All you need to know about Vehicle Insurance

Types of Vehicle Insurance

1.Third party insurance

Third party insurance covers only any damage caused by the vehicle to a third party in case of accident. It covers liability due to death/ injury of third person and damage to third party property. No benefit is paid to insured in case of accident. Third party insurance is mandatory as per motor act. It covers

 

2. Standard motor insurance:

Standard motor insurance covers damage/theft to vehicle as well as damage to third party.It covers

 

  • Loss or damage to your car(OD)

  • Personal Accident Cover for owner driver

  • Liability due to death/ injury of third party damage to third party property.

 

3. Standard motor insurance with zero deprecation rider:

In event of claim in standard life insurance policy, certain deduction in claim will be applicable for replaced parts. It means difference between depreciated cost and actual cost will have to be borne by the vehicle owner.

 

Rubber/nylon/plastic parts, tyres and tubes, batteries and air bags have approximately 50% depreciation value, while for fibre glass it is 30%. For glass there is zero depreciation value, while other parts including wood the percentage varies (5% to 40%) depending on age of vehicle.

 

You can buy a zero depreciation rider to get entire claim from insurance provider without any deduction. Premium cost will increase by 20% approximately, but it is good option for new cars and persons learning to drive as chances of claims are higher.

What is covered in Standard Motor Insurance ?

Damage to vehicle and its accessories due to below listed reasons

 

  1. Fire, explosion, self-ignition or lightening.

  2. Burglary, housebreaking or theft

  3. Natural calamities like earthquake, flood, storm,  inundation, cyclone, hailstorm, frost, landslide and rockslide etc

  4. Accidental External means

  5. Riot ,strike, malicious act, terrorist activity

 

Damage to vehicle and its accessories due to below listed reasons is not covered

 

  1. Mechanical or electrical breakdown.

  2. Normal wear and tear

  3. Natural aging of vehicle

  4. When vehicle is used for unlawful purposes

  5. Damages to Tyres and Tubes unless the vehicle is damaged at the same time.

  6. Damage to vehicle when driver of car was under the influence of intoxicating liquor

or drugs and driving without valid driving license.

  1. War and nuclear perils

  2. Consequential loss’

  3. When vehicle is driven outside the geographical area where it is covered.

Premium for Vehicle insurance

For standard vehicle insurance premium is charged for third party insurance ,personal accident cover and own damage minus applicable discounts if any.

 

Own Damage premium is calculated based on vehicles IDV(insured declared value). IDV is based on vehicle manufacturer's listed selling price of the brand and model. Depreciation is applied on IDV based on age of vehicle.

IDV of vehicles which are older than 5 years is decided based on understanding between insurance buyer and insurance provider. IDV is the maximum amount insurer will pay for the insured vehicle. Lower IDV will ensure lower premium but at the same lower your maximum claim amount.

 

If you have installed any additional electronic /electrical fitting, bio fuel kit or CNG/LPG kit which is not part of manufacturers selling price and you would like to get it insured the additional premium will be applicable. Additional premium is approximately 4% of value of this items

How to get discount on vehicle insurance premium
  1. You will get a 5% discount(max Rs 200) if you are member of Automobile Association of India.

  2. If you install anti-theft device approved by ARAI (Automotive Research Association of India) then you get 2.5% discount on own damage premium.

  3. If you maintain good no claim track record then you will get no claim bonus on own damage premium.

  4. You can opt for voluntary deductible on claim to get further discount on own damage premium.If you opt for voluntary deduction of say Rs 2500 and you have claim Rs 10,000 /- then insurance provider will pay Rs 7500/- while balance will be paid by vehicle owner.

What is No Claim Bonus(NCB) ?

If you do not make any claim in first year then you get 20% no claim bonus, thus reducing your annual premium by 20%.

 

  • No claim bonus increases every year provided you do not make any claim and you can accumulate up to 50% till sixth year.

 

  • No claim bonus is applicable only to self-damage part of premium and 80% of premium charged is for self-damage.

 

  • If you make any claim or do not renew your policy within 90 days of expiry then your no claim bonus is reset to zero.

 

  • Generally up to 50% of existing no claim benefit can be transferred from one insurance provider to another.

 

  • No claim benefit can be transferred from one vehicle to another provided policy holder is the same.