Basics of Car Insurance
Is motor insurance compulsory in India?
Under the provisions of Motor Vehicles Act all the vehicles, which are runnng in public places shall have at Car insurance policy at least to cover third party liability as specified under the Act.
What is insured ?
Any light motor insurance used for social, domestic and pleasure purposes and for the insurer’s business.
What types of policies are available for motor vehicles?
There are two types of policies available for motor insurance
• Third party Car insurance -policy A and
• comprehensive insurance policy- policy B.
What is the difference between these two policies?
Third party Car insurance policy covers only the inter-alia accountability of the vehicle owner for loss or damage to life or property of the third parties. Whereas comprehensive Car insurance policy covers in addition to third party accountability, loss or damage to the vehicle itself by way of accident, theft, etc. and specified dangers.
Are the insurance premiums same or different amongst four Indian companies?
The premium rates for motor vehicle insurance in India are governed by Tariffs, which is same for all the companies operating in India.
For what value the car is to be insured – Depreciated value or reinstatement value?
The car is neither to be insured for reinstatement value nor for depreciated value. It is to be insured for second-hand value in the local market for a similar type of car for a similar model. In the event of loss, the liability of insurance company is the maximum compared to the market value or the amount of insurance whichever is less.
What factors determine the premium for car insurance?
The cubic capacity, use of car, normal area of operation and the value of car proposed for insurance decide the premium payable and also various extensions opted for.
How much would the insurance company pay in the event of an accident?
In case of an accident, the insurance company pays for cost of damaged parts which are replace and the labor cost to repair the vehicle. As per the revised regulations, depreciation is not deducted from the cost of the parts except for the tyres and tubes for which 50 percent depreciation is deducted.
What is Bonus/ Malus system?
In case of any accident occurring in a year for which a claim is lodged on insurance company, in the very next year, the insurance company loads the premium by way of charging a malus- a percentage of extra premium. Whereas when there is no claim lodged during the year the Car insurance company grants a discount in the premium by way of bonus.
What are the minimum/ maximum percentages of the Bonus/Malus?
The minimum Bonus is 20 percent, maximum is 65 percent whereas minimum Malus is 105 percent and maximum is 50 percent.
On sale and transfer of vehicle, what happens to the Bonus/Malus?
The Bonus/Malus goes with the original owner since he can claim bonus on his next purchased vehicle. However, the purchaser enjoys the bonus under seller’s policy till the renewal date. On date of renewal, the bonus/malus has to start afresh.
What is voluntary excess?
Voluntary excess is client’s option to opt for bearing a certain amount of loss from every claim. For this option,Car insurance company allows a discount in premium.
How is voluntary excess different from compulsory excess?
In case of voluntary excess, it is the client’s option for which he gets discount in premium whereas compulsory excess is imposed by the Car insurance company in addition to Malus to take care of a bad claim experience for a particular car. For compulsory excess, no discount in the premium is allowed.
Great information!
I think i found this site at right time, however we just have purchased a new car. I am wondering to take Car Insurance as soon as possible now. I think i should have a deductible on both collision and comprehensive that is the maximum amount that i can afford to pay out-of-pocket for repairs.
Remember that liability insurance provides protection from claims arising from injuries or damage to other people or property