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Car Insurance Guide

Guidebook

Chapter 1- Types of car insurance


As per the Indian Motor Vehicle Act, car insurance is mandatory in India. However, you should know that only third-party insurance is compulsory. In order to choose the most suitable car insurance as per your requirement, it’s important to first know the types of car insurance offered by insurance companies. Let’s have a look at the different types of car insurances offered in India:

  1. Third-party car insurance: A third-party insurance is mandated by law. If you come across an accident, a third-party car insurance policy takes care of the expenses that is incurred to the car you dashed into. The other party will receive reimbursement for the damage, and you will be saved from a financial catastrophe.

  2. Comprehensive car Insurance: As the name suggests, a comprehensive insurance policy offers holistic coverage that not only offers the coverage of third-party insurance, but also provides protection for your own vehicle. This type of policy provides the most extensive coverage and is highly recommended by us


Chapter 2- Five motor insurance terms you need to know


While going through your car insurance documents you might have felt that you have entered a world full of big words and jargons. But, don’t you worry, we are here to solve your problem. Listed below are some of the important car insurance terms that will help you understand your policy documents in a better way:

  • Insured Declared Value (IDV)

    The IDV of a vehicle is defined as the maximum sum that the insurer pays in case of theft or total loss of that vehicle. IDV is usually the current market value of a vehicle and comes into picture during insurance claims.


  • Zero Depreciation Cover

    When a claim is registered after an accident takes place, insurance companies use a formula that factors in depreciation to determine the payable amount. As a matter of fact, cars do depreciate, which could leave you paying a hefty fraction of the overall expense even in case you have a comprehensive coverage.

  • No Claim Bonus (NCB)

    We all love incentives, don’t we? Be it in the form of cashback, discounts or reward points. Similarly, in the world of insurance, NCB is a discount that a policyholder gets from the insurer for making zero claims during the policy term.


    NCB is applied on policy renewal, which reduces the insurance premium amount significantly. It varies between 20% for the 2nd year and up to 50% for the 6th year. Therefore, it is advisable to refrain from making claim for minor damages, instead reap the benefits of the NCB.

  • Voluntary Deductible

    Voluntary deductible is the limit chosen by a policyholder to meet a part of the claim from his own pocket. This amount depends on the policyholder who factors in his affordability and risk; however voluntary deductible is not mandatory. Remember, higher the voluntary deductible, lower the premium.


  • Third Party Liability Cover

    A Third Party Liability Cover secures the vehicle owner against any financial obligation caused as a result of death, physical injury or damage to a third party i.e someone other than the vehicle owner and the insurance company. As per the Indian Motor Act, third party cover is a mandatory Insurance requirement to drive a vehicle legally on Indian roads.


Chapter 3- What is required to buy car insurance online?


Buying car insurance is an difficult task. There are several insurance companies in the market with a wide range of features and benefits to offer. However, with everything present online and the augmented ease of policy purchase procedure, getting a car insurance has become a child’s play- all you need is the right set of documents handy.

Listed below are few details you should know to get a quote while buying a car insurance policy-

Make
and model
Registration
number
Age of
your car
City of
registration

 

Chapter 4- Understand coverage in car insurance


What Does Comprehensive Insurance Cover?


Ok, now you bought a car insurance policy and have no idea what it covers and what does it not cover. To avoid any last-minute surprises, it’s always a good idea to go through the documents and have a detailed knowledge of the coverage. Here’s what covered under a comprehensive car insurance policy-

  • Fire
  • Theft
  • Vandalism
  • Damage to third party
  • Damage caused by Natural disasters or severe weather
  • Damage to your vehicle caused by falling objects such as trees
  • Damage or destruction of your vehicle caused by an act of civil disturbance such as riots

What Does Comprehensive Insurance Not Cover?


There are a bunch of things that have been excluded from a comprehensive car insurance. Let’s have a look at what isn’t covered under a comprehensive car insurance policy-

  • Depreciation
  • Wear and tear of the vehicle
  • Electrical or Mechanical breakdown
  • Damage caused to the vehicle by a person driving without a valid license
  • Damage caused due to drunken driving
  • Loss / damage to the car caused by war, mutiny or nuclear risk
  • Damage to tyres and tubes. However, if the vehicle is damaged at the same time, liability of the company will be limited to 50% of the replacement cost

Chapter 5- Remedies to reduce your car insurance premium


It is your responsibility to insure your vehicle with a car insurance policy to secure it against several unforeseen circumstances. Also, the Indian government has made it compulsory to get a car insurance policy for your vehicle. However, most of us buy a car insurance policy just to meet the basic requirement of law, which does not offer holistic cover, thereby placing us in a difficult situation. It is always a good idea to get a car insurance after through research. Apart from that, you can take these remedies to reduce your car insurance premium-

Opt for voluntary deductibles
One of the smartest ways of reducing your car insurance premium is by opting voluntary deductible. Keep in mind that voluntary deductible is usually advised to the customers with a good driving record and those who are certain about their driving skills. If you fall in this category, then opt for voluntary deductible at the time of buying motor insurance.

Set up safety devices in your car
It’s a brilliant idea to install safety devices in your car, as such devices further ensure your car’s security which is a good factor for any car insurance company. By doing so, you can get discounts on your car insurance premium. Moreover, a membership of the Indian Automobile Association (IAA) might also make you eligible for more discounts on your car insurance premium. Apart from these options, being a safe and cautious driver is the best way to save on your car insurance expenses. Drive your car smartly, this surely helps!


Chapter 6- What are add on covers and why do you need them in your car insurance?


By paying a little extra, you can avail some added benefits towards your car insurance. These additional covers are known as add on covers and are completely optional.

Take a look at some of the add-on covers offered by Reliance General Insurance:

  • Nil Depreciation:
    At the time of a claim settlement, your insurer calculates depreciation on certain parts of your car. This leads to a decrease in the claim amount. However, if you include Nil Depreciation cover in your policy at the time of purchase, you would probably get full claim amount. Isn’t it amazing?
  • Total Cover:
    In case of theft or damage total loss basic, a car insurance policy pays only for the Depreciated Car Value. However, Road Tax, Registration Cost and Insurance premium together form about 15%-20% of the total On Road Cost of your vehicle, which does not get reimbursed if your car is stolen or damaged beyond repair. But, if you get a total loss cover for your vehicle, all such financial needs are taken care of.
  • No Claim Bonus Retention Cover:
    This add-on cover ensures that in case of an untoward occurrence where the sum value of single claim does not exceed 25% of your car’s IDV, your current No Claim Bonus stays unaffected while renewing with Reliance General Insurance. e.g. If you have earned 20% NCB on your previous year policy and your vehicle IDV is Rs 10 lakh. if there is any claim which is upto Rs 2.5 lakh, you are still eligible for 20% NCB if renewed with RGI.

Chapter 7- Roadside assistance with Reliance car insurance



roadside assistance feature

Chapter 8- Importance of renewing your car insurance policy in time


Buying a car insurance policy is imperative and keep renewing it when it expires is equally important. If your vehicle insurance policy is nearing renewal, here are a few key tips to keep in mind –

  • Mandated By Law-
    The most important reason why you should get your policy renewed at time is that it is mandated by law. By not doing so, you will have to pay a hefty fine along with imprisonment.
  • Third Party Coverage-
    In the event of an accident, involving other individuals or properties, your car insurance policy will save your day. It will cover the expenses arising out of the accident and handle the legal aspects.
  • No Claim Bonus (NCB)-
    When you renew your car insurance policy without it being lapsed and with zero claims through the period, you will be eligible for a NCB. No Claim Bonus is a discount which you get on the insurance premium during policy renewal.
  • Optimum Security-
    Most importantly, when you renew your car insurance policy on time, you get a sense of security. With a valid policy by your side, you can drive around with confidence and not be constantly bogged down by the thoughts of the financial implications of an accident.

Chapter 9- How do I renew my expired car insurance policy?


  1. Intimate your Insurance Company immediately
    It is extremely important to inform your insurer about the lapse in your expired car insurance policy, but there might be certain exceptions to it. Renewing an expired policy is not as straightforward as renewing a normal, valid policy. Hence, it is advisable not to wait for your policy to expire, rather renew it few days prior.
  2. Don’t waste more time
    In case your policy has expired only a few days ago, you can expect some liberty from your car insurance company and get to renew your car insurance policy in the usual way. On the other hand, if the policy has expired several weeks ago, your insurer won’t be very lenient. In this case, your vehicle will go through a inspection again to check for any damages.
  3. Pay the requisite premium
    It is essential to be a little meticulous and renew your car insurance policy well in time to avoid unnecessary hassles later. Additionally, if your car is old or a bit damaged, your insurer will no longer be interested in insuring it. Therefore, you must make sure that you pay your premium on time and never let your car insurance expire.