All You Need To Know About Car Insurance on Purchasing a Car

 Ravi Khurana

The car you have purchased may be a brand new one or even a used one. Cars are purchased for personal, professional as well as business uses. Business firms may purchase fleets of cars for transportation purposes.

For whatever reason, a car is purchased it is first necessary to get its registration done. If the car is not a new one, but there is a change of the owner, then the same must be updated in the registered information. The updated registration certificate should be obtained, and a copy of it should always be present inside your motor vehicle.

Right after obtaining updated registration certificate it is important to get your car insured for third party liability as your car is a motor vehicle and in India, it is compulsory for owners to get their vehicles insured against third party liability (Motor Vehicles Act). So once you have the car’s registration certificate, third party liability insurance and a valid driving license you are ready to drive your car.

Third Party Liability under Car Insurance Policy

It is mandatory for all car insurance policies to include third party liability insurance cover in accordance with the guidelines and prescriptions under The Motor Vehicles Act. The owner of a car can raise a claim for third party liability cover on behalf of the third party in the event of death, disability of third party or damage to property of the third party as per the prescribed list of claimable amounts applicable for each type of contingency and within the prescribed limits. The third party can be a person(s) outside the vehicle and even uncovered passenger.

Total Car Insurance Policy

Car owners can choose total or comprehensive car insurance policies of top insurance companies. Besides the compulsory third party liability cover, they can also procure cover for car damage and theft, personal accident cover (of owner or driver), known and unknown pillion cover and several additional covers which make the policy more comprehensive.

Car Damage and Theft Cover

Includes cover for car theft and damage to the car due to accident, fire, lightning, self-ignition, riots, terrorism, natural disasters.

Personal Accident Cover

Includes cover for death and disability (permanent/temporary, partial/total) of owner or person driving the car.

Pillion Cover

Includes personal accident cover and property damage cover of pillion.

Additional Covers

This can include nil depreciation cover, loss of key and lock replacement cover; daily allowances cover till car repair, accommodation assistance, towing assistance, remote area and road side problem assistance and legal assistance cover. Additional covers are especially sought for cars which are used constantly and extensively like for long distance and remote area transport or commutation.

Features and Benefits of Car Insurance Policy

To conclude it can be said that car insurance policy owners can enjoy complete peace of mind due to the features and benefits included in their car insurance plan, among which the salient ones are:

  • Third party liability cover in accordance with law
  • Personal accident cover of owner/driver/pillion
  • Car theft and damage cover
  • Additional covers for greater comprehensiveness
  • Repair at networked garages
  • Cashless claim settlements
  • No claims bonus up to 50%
  • Renewal and long term policy discounts
  • Group car insurance discount
  • Security and anti theft device installed car discount
  • Round the clock customer support assistance

Exclusions under Car Insurance Policy

It is recommended for car insurance policy holders to be aware of the several exclusions under which their claims may not be honored by their insurers, and these include:

  • Cover for normal wear and tear
  • Willful negligence of standard maintenance guidelines
  • Willful negligence of safety rules and regulations
  • Driver in intoxicated state
  • Driver without valid driving license
  • Mishap occurrence outside geographical scope
  • Occurrence after expiry of policy date (policy not renewed and not in force)
  • Involvement in abnormal risk taking
  • Involvement in illegal or unlawful acts

Car Insurance Policy –FAQs

Q. How to optimize car insurance policy?

Here optimizing means quoting the appropriate Insured Declared Value (IDV) for your car at the time of purchasing or subscribing for car insurance policy. The IDV determines the premium amount as well as the maximum sum assured. Lesser IDV implies lesser premium but also lesser cover while greater IDV implies more premium yet also more cover. IDV should be declared keeping in mind the amount which would be needed to totally replace the car.

Car insurance premiums can also be lessened by availing car insurance premium discounts which include No claim bonus discounts, group car insurance discounts, long term policy discounts, installation of security and anti theft devices, declaration of being special group member like that of the defence force, the medical profession and other special groups.

Car insurance policy premium also depends upon year of purchase. The premium for new car insurance cover costs less as depreciation charged is almost nil and the car has a greater life, but the IDV of a new car would be more as compared to IDV of an old car of the same make.

Q. What happens if my car collides with another car? Who is the third party here?

The third party is the car with which another car has collided. Usually, when such an incident occurs, the police needs to be involved immediately, and FIR needs to be registered. The insurance firm needs to be informed immediately who then depute their personnel for an onsite visit and legal assistance can also be sought (car insurance policy may be inclusive of legal assistance cover). If the collision has occurred not due to either party’s negligence of traffic rules. For example in the case of sudden collision like while sudden backing to avert or taking a sharp turn then no party is the third party, but each party can claim cover as applicable under their own separate car insurance policies provided the occurrence has happened within the geographical scope of the policy.

Q. What is nilling depreciation cover?

The claimed amount payable in case of car damage due to a covered condition in the car insurance policy is deducted for applicable depreciation. If the car insurance policy covers for nill depreciation, then the applicable depreciation amount is not deducted from the cost of the part which needs replacement.

Domain: Business
Category: Companies
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