of your vehicle from circumstances that cannot be foreseen. Insurance, depending upon its type, covers you, your vehicle and third party against mis happenings. The insurance cost ofcourse depends on age and condition of your vehicle, claims in previous year, additional excess you choose etc.

How car insurance works?

No matter how carefully you drive, accidents happens due to various circumstances including those not under your control. It may be due to bad weather conditions or a fault of another driver. Car insurance covers you against such mishappenings. When you file a claim, you request the insurance company to pay for the damages incurred in car accident. Depending upon the type of insurance, you can get claim for third party involved i.e. bodily injury or death, for the vehicle damages, theft, vandalism and medical treatment for self or the person driving the car.

How car insurance works if you total your car?

If your car meets an accident and the cost of repair is equal to or more than 70 percent of the market value of your car, your car is said to be totalled. In this case, the insurance company does not get your car repaired but pays you the amount of insurance covered.

Do you require car insurance?

In India, the law requires that you have at least third-party coverage insurance. The insurance company will pay for bodily injury or death of third persons involved in the accident. Apart from the requirement, you may get a ticket if caught driving without the insurance.

Paying for damages to car or other property can be a costly business. If you do not have car insurance or car insurance of appropriate type, you will end up paying for damage to your own car, for others property and medical expenses as well. Therefore, it is wise to get car insurance coverage of appropriate type.

Do I need car insurance if I don’t drive my car?

Law requires that you have the bare minimum car insurance also known as third party insurance.

What is car insurance deductibles and how it works?

Car insurance deductible is an amount that you must pay in case of damages before the role of insurance company comes into play. For example, you damage your cars rear bumper. The bumper must be replaced, and the replacement cost is Rs. 20,000. You have a deductible of Rs. 5000. In this case, you will have to shell out Rs. 5000 before your insurance company will pay rest of the amount.

What is zero depreciation?

Every part of the vehicle has a value. As time passes, these parts get old and its money value goes down or we can call the parts are depreciated. Depreciation is calculated on these parts and payment against claim is made accordingly. In zero depreciation, full amount of the cost of the part is paid by the insurance company.

What is third party insurance?

Third party insurance covers bodily injury or death of third party and damages to their car. Insurance company pays a compensation upto Rs 1 lakh for third party damages.

What is comprehensive car insurance?

In addition to third parties claims and damages, comprehensive car insurance also protects your car from calamities like terrorist attacks, theft, riots, earthquake, cyclone, hurricane etc. If you meet an accident and you do not get compensation from the other party provided you are not at fault, you can claim for repair of your car. The value of the claim cannot be more than the value of your car calculated at the time of insurance.

What will my car insurance cover?

This depends on the type of insurance you have. As stated earlier, you can have either third-party insurance or comprehensive coverage. While third party insurance will cover cost of damages to other party involved in an accident, comprehensive cover will also cover accidental damages and losses to your own vehicle.

Can car insurance companies drug test you?

It is unheard and unlikely that your car insurance company will drug test you when buying an insurance or filing a claim. However, law enforcement bodies may drug test you without even causing an accident.

Can car insurance companies change your policy?

Car insurance companies has 60 days to cancel your policy. Apart from this your policy may be cancelled if you do not pay for the premium, your license has been suspended or you have committed a fraud.

Can car insurance be tax deductible?

If you use your car for personal purpose, then car insurance premium is not tax deductible. However, if you use it for business, some of the expenses are tax deductible. If your car related costs are more than 2% of the gross income, you can claim these costs on tax returns.

If you suffered a theft or your car is total, you may qualify for deductions. In order to claim:
1. You must file insurance claim
2. The accident cannot be because of your negligence
3. Your car insurance cannot completely reimburse the loss. If your car damage exceeds the insurance claim, you can deduct the difference.
4. Your costs must be more than 10% of your annual gross income.

Can car insurance be used as proof of address?

In India, car insurance is not valid proof of address.

Can car insurance be refunded?

It depends on the car insurance company policy. In some cases, you may get partial refund.

Can car insurance and registration be in different names?

In order to get a claim, the car registration certificate and the car insurance policy must be in the same name.

Can car insurance overlap?

Car insurance can overlap. This usually happens when changing the insurance company. Human error in mentioning the policy dates may lead to overlap in the car insurance. If an accident occurs during this period, the new insurer usually pays the claim.

Can car insurance be transferred?

Yes, car insurance can be transferred. Although not many people know about this. When you sell a car, the new owner transfers the ownership by registering changes in the car registration certificate. However, in order to file a claim, the owner in the registration certificate and the car insurance must match. Car insurance can be transferred to the new owner as well. However, note that the No claim bonus is non-transferable.

Can car insurance be paid monthly?

Although most of the time you must pay the yearly fee upfront, there are insurance companies that offer payment at regular intervals like monthly, quarterly or semi-annually. Note that in case of regular payments at some intervals, the insurance company will charge you more than what you pay at one go.

Can car insurance be claimed twice in a year?

First read the fine prints on your car insurance policy. Some companies do restrict the number of times you can make a claim in a year. Otherwise, you can make a claim N number of times provided the total claim value does not exceeds IDV.

What is IDV?

IDV is insured declared value. It is the value provided by car insurer in case of theft or your cat totals. In other words, it is the market value of your car.

When car insurance doesn’t pay?

If you had a car accident at other drivers’ fault, their insurance company should pay for your car repair and any medical expenses. However, in some cases, insurance companies may deny the claim.
Here are ways out:
1. You may ask for explanation answer and if required submit evidences as police report, eyewitness accounts etc.
2. Hire an insurance lawyer to help you file the claim.
3. You can use your policy in case you have a comprehensive coverage. In this case your car insurance company will deal with other insurance company.
4. Small claim courts – if your damage is not huge, you may take help of claim court where a third party hears the arguments and decides if you are eligible for a claim.

Can car insurance company deny your claim?

Yes, car insurance company can deny you a claim. The first reason is you being very rude and abusive to the workers of the insurance company. You will be quickly transferred from the call centre to right up to area manager and everything you say will be recorded. This will end up in a refusal in your claim with a note that you have beached the good faith and the company will also black list you.

The second reason is fraud. In most of the cases, the company can smell fraud claims and you will simply be denied the claim.

How is car insurance premium calculated?

Car insurance premium is calculated based on many factors. Some of them are:
Your driving record – If you have filed a claim during last year, you are more likely to pay higher premium as you are considered a risky driver.
Your city – if you live in a highly populated city, the chances that you will meet with an accident is high. If you live in a city with high crime rate, there are high chances that your car can get stolen. In both the cases you end up paying high premium.
Coverage history – insurance company will check on if you have a gap in your policy coverage. If you do not get your policy renewed in time, the premium will go up.
Your vehicle – the more expensive car you drive, the more will be the cost of repair in case you meet with an accident. As the cost of your car goes up, so does the cost of the insurance.
How much you drive – if you spend more time driving on roads, the chances of meeting with an accident goes up and you can expect higher insurance cost.
Your gender – it may sound strange but generally female are considered safe drivers. The cost of insurance may be less for females.
No claim bonus – if you have not claimed the insurance during previous year, you get a no claim bonus.

Why car insurance premium increase?

You might have noticed that despite being a good driver with no on road accidents history, the premium of your car insurance goes up at renewal time. If so, you are not alone. There are many factors that contribute to increase in premiums. Let’s look at few of them.

Spare part costs – Spare parts cost goes up each year. Insurance company must shell out more money each year and this increased cost is evenly distributed over to the consumers.

Distracted drivers – Each year people using smartphones while driving is on rise. Statistics show that accidents due to distracted drivers are on rise in last few years. More accidents mean more claims and insurance company must pay more and more in claim each year. This increased amount of claim payment is evenly distributed over to the consumers.

Car insurance fraud – You are telling every truth you know to your insurance company. But there are people who lie. They claim own damages as accidents. Insurance companies incur a heavy loss due to insurance fraud. Again, this increased load is distributed among consumers.

Increased medical costs – cost of medical help goes up each year. Insurance company must pay more compared to previous year. This increase in cost is distributed among consumers.

Place of stay – It may sound strange, but the place you live in matters. If you live in a city with high crime rate, there are more changes your vehicle will be stolen or vandalised. You end up paying more for the risk.

Weather conditions – If the place where you live has extreme weather conditions like hurricane, cyclones, heavy snowfalls, the chances of damages to your vehicle increases. This risk is passed on to you as a hike in premium.

Rise in traffic – statistics shows that each year the traffic is on rise and people tend to drive more hours on roads. This increases the chances of accidents and subsequently paying claims. This cost is distributed among the consumers.

Are car insurance rates higher for senior citizens?

Senior citizens are considered riskier while at driver’s seat, just as those under 25 years. Therefore, car insurance rates are higher for senior citizens.

What are the benefits of having a car insurance?

Apart from the requirement by law, car insurance can maintain your financial well being by passing on the risk of paying for consequences of car accident or other mis happenings to the insurance company. If you are hit by uninsured or underinsured driver, your insurance can pay for the repair and the medical bills. Car insurance provides benefits to the survivor when someone dies in the car accident. It also covers the law suit including legal fees brought against you in case of an accident.

Car insurance also saves you time after you have met with an accident. The insurance company will recommend the car repair garage, pay for the repair and communicate with other driver’s insurance company and negotiate the payment of other persons claim. A good insurance company will help you through the process.

Which car insurance is best in India?

Car insurance is not only mandatory by law, but it should be chosen wisely. Choose the one that satisfies your insurance needs. Here are eight top car insurance companies.

1. ICICI Lombard GIC Ltd.
ICICI Lombard car insurance covers loss or damage to your vehicle against natural and man-made calamities, third party cover and personal accident cover.

They have 5 plans in vehicle insurance sector:
• Auto Secure-Private Car Package Policy
• Auto Secure-Two-Wheeler Package Policy
• Long-Term Two-Wheeler Package Policy
• Auto Secure-Commercial Vehicle Package Policy
• Liability Only Policy

3. Bajaj Allianz GIC Ltd.
You can get benefits like 24×7 road side assistance, 50% no claim bonus when switching over from other insurer, over 4000 garages all over the country with cashless facility, zero depreciation offer.

4. Bharti AXA General Insurance
Offers cashless garage facility with over 2500 garages, add ons like no claim bonus, zero depreciation cover etc.

5. The New India Assurance Co. Ltd.
Operating in 28 countries, are oldest general insurance company in India. The company has more 230 insurance products. They cover all the general aspects of a vehicle insurance.

6. The oriental Insurance Co. Ltd.
It is run by the central government of India. They offer insurance for private cars only.

7. HDFC ERGO General Insurance Co. Ltd.
Some of the key features are 24×7 assistance, paperless car insurance, cashless claim service at over 4800 garages.

8. United India Insurance Co. Ltd.
Their car insurance has the following features: package plan and liability plan offered, hassle free documentation process, no claim bonus.

Where to compare car insurance quotes?

You can check the car insurance companies’ websites directly and get a quote and compare them. You may also use the service of web aggregators like acko, policy bazaar and coverfox to compare and choose the right policy for car insurance.