The moment we buy a new car it becomes part and parcel of our life. It becomes like another member of our family. And it is our duty to protect each and every member of our family. So buying a car insurance is like buying a layer of protection for your beloved asset. Here’s everything that you should know about car insurance.
What is car insurance?
Car insurance is the extra layer of protection to your car that covers you for financial strain in the face of an accident, natural disaster or any other unforeseen incident that can cause damage to the vehicle, property or injury to the driver and passenger.
Why do I need car insurance?
Car Insurance helps in covering the financial expenses in case there is damage to vehicle or property, in the face of an accident or other unforeseen incidents. It not only covers a third party for damage and injury, but also covers the owner driver for injury and damage to own vehicle.
What is included in car insurance?
Car insurance covers for any damages that is inflicted on your vehicle due to an unfortunate event, theft of your car, total damage, any damages that you have inflicted on anyone else’s property, vehicle or caused any injury. It also covers in case of death or disability for the owner driver.
What are the types of car insurance?
Broadly, there are 2 types of car insurance:
- Third Party Liability- This is the minimum basic insurance you need to be able to legally drive your car. A third-party car insurance is mandated by the Government of India while the purchase of a vehicle and covers only damages to a third party’s vehicle, property or in case of any bodily injury.
- Comprehensive Car Insurance- along with a third party car insurance, the comprehensive car insurance also covers ‘Own damage’. That means, it covers for any damages on your vehicle due to an unfortunate event, theft of your car, total damage, any damages that you have inflicted on anyone else’s property, vehicle or caused any injury. It also covers in case of death or disability for the owner driver.
Which is a better car insurance, comprehensive car insurance or a third-party liability insurance?
Taking a comprehensive car insurance cover is always advisable as it provides complete protection of not only someone else’s car like a Third-Party car insurance, but also the Own damages to your car, as well as any injury to the owner driver.
What are the addons available in car insurance & how to choose Addons
The various add-ons available for car insurance are
- Roadside Assistance- Covers you in case your car breaks down in the middle of the road, away from the city
- Engine & Gear Box Protect- Covers you in case your engine gets damaged, which is not covered
- Zero Depreciation- Covers you in case of parts damage, where depreciation doesn’t reduce the price
- Consumables cover- Covers you in case of damage to nuts, bolts, brake oil etc
- Tyre Protect - Covers you in case of any damage to your tyres
What is the difference between zero depreciation and comprehensive insurance?
The most obvious difference is that with a zero-depreciation addon with the comprehensive car insurance, offers the full amount, depreciation cannot touch your car here. However, a standard comprehensive cover—or a plan that does not offer zero depreciation—makes estimations that depends on the 'current value' of your vehicle. 'Current value' takes in account the depreciation on your vehicle.
For example, your insurance provider, under a normal cover, will account for the depreciation of your bumper (a plastic part, usually depreciating at 50% a year) and then pay you. But the rest is for you to pay, which can be almost around INR 6,000 (If say you bought a car for 10 lacs and your bumper cost is 12,000).
This is when a Zero-Depreciation add-on of just INR 3000, could have come to your rescue, completely ignoring your bumper’s depreciation and making the insurance provider pay the full INR 12,000.
What is covered & what is excluded in a comprehensive car insurance?
Own-damages: Coverage against loss of or damage to your vehicle caused by accident, theft, fire, explosion, self-ignition, lightning, riots, strikes or act of terrorism, natural calamities
Third Party Liability
- It covers damage your car causes to someone else's car
- Any personal damages like injury to someone else if your car hits them
- Any damage to third party’s property
Things that are excluded under a comprehensive car insurance are:
· Any policy that is not in force anymore. Ensure that you renew your policy on time. If the damage happens post expiry & before renewal, your car won’t be covered.
· Any car damages to your car due to war, radiation, rebellion, hostilities, terror attacks, or invasion
· At the time of accident, if you or anyone driving with your consent is found under the influence of alcohol or any other intoxicants
· Any consequential damage. For instance, your car’s engine gear oil leaks. Yet you drive & the gearbox fails, which is a consequential damage.
· Any damage due to contributory negligence, for instance, you forget to lock your car and your car gets burgled
· Any damage to due to a deliberate accident attempt, for instance if you intentionally go and hit in your car to a pole
· Any activity not guided by the rule of low. Like, underage drivers, driving without a valid license or on the wrong side of the road
How do I choose the best car insurance?
1. If you are buying a car insurance for the first time, then research about various car insurances, based on how much IDV they are giving you, what are the add-ons they are offering, how is their service during claims, etc.
2. If you are renewing your car insurance, check rates from other companies to make sure you are getting the best deal.
3. Look at how much IDV you are being offered for your car and hence know your coverage
4. Set the right deductible. Check for compulsory and voluntary deductible. A voluntary deductible reduces your premium, but you have to pay more out of pocket in the event of an accident. If you have a good driving record and haven’t had an accident that was your fault, you may want to gamble and opt for a higher premium.
5. If you are renewing your car insurance, don’t forget to claim your NCB, as that will lead to a lower premium.
What is the meaning of zero depreciation car insurance?
Zero dep cover is an addon that you can buy with your car insurance, in which the insurance company will pay almost the entire cost of the parts to be replaced with nothing (zero) deducted for depreciation. In the unfortunate even of an accident, not having the zero dep cover can set you back by thousands or even tens of thousands of rupees. But if you have the zero dep cover, you can rest easy as most of the repair cost will be covered by the insurance company.
What is Roadside Assistance?
Roadside Assistance (RSA) is an addon that is extremely useful in cases when your car breaks down in the middle of the nowhere.
So, let’s look at where all roadside assistance in your car insurance policy can cover your back:
Flat Battery: Making an alternate arrangement so that your car starts moving. If the battery needs to be changed, the car insurance company will take care of the repair costs, although you need to pay for the new battery
Spare Key: Arranging for pickup and delivery of spare keys or providing unlocking services of a vehicle technician, is provided by the car insurance company
Flat Tyre: Getting a technician to repair / replace the tyre, or arranging to take the tyre to the nearest repair facility. If the tyre needs to be changed, you will have to pay for it although the repair costs will be borne by the car insurance company
Minor Repairs: Providing you with telephonic assistance for a solution, or sending a technician to carry out the repairs
Towing Service: Arranging for a towing service to the nearest Digit Authorized Repair Shop, in case of irreparable breakdown or an accident is also covered in the car insurance policy
Urgent Message Relay to Relatives: Arranging to send urgent message to persons requested by you, through available means of communication.
Fuel Assistance: Arranging for supply of up to 5 litres of fuel (the fuel is chargeable) if your car has run out of fuel or arranging for towing to the nearest garage in case of immobilization due to contaminated fuel.
Also, Taxi and Accommodation benefits are provided if you are too far from the city, so that you and your family are safe in the first place.
So, roadside assistance ensures that if your car betrays you on road you don’t go through a shot of anxiety and panic.
How Premiums are Determined for Car Insurance Policies?
There are several factors that an insurance provider will consider to calculate your car insurance premium such as:
Insured Declared Value (IDV)- The insurance provider will consider the IDV of the make and model of your car. The IDV changes annually after adjusting the depreciation value of the car.
No Claim Bonus (NCB)- You are entitled to a NCB if you haven't made any insurance claims in the previous year.
Discounts or offers- If the car contains additional accessories that are not included in the selling price of the car or a part of the manufacturer's catalogue, then the premium for those accessories will be calculated separately.
Age of the car- The entry of new models of cars can reduce the value of the older models.
Geographical location- India is divided into Zone A and Zone B. Zone A includes all the major cities in the country (Bangalore, Ahmedabad, Chennai, Mumbai, Kolkata, Pune, and New Delhi) where the accident risk is considered to be high, therefore the insurance premium is higher than in Zone B (the rest of the country).
Add-ons- Facilities like roadside assistance, lock and key replacement, and loss of personal belongings will add to the insurance premium cost.
Tired already? But wait, here are some frequently asked questions that we have answered too:
Are passengers covered by car insurance?
In a comprehensive car insurance policy, usually only the owner driver is covered in case of any personal accident. However, almost all insurers offer a passenger cover add-on that you can buy which covers the passengers of your car, with a little extra premium.
What documents do I need to get car insurance?
The documents required for taking a car insurance policy are
- A Valid Driving License
- Registration certificate
- Proof of ownership of car
- Valid Photo Id Proof
With Digit, we don’t ask for hardcopies of any of the above. You can send us soft copies of all the documents and that will suffice.
What is a car insurance renewal? What are the things to consider while renewing a car insurance policy?
Every car insurance policy is a yearly contract, after which it needs to be renewed once the contract is over. During renewal, you can opt to continue with the same car insurer, or you can opt to go with a new car insurance company. It is very important to renew your car at the right time, so you are not vulnerable to damages at any point in time.
Some important things you should remember while renewing your Car Insurance
· Multiple policies discount: If you buy more than one policy from the same insurance provider, you may be eligible for a discount on your insurance cost. Loyalty always counts.
· Useful add-ons like passenger cover: By adding a passenger cover to your car insurance cover, you ensure that everyone in the car are protected.
· Claim your No Claim Bonus: If you haven't claimed for your insurance the previous year, you can enjoy a No Claim Bonus (NCB) in the form of a discount on insurance premium when renewing your policy. Always ensure you claim your NCB when renewing your policy.
· Check if you are getting highest IDV: Don’t always go for the lowest premium but check if your insurance is offering you the highest IDV for your car.
· Check for the right add-on covers: From zero depreciation cover to loss of personal belongings cover, you can personalize your insurance policy with relevant add-ons.
· Check for voluntary deductible to reduce premiums: If you have not claimed for 5 years at a stretch for your car insurance, you can also opt for a voluntary deductible that will ensure that your car insurance premium gets reduced.
Is engine covered by insurance?
Engine is not usually covered in a standard package policy. However, there is an addon offered by most insurers where you can cover the engine by paying a little extra premium. The Engine and Gear Protect addon takes care of the damage to engine and gear box, in case of any unforeseen incident.
Is tyre covered under insurance?
Tyre is not usually covered in a standard package policy. However, there is Tyre Protect addon offered by most insurers where you can cover the Tyre by paying a little extra premium.
Does insurance cover if your car catches on fire?
Yes, for fires due to any reason, your car insurance will surely cover it.
Does car insurance cover electrical fires?
If there is an electrical fire due to accident, then that is covered under your comprehensive car policy.
NCB or No Claim Bonus is a discount on premium given to the policyholder for having a claim free policy term.
If a car owner doesn’t claim in a policy year, he gets an NCB that amounts to a discount in premium The NCB increases each claim-free year accordingly:
All types of vehicles
Percentage of discount provided on OD premium
After 1 claim-free year
After 2 consecutive claim-free years
After 3 consecutive claim-free years
After 4 consecutive claim-free years
After 5 consecutive claim-free years
What documents should I keep in my car?
You should always have your driver’s license and your Registration Certificate (RC) inside your car.
What is cashless car insurance?
Cashless car insurance is a benefit offered the car insurer where you don’t have to pay anything to get your car repaired if the repairs are done in the insurance company’s authorised garages. At Digit, we have 1000+ garages across the country and we also offer a Pick-up, Repair and Drop service with a 6 months repair warranty.
What is advance cash option in car insurance claims?
Quite often we have a garage which has won our heart every time and we want to repair our car only there. For such situations, we offer cash upfront before the repairs, so you can get your car repaired at the garage of your choice.
On the off chance that you drive a vehicle, there is a decent shot that you will be engaged with an episode that harms it. So, you should be well acquainted with the claim process of your car insurance for such situations.
At Digit, filing for a claim is easy breezy, juts follow up the steps below
- For claims, just call on 1800-258-5956. No forms to be filled.
- Get a link for Self-Inspection on your registered mobile number
- Shoot your vehicle’s damages from your smartphone through a guided step by step process
- Our team will then assess the damages and get back with an estimate
- Post that you may choose the mode of repair you wish to opt for i.e. Advance Cash or Cashless through our network of garages.
How to claim in case of third-party liability and theft?
Third-party liability claims:
In case if you have damaged someone else’s vehicle, or property, here’s how you can settle the score with the help of your car insurance
- The Third Party should lodge an FIR at the local police station.
- You have to share a copy of your auto insurance policy with the third-party, so that they can raise a claim under it.
- All third-party liability claims are settled in a Motor Accident Claims Tribunal (MACT). The third party must file a case at the local tribunal.
The documents needed for third-party claims are:
· Duly-filled and signed claim form.
· A copy of the FIR.
· A copy of your valid Driving Licence.
· A copy of the first 2 pages of your policy document.
· A copy of your vehicle's RC.
For theft claims:
Unfortunately, if your car was stolen, you should follow the steps below to raise a claim:
· Lodge an FIR with the police.
· Tell your insurance company of the theft. The following documents will have to be submitted:
- A copy of the registration certificate of your car
- Copy of your driving license
- A copy of the FIR
- The first two pages of your car insurance policy document
- A letter addressed to the RTO
Once this is done the police will attempt to locate your vehicle. After 6 months, if the vehicle has still not been found, the police will issue a ‘Non-Traceable Report', completing the transfer of the RC of your lost car to the insurance company. A letter of subrogation will also be submitted. Once all relevant documents are received by the insurer, the claim will be settled.
What documents are required to make a car insurance claim for accidents?
· Duly-filled and signed claim form.
· A copy of your vehicle's RC
· A copy of your valid Driving Licence.
· A copy of the first 2 pages of your policy document.
· A copy of the FIR.
· The original estimate, invoice, and payment receipt for cash and cashless garage
What documents are required to make a car insurance claim for theft?
· Duly-filled and signed claim form
· A copy of your vehicle's RC with car keys
· A copy of your valid Driving Licence
· A copy of the first 2 pages of your policy document
· A copy of the FIR
· RTO transfer papers, and Forms 28, 29, 30, and 35
· Final report from the police mentioning that the vehicle cannot be located
At Digit, we do not ask for hardcopies of any these documents. Sending us only softcopies of them is more than enough.
Can you transfer your old Insurance to your new car? If yes, how to do that?
When you buy a new car, you can transfer your old car insurance policy to your new car. You have to inform your insurance company about the transfer. You can also retain your NCB.
When you purchase a used car, the first step would be the transfer of the registration certificate (RC), also transferring the insurance policy at the same time.
Once the new owner has bought the car, the policy of the previous owner will not be valid.
As per IRDAI guidelines, the name and address on the insurance documents of a car and the RC should match. So, in the event of an emergency, the new car owner can recover the incurred expenses without too many hassles.
The following documents are needed to transfer car insurance:
· Copy of the registration certificate (Form 29)
· Old insurance policy document
· No Objection Clause (NOC) from the previous car owner
· New application form, duly filled in
· Inspection report - This will be created by the insurance company after vehicle survey
This blog is your handy guidebook to know everything on car insurance! Make sure you have it when you need it 😊