Owning a car is a matter of pride. There is a lot of careful planning involved in buying one too. As you invest a large sum of money on the purchase of your car, you must ensure that you protect it in the best way you can. In India, it is mandatory for all car owners to have insurance. However, if you want to give your car additional protection, you can consider buying a comprehensive insurance cover. It will ensure complete protection in case of damages that may be caused by you as well as third party liabilities.
Let us take a look at the terms covered under a car insurance policy.
Damage or loss due to natural calamities
Some events are outside your control like floods, earthquakes, or cyclones. Damage or loss to the car due to such events will be covered under the insurance policy.
Damage or loss due to manmade calamities
There could be man-made disasters like a strike, riot, theft, terrorist activity, burglary or even damages caused by rail, water or road incidences. A comprehensive insurance policy will protect you in case of all such events.
Third-party liabilities
Third-party liability insurance has been made mandatory by the Indian law. It will provide cover against the legal liabilities that arise due to an accident and if they may result in the death of the third party or permanent injury. It also covers the damage caused to property.
Personal accident cover
A personal accident cover is as simple as it sounds. It will secure the future of your loved ones in case of your untimely demise or permanent disablement. Some insurance companies also offer optional add-on covers for co-passengers.
Theft coverage in comprehensive car insurance
Let us consider a common man-made event that can cause huge losses to you, for example the theft of the car. There is no set time for such an incident to occur and it could put you in a very uncomfortable situation.
The theft of your car can cause a huge dent in your savings. You do not buy a car every few years as it is a big-ticket purchase, and the last thing you want is to lose your car to theft. And if you think that two wheelers are stolen more often because they are easy to whisk away, you would be highly mistaken. Cars carry equal risk of being stolen. The theft could take place anywhere, in the parking lot, on the road by the pavement or even in the garage of your house. You cannot anticipate such events but you can always take precautions to be financially affected by it.
If your car is stolen, the first thing you must think of is the car insurance policy. You should be aware of the fact that there are two types of insurance plans – a basic cover and a comprehensive cover. The basic cover includes third party liability insurance and mandatory for all car owners. But this cover will not protect you in case of car theft. The comprehensive car insurance cover includes only reimbursements made by the insurance company for the theft. With this plan, you will be covered for theft and the repair cost incurred due to the damages that may be caused because of the break-in. This includes repairs of broken doors, smashed windows or damaged ignition locks.
Claim process if the car has been stolen
If your car has been stolen, follow the procedures mentioned below.
Call the nearest police station- As soon as you see that your car has been stolen, you must report the theft to the local police station. File a First Information Report (FIR) at the station. This is a crucial step and you must not omit it. A copy of the FIR will be sent to the car insurance company, where you will raise the claim for compensation.
Contact the RTO- After filing the FIR, you must contact and inform the RTO where your car was registered. It is important to fill specific forms to record the details of the theft. This will ensure that the stolen vehicle is not re-registered with the RTO.
Raise a claim- If it is not possible to bring your car back, you need to ensure that you manage to recover at least a considerable amount of money that you had spent on buying the car. It is important to remember that the claim should be raised at the earliest so do not delay this procedure.
Inform the insurance provider - You now need to call the customer helpline number or send an email to the motor insurance company informing them about the theft. The team will then guide you through the next steps towards submitting your car insurance claim.
Gather the documents - The insurance claim application should be accompanied by the necessary documents to support your claim. You need to have the car insurance policy, police FIR, registration certificate of the car, road tax receipt, invoice of the car, keys of the car, RTO forms, etc. You will have to submit these to the insurance company with the claim application. You may have to provide the original documents whenever possible. If you do not have the originals, you can submit copies of the same. Do remember to attach the photographs of the car.
Claim settlement- After the claim is registered and assessed, it will be approved by the company and you will receive the stipulated amount.
The claim is settled at the earliest and you will receive the amount as estimated by the company.
How much can you receive in case of a claim for theft?
A lot of people believe that they can get full compensation or the entire purchase amount of the insured car in the event of theft. However, this may not always be the case. It is applicable only if you have a Return to Invoice add-on cover with the car insurance policy. If you have this cover, you will receive an amount that is equal to the purchase amount or the car's invoice. But if you do not have this add-on, you will receive the current market price of the car as compensation. It will be mentioned as the Insured Declared Value (IDV) in the policy. Since a car is a depreciating asset, the insurance company will adjust the amount based on the current value of the car.
Now, if the car is only a couple of months old, you will receive a higher claim amount as the IDV will be higher. But if the car is about 3-4 years old, the current market price of the car will be lower. The company will deduct the depreciation amount as per standards issued by IRDAI. Hence, the amount you receive as compensation in case of theft will be based on the terms and conditions of the car insurance policy. So, before you sign-on for the policy, make sure you read the terms and conditions carefully.
