Last Updated by Richbrite on October 12th, 2021 at 08:14 pm
There is no option to buy a motor insurance policy but it is mandatory in India. You should buy at least a third-party or liability-only insurance policy to cover the risks associated with the vehicle.
However, there will be a great benefit when you buy a comprehensive vehicle insurance policy.
There are many general insurance companies in India offering both third-party and comprehensive insurance policies. You can choose a policy as per your needs by using online or offline methods.
What is Vehicle Insurance?
Vehicle insurance is also called motor insurance or auto insurance in India. The insurance product will cover the third-party or complete cover as per the type of insurance policy.
Insurance companies will have a tie-up with various manufacturing companies. Hence, it is possible to offer customers an instant quote.
Types of Insurance Policies
Vehicle insurance companies offer the following types of insurance products:
Private Car Insurance – If you buy a new car, you should ensure your car without fail. The private car insurance market is huge and it is growing every year in India. There are a number of insurance players in the market both in the public and private sectors.
Commercial Vehicle Insurance – There are many commercial vehicles of various sizes, make & model in India. The vehicle should be insured to cover various risks and third-party insurance is mandatory. The premium for commercial vehicle insurance is based on the make & model of the vehicle, place of registration, and showroom price of the vehicle.
The following types of vehicles are covered by commercial vehicle insurance:
- Passenger-carrying buses
- Passenger-carrying taxis
- Passenger-carrying auto-rickshaws
- Goods carrying 4-wheelers
- Goods carrying 3-wheelers
- Mobile promotion vehicles
Two-Wheeler Insurance – A two-wheeler insurance policy will cover accidental risk, theft, and damage due to various man-made and natural disasters. The personal accident coverage is applicable to a comprehensive insurance policy.
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What is an Insurance Premium?
The insurance premium calculated by the insurance company is based on various factors.
If the price of the vehicle increases there will be a corresponding increase in the premium as well.
The following risk factors will influence the car insurance premium:
- Age of the vehicle
- Age of the driver
- Marital status
- Driving experience
- Claims history
- Government employee
- Membership in an automobile association
- Make and model of the vehicle
- Mileage of the vehicle (per year)
- Add-ons subscribed by the customer
What is Insurance Claim?
The insurance company will admit various kinds of claims such as accident, theft, and property damage.
To claim policy, you should submit the required documents to the insurance company. The insurance claim can be made by the policyholder or the third-party.
Public Sector Insurance Companies
- National Insurance Company
- New India Assurance Company
- Oriental Insurance Company
- SBI General Insurance Company
- United India Insurance company
Private Sector Insurance Companies
- Bajaj Allianz insurance company
- Bharti AXA General Insurance Company
- HDFC Ergo General Insurance company
- ICICI Lombard Insurance company
- Iffco-Tokio General Insurance
- Kotak General Insurance
- Reliance General Insurance
- Royal Sundaram
- Shriram General Insurance
- Tata AIG Insurance
Buying a New Vehicle Insurance Policy
Before buying a vehicle insurance policy, you should assess your insurance requirements. The insurance requirements of the vehicle owner (self/driver), passengers, own vehicle, third-party vehicle, third-party property, and a third-party person should be fulfilled by your insurance policy.
Renewing the Vehicle Insurance Policy
The insurance policy should be renewed on or before the expiry date so that you can make use of most of your investment. The insurance will not multiply your money. However, it will protect you from various risk factors in the best possible way.
There will not be a loss by switching over from one insurance company to another insurance company.
Inclusions of Vehicle Insurance Policy
The insurance requirements will vary as per the vehicle, policyholder, and driving conditions. The insurance plan which fulfills your friend’s needs may not fulfill your interests. Hence, you should be aware of the inclusions and exclusions mentioned in the insurance policy:
- Own Damage – If you buy package policy or comprehensive policy, the damage of your vehicle will be covered by the policy
- Roadside Assistance – It is included in the standard features of some insurance companies or it can be bought as an add-on.
- Natural Calamities – The loss of damage to your vehicle due to natural calamities will be covered when you buy a comprehensive insurance policy
- Personal Accident Cover – The personal accident cover will protect the vehicle owner and passengers. If you go for a comprehensive policy, the coverage for the driver will be included. The coverage for passengers can be selected as optional.
- Theft of Car – The theft of the car will be covered by package policy
- Injury to the Third Person – Injury to third-party will be covered by any type of insurance policy
- Damage to the Property – If there is damage to the property, the insurance company will pay for the loss to the third-party.
Exclusions of Vehicle Insurance Policy
Exclusions are risk factors that are not covered by the insurance policy. You are advised to go through the policy documentation to understand the risk factors that are not covered by your policy. The following exclusions are applied to the car insurance plan:
- Illegal Purpose – Damage to the vehicle for using the vehicle for illegal purposes
- Beyond the Limits – If the car used beyond the geographical boundaries, the insurance cover is not applicable
- Fraudulent accident – If the insurance company identifies the accident as a fraud after the investigation
- A driver without Driving License – If the driver of the vehicle does not possess a valid driving license while driving the car
- Negligence of the Owner – If there is willful damage or damage due to the negligence of the driver
- Accessories and Consumables – Certain accessories and consumables are not covered by the vehicle insurance policy
- Contractual Liabilities – If the policyholder has contractual liabilities, the insurance company is not responsible for the damages
You can include certain exclusions by buying add-on covers. Add-on covers can be bought by paying an additional premium to the insurance company. Even though the insurance premium increases, you will be able to protect your interests by subscribing to add-ons.
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Insurance Companies and IRDA
The formulation of guidelines towards the general insurance companies (including vehicle insurance companies) will be done by IRDA (Insurance Regulatory and Development Authority).
If you are looking for a vehicle insurance plan, you should buy a plan from an insurance company registered with IRDA.
When you buy a motor vehicle insurance policy from a registered insurance company in India, you will get a certificate of insurance as per Rule 141 of Central Motor Vehicle Rules 1989.
Timeframe – IRDA stipulates the timeframe for services offered by insurance companies. For example, the insurance company should process the proposal of the customer and the decision should be conveyed to the customer within 15 days.
If there is an accident, the survey report should be submitted within 30 days.
The claim-settlement or rejection should be completed within 30 days of submission of the claim
Premium Determination – The premium for third-party coverage will be determined by the insurance company. The premium payable for a package policy will be determined by insurance companies.
Policy Tenure – The policy tenure of auto insurance will be for one year. However, vehicle insurance policies are issued for more than one year and they are termed as long-term insurance policies. When you go for long-term insurance policies, there will be a great benefit to the customer. However, long-term policies are issued for third-party coverage only.
Deductibles – By applying deductibles, the insurance premium can be decreased. However, it will increase out of pocket expenses while claiming the policy. Hence, the decision should be taken very carefully.
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How to Choose the Best Insurance Company?
- Features – The insurance company should offer features that are relevant to your needs
- Affordable – The insurance premium should be affordable
- Accessible – You should be able to access the insurance company in various ways including offline and online
- Customer Support – The insurance company should offer the best customer support so that your needs will be fulfilled immediately
- Claim Settlement Ratio – The insurance company should maintain the highest claim settlement ratio.
- Discounts – The insurance company offers various kinds of discounts based on driving history, type of vehicle, and claim history. You should be able to get discounts on various fronts.
You should be aware of the various kinds of vehicle insurance companies and their products so that you can choose the most appropriate vehicle insurance policy to fulfill your needs. When you choose the right kind of policy, there will not be any issues in claiming the policy. It is also very much important to be aware of the inclusions and exclusions mentioned in your motor insurance policy.
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