Congratulations on your new car! Now we know what ensues. Perhaps an auspicious round to the temple, a long drive and some social media uploads.  In all this rush and excitement, did you think of car insurance? After all, your car is no less than a family member, and it is important to buy an insurance policy to protect your valued possession from all the dangers, including natural calamities.

Of course signing up for car insurance is a complicated task. But no worries! Here’s what you need to know about it.

What is Car Insurance?

It is an agreement with the insurance company wherein the insurer is ready to offer coverage against any financial loss caused due to any damage to the car. It covers both man-made and natural disasters.

What are the types of car insurance?

  • Third-Party Liability Cover: It is a mandatory insurance policy that you should buy before you take out your car from the showroom. This insurance policy gives you coverage if your insured vehicle causes damages to life or property of a third-party.
  • Comprehensive Car Insurance: It offers protection to you and your vehicle. It gives 360-degree coverage to your vehicle against theft, riots, natural calamities, etc. and also covers third-party liability.

What add-on’s to avail?

Usually, the structure of car insurance remains same across various insurers, but what mainly differs is add-on benefits. Some of the leading car insurance riders are:

  1. Zero depreciation cover: The insurer settles the claim after factoring in depreciation. Thus, you end up paying a considerable portion of the claim amount from your pocket even if you have a comprehensive car insurance policy. A zero or nil depreciation cover will help you settle the claim amount without deducting depreciation.
  2. Engine cover rider: For a country like India, where the onset of Monsoon means water logging, the engine cover rider is of great use. Under this rider, the insurer covers losses caused due to leakage of oil, water stalling, etc.
  3. Roadside assistance and towing rider: It offers extremely useful services in case your vehicle breaks down in the middle of the road or your car meets with an accident. Various services like lost key recovery, fuel refilling, battery jump start, etc.; are offered by this rider.
  4. Personal accident cover: It financially secures your family in case of permanent disablement or the unfortunate death of the policyholder. It includes injuries caused to the driver while traveling, mounting or dismounting from the car. Some insurers extend the cover to co-passengers also.
  5. Ambulance and medical expense rider: This rider compensates you if you or another party suffers serious injuries and needs to be taken to the hospital.
  6. Garage cash cover: If your car has been sent to the garage center, managing without one can be quite tricky. You would need to carpool or take public transport, and while doing all these, you would need to spend money. In this situation, a garage cash cover will help you. The insurer will pay a fixed amount which would help you cope with all these costs.
  7. Vehicle replacement cover: In case your car gets stolen or damaged in an accident, this rider compensates you with an amount which would be sufficient to replace your old car with a new car of the similar make, model, features and color.

What claims are settled by the insurer?

It is important to understand that though you have a car insurance policy; it will not pay you entire claim amount. In the case of own damage cover, the policy comes with a deductible feature. Mainly, the deductible is the claim amount that needs to be paid by the policyholder first, before the insurer settles the claim. For instance, if the deductible amount is Rs 2000 then the insurer will not cover you if the losses do not cross this limit.

Similarly, in the case of the high claim amount, you will still need to pay Rs 2000 first, and then, the policy will pay the remaining claim amount after factoring in the depreciation. However, in case you opt for the zero depreciation cover, the insurer will settle the claim amount without deducting depreciation.

Further, the insurer will not cover improvements or modifications made to the car, unless the same has been specifically mentioned in the policy document. Also, you need to buy a rider to cover consumables like engine oil, brake oil or gear oil.

Here it is important to note that the insurer will not cover losses or damages caused due to negligence. Before the claim settlement, the insurer makes sure that at the time of the accident:

  • The policyholder was holding a valid driving license
  • The policyholder was not driving under the influence of alcohol
  • The car possessed a valid fitness certificate

How to file a claim?

We divide the claim process under the following heads:

  • Third-party claim: The first step is to bring your insurance company in the loop so that the insurer can also defend you in the court. In case of an accident, you should also click pictures of the accident site and note down the numbers of witnesses as it will help your insurer at the time of claim settlement.
  • Claim on a comprehensive insurance policy: Mainly, there are two types of claims for which you can approach your insurer:

(a) Damage: In the first instance, the most important thing to do is to inform the insurance company at the earliest as any delay can make the insurer suspicious. Also, any unnecessary delay may cause the insurance company to investigate your case in detail. It is advised to take pictures of your damaged car as proof. In case you take your vehicle to the network garage, you will get the cashless facility, and the insurer will directly settle the bill. In case it is not a network garage, you will need to pay the bill yourself and then approach the insurer for reimbursement of the claim.

(b) Theft: In the case of car theft, the entire claim processes may take many months to get completed, and there are many more hoops that need to be crossed. Also, the vehicle needs to be insured under the comprehensive cover. Here is a quick look at the steps that need to be followed:

  • The policyholder must lodge the First Investigation Report (FIR) with the police
  • The policyholder should call the insurer’s customer service center and fill the claim form with information like the policy number, registration number of the vehicle, description of the incident, etc.
  • The insured needs to submit the duly filled claim form, copies of the registration certificate, policy document, driving license, the copy of FIR and a description of the incident
  • The police may take about 90 days to trace your stolen vehicle in your area, and after that, a ‘non-traceable report’ is issued. Submit that report to the insurance company who will ask you to fill the transfer forms that will assist in moving the vehicle in their name. You need to transfer the RC of the stolen vehicle in favor of the insurance company along with the keys. It is done to ensure if the car gets recovered in future; it is to become the property of the insurer, and the policyholder should not make any claims on it

Now you know everything about car insurance, so it is time to buy one. As you get ready to adore your car with new floor mats, seat covers, seat cushions and sun films, make sure you buy car insurance too to ensure a safe and a happy ride.