How car insurance works in India

Driving a car calls for having car insurance. It's required by law and protects you from financial loss in case of an accident or other unforeseen event. However, if you are unfamiliar with the idea or doubt the specifics, you could be thinking, how does car insurance work in India?

In this blog, we'll break down the entire process so you can comprehend it and make informed decisions.

What is car insurance?

Car insurance is a contract between you and an insurance provider that offers financial coverage for damages or losses brought on by theft, natural disasters, accidents, or any other unanticipated incident. The insurer guarantees to cover some financial expenses that might result from these events in return for a premium, a set amount paid consistently.

Usually covering repairs, medical bills, and perhaps even reimbursement for third-party obligations, the coverage under the Motor Vehicles Act, 1988, car insurance is required in India and guarantees that if you are involved in an accident, you are not left bankrupt.

Types of car insurance in India

Before understanding how does car insurance work, know that there are several types of car insurance in India. Let's dissect them:

Third-party car insurance

●        The most reasonably priced and fundamental type of car insurance is this one. Indian law mandates that every motor vehicle on the road carry at least third-party insurance. In the event of an accident, it addresses damages done to another person or their property. It also covers any death or physical injury resulting from the accident.

●      This policy does not, however, address theft, personal injury, or damage to your car. Consider this policy the minimum requirement for being legally and safely on the road.

Comprehensive car insurance

●        A comprehensive car insurance plan is the best approach if you desire more extensive coverage. This coverage addresses damages to your car resulting from accidents, fire, theft, vandalism, or natural events including floods or earthquakes, as well as third-party liabilities. 

●        It is also more all-inclusive since it covers personal accidents, including injuries suffered by the driver and passengers. Knowing that you are insured for practically any scenario gives far more peace of mind, even if it is more costly than third-party insurance.

Standalone damage cover

●      This kind of policy, which is somewhat new in India, is designed for customers who currently hold third-party liability coverage but wish to add damage protection for their own car. If you have a current third-party policy, this stand-alone own damage insurance lets you add coverage for damage to your vehicle without having to purchase a complete comprehensive policy. 

●        Depending on your budget, the kind of car you drive, and your demand for thorough security, every kind of insurance offers advantages and drawbacks.

How does car insurance work in India?

Now, let's address the main question: how does car insurance work in India? Let's examine the process in detail.

Choosing a policy

●      Selecting a proper policy comes first when you decide to purchase car insurance. Either visiting a local insurer or using an online service can help you achieve this and greatly simplify the comparison. 

●      You will have to go into specifics about your car, including the make, model, year of production, and registered city. These specifics will let the insurance pay your premium.

Premium calculations

Your car insurance's premium is shaped by a number of elements:

●        In the event of a total loss or theft, the insured declared value (IDV) represents the maximum amount that the insurance company will pay. Your car's current market value determines the renewal rate.

●        Car Model and Age: Generally speaking, more expensive models and younger cars draw better rates.

●        If you do not have any claims from last year, you will be discounted on your renewal rate through no-claim bonus (NCB).

●        Additional options include zero depreciation cover, engine protect, or roadside assistance, which can raise the rate.

You can pay the premium either yearly or in instalments after you have chosen an insurance policy. Your insurer will determine whether you should do this online or offline.

Policy activation

●        Your car insurance policy starts to run after the premium payment. You will receive an insurance certificate, which you should always keep in the car while it's in use. Regarding claims or mishaps, this document will be required for proof.

Filing a claim

You can submit a claim to the insurance company if you have an accident or any other tragic incident covered by your policy. Here's the method:

●        Third-Party Claim: You have to notify the police and submit an FIR (First Information Report) if the collision damages another car, property, or person. 

●        If your car is damaged, you must notify the insurer and bring it to a network garage or approved garage for repairs. Before sanctioning the claim, the insurance company could send a surveyor to evaluate the damage. 

●        If someone steals your car, you must notify the insurer after filing a police FIR.

Settlement of claims

●        The insurance company will either pay for the damages straight to the garage or refund you for the repairs once your claim is accepted. Occasionally the insurer may pay you the insured declared value (IDV) of your car if it is written off or considered a total loss.

 ●        However, if a deductible, which represents your share of the claim liability, is present, it will reduce the final payout.

Renewal of policy

Usually, car insurance runs for one year. Renewal of the policy guarantees ongoing coverage even before it expires. For your convenience, several of the insurers provide online renewal choices. Be sure to check for any changes to the coverage terms or price before renewing.

Conclusion

At first, knowing how does car insurance work in India can seem a bit daunting, but after you understand the nuances, it gets basic. From selecting the appropriate coverage to knowing how claims are handled, automobile insurance is meant to guard you and others using the road.

Making sure you are adequately covered for all potential risks is crucial, regardless of whether you opt for third-party insurance or a comprehensive plan. Ask your insurer for directions if you ever have questions. A well-selected coverage will help you avoid unanticipated financial problems and provide peace of mind while you are driving.

In India, the primary focus of car insurance is to protect you, your passengers, and others from potential road hazards. Drive carefully, then ensure you are insured!