Car insurance (also known as motor or auto insurance) is an agreement between you (car owner) and the insurance company. The insurance company covers for loss or damage caused to your car in respect of the premiums paid by you (car owner). Car insurance is mandatory in India, as per the Indian Motor Vehicle Act.
The premium of the car insurance is dependent on certain parameters and acts as a boon to the insurance holder. It helps cover against financial loss caused by accidents, theft and any subsequent liabilities.
You must have seen a lot of immense words and jargons while going through your carinsurance documents. But, you don’t need to worry, as we have covered all the key car/motor insurance terms below:
The value of insurance policy is based on the Insured Declared Value (IDV) of your car. IDV state the maximum insured amount the insurer can pay you which is calculated based on the showroom’s listed price. And therefore, the IDV value of a car is not constant.
How IDV is calculated?
IDV = (Manufacturers listing price – Depreciation) + (Cost of vehicle accessories – Depreciation)
The insurance cost and registration are excluded from IDV. IDV value of your car decreases when you renew your motorcycle, because of the depreciation rate that is applied to vehicles between one and two years old.
It is advisable to get IDV which is near your cost of the market value of the car. Insurers provide a range of 5% to 10% to decrease IDV which could be selected by the customer. Less IDV would attract less premium.
NCB or No claim bonus is essentially the discount that you (policyholder) gets from the insurer during the policy term for making zero claims. In India, NCB can be earned starting from 20% and go up to a maximum of 50% for the 6th year. No Claim Bonus is only allowed if you renew the policy within 90 days of the expiry of the previous policy.
When you claim carinsurance, standard insurance policies deduct depreciation on replaced parts. But, insurance companies waive off depreciation on replaced parts under Zero Depreciation cover. This states that one will get a higher claim amount.
Third-party is the most popular insurance claim term. This claim is mandatory when you are buying a car, according to Indian Law. The third-Party cover protects the car owner against any financial liability as a result of physical injury, death or damage to the property of a third party.
Own Damage Premium insures your car against losses caused by events that are beyond your control. This includes natural disasters like tornadoes, earthquakes, fires, explosions. This premium differs according to geographical zones, capacity, model, etc of a vehicle.
Listed below are the two types of carinsurance in India.
The following is generally covered under Comprehensive Insurance cover:
Depreciation, Wear and tear of the vehicle, and Electrical or Mechanical breakdown are not covered under Comprehensive Insurance cover.
The following are the factors that will determine your car insurance premium in India:
Car registration RTO car insurance premiums are calculated on the basis of the vehicle registration location. The locations are categorized as the following:
While Mumbai, Chennai, Delhi, Bangalore, Kolkata, Ahmedabad, Pune, and Hyderabad, falls under Zone A, the rest of India falls under Zone B. Higher premiums are registered under Zone A as compared to Zone B.
Also Read, Top Investment Options In India Offering High Returns
There are certain exclusions on motor/car insurance policy which means that the insurer will not cover the liabilities under the following circumstances:
The following are the steps you can follow to claim your car insurance after an accident to get insurance benefits:
While selecting the car insurance policy, it’s better to compare insurance quotes online. Be safe and drive safe. It can save your life and money.
[ad_1] Nørresundby, 26 April 2024Announcement no. 23/2024 The Board of Directors of RTX has, cf. company announcement no. 20/2023 dated…
[ad_1] Gyroscope Global Market Report 2024 – Market Size, Trends, And Global Forecast 2024-2033 The Business Research Company's Gyroscope Global…
[ad_1] ODISHA, India, and LOS ANGELES, Calif., April 25, 2024 (SEND2PRESS NEWSWIRE) — In the 1880s, to call attention to…
In support of Hong Kong's new mega tourism and commerce drive, Alipay+ now enables users of 14 leading overseas mobile…
[ad_2] TOKYO, April 26, 2024 /PRNewswire/ -- KLab Inc. announced that its hit 3D action game Bleach: Brave Souls has…
[ad_1] CALGARY, Alberta, April 24, 2024 (GLOBE NEWSWIRE) -- The Board of Directors of TransAlta Corporation (TSX: TA) (NYSE: TAC)…