Car Insurance | Types Of Car Insurance | Online Car Insurance | Add-On Insurance Covers

Mishappenings are a part of our life. They may occur with anyone, anytime and anywhere. The cars are no exception. Any unfortunate event like accident or theft may give you a huge monetary setback. Getting an accidental car repaired may cost you a hefty sum of money. These mishappenings occur all of sudden and you are not always prepared for them. They also put a mental and financial burden on us. Getting your car Insured can solve this problem for you. Car Insurance deals with Insurance covers for loss and damage of cars due to natural and man-made calamities. It provides us with financial protection against physical damage to the car and bodily injuries to us during an accident. They also cover theft, natural disasters and even the damage during riots. They also cover any third party liability which comes upon you in case of damage to the third party. All you need to do is to choose an appropriate policy for you and pay the yearly premium for it. 

Insured Declared Value or IDV

IDV or Insured Declared Value is the maximum amount of money the Insurance company pays you if your car gets stolen or gets totally damaged. IDV of a car depends upon two factors

1. The ex-Showroom price of the car

2. Depreciation.

Insurance companies use ex-showroom price instead of the on-road price of cars to calculate  IDV. The on-road price of cars is higher than their ex-showroom price. It also includes charges like road tax and registration fee. To calculate IDV the ex-showroom price is taken as the base amount. The depreciation depends upon the age of the car. With the increase in age, the depreciation also increases. For the first six months, depreciation is taken as 5% of the ex-showroom price. For a six month to 1-year-old car, it is kept around 15%. After that, it keeps on increasing with each passing year. To find out  IDV the depreciated amount of car is subtracted from the ex-showroom price of the car.

Car Insurance Types

There are three parties involved any car insurance contract. The car owner is the first party. The insurance company is the second party. These are involved in the insurance agreement.  Any person besides these two, who suffers a loss in an accident with the car is called the third party. Based on the parties covered under the insurance car insurance can be classified into two types:

1. Third-Party Car Insurance

2. Comprehensive Car Insurance

Third-Party Car Insurance

The Motor Vehicle Act of 1988 made it compulsory to have Third Party Insurance.  It protects the interests of a third party which becomes the victim of an accident with the insured car. Any monetary liability which comes at the insured car is paid by the insurance company.  It covers the property damage as well as death & disability of the third party. It does not provide any benefit to the insured or the first party.

Comprehensive Car Insurance

Comprehensive Insurance covers the First party along with the Third-party. It not only protects your third party liability but also protects the insured car against any damages due to accident, fire natural calamity, etc. It also offers various add-on covers which help us to customise the policy as per our requirements. Comprehensive insurance policy safeguards us against:

1. Natural Calamities 

Comprehensive Insurance protects us against the damage of car by natural calamities like rain, storm, hail, thunder, hurricane, tornado, earthquake, Tsunami etc. These disasters are natural and we have no control over them.

2. Man-Made Calamities

Man-made calamities like theft, damages in riots, strike, terrorist attacks, damages in transit etc are covered under Comprehensive Insurance Policy.

3. Third-Party Liabilities

Comprehensive Insurance Policy protects you against any third party liabilities like death, injury or damage. It also covers the damages caused to surrounding properties in an accident

4. Personal Accident Cover

It offers personal accident cover up to 2 lacs in case of death or disablement of the driver. You can also extend accidental cover to the co-passenger through add-on covers.

Some of the popular ads-on are

1. Engine Protection Cover

Engine protection cover offers you compensation against any engine damage. It is an add-on to the Comprehensive Car Insurance. It is advisable to opt for this cover if you are living in flood-prone areas. In these areas, there are huge chances that water may enter the engine and damage it.  One must also go for engine cover if he owns a very expensive car. The replacement of engines in these cars is a very expensive process. Having engine protection cover may save you from heavy financial burden in case of any mishappening.

2. Zero Dep Cover

Every machine depreciates over time. The cars are no exception. The car parts lose their original value due to depreciation over time. Different car parts have different rates of depreciation depending upon their material and their function. During any accident, you may not be able to recover the entire cost of part replacement.  The insurance companies consider this depreciation factor while calculating the claim amount. This decreases the overall claim amount.  To prevent this you may opt for Zero Dep Cover. This cover prevents the deduction of depreciation amount from the claim and hence you get reimbursement worth the original value of your car parts.

3. Return To Invoice (RTI)

The sum which the insurance company pays you after the total loss of your car i.e. theft or total damage is called its IDV ( Insured Declared Value). Also, we need to pay additional charges like road tax and registration fee which add to the overall cost of the car but are not included in IDV. The IDV  keeps on falling with time. Its falls per year by some percentage. It means in case if we have a theft or total damage to the car, we will get an amount which is significantly lesser than that of the total price of the car. To prevent this monetary loss, we can opt for Return to invoice policy. This policy helps the customer to get the actual price of the car in case of a total loss of the car. It covers the gap between IDV and the invoice value of the car. RTI is not applicable in case of minor damages. It is applied only when the cost of repair is over 75% of the IDV. It is also applicable in case of theft. This cover is recommended for the people who are living in theft-prone areas or do not have secured parking.  RTI is also recommended for people who have to travel long distances on a routine basis.

4. Consumables Cover

Some Insurance Companies offer consumables cover as a part of Zero Dep, while others offer it as a separate package. Consumables are the items which are consumed during vehicle repair. They include nut, bolt, washer, coolant, Engine Oil, gasket, grease etc. These items are generally not covered in Comprehensive Insurance Policy or Zero Dep. However, they are consumed during the repair of the accidental vehicle. They may cost you a hefty sum of money. To save yourself from paying for them, you must opt for consumables cover add-on.

5. No Claim Bonus or NCB

No claim bonus is offered by the Insurance company if we file no claim within a year. This amount is reduced from your next Insurance premium. For the first year, NCB is around 20% and with further years it increases to 25, 35, 45 and 50%. NCB can not be more than 50% of the premium.

Online Car Insurance 

In recent days the craze for online car insurance has increased substantially. The availability of a large number of online options is making it popular. It provides us with a chance to choose from a wide range of policies at affordable prices. It also saves time and money. However, one must keep in mind a few things while buying an online Insurance policy. First, we must look for a total number of cashless facilities the insurance company have in your area. Second, we must check whether those facilities are authorised service centres or not. If you do not have a cashless facility in your area you will have to get your car repaired by paying money from your pocket. However, you can claim this money latter from the insurance company. But, for most of us, it is inconvenient to pay huge repair charges. Also, getting your car repaired at unauthorized service stations is a bit risky. They may not be using proper tools or genuine parts. They may also not have well-trained labour. All this may cause problems for your car. Hence it is advisable to look whether the Insurance company have a tie-up with a local authorised centre or not.

When An Insurance Claim Is Rejected

It is seen many times that Insurance claims are rejected by the insurance company. This usually occurs due to violation of certain clauses of Insurance policy. Apart from rejecting they may also reduce the claim amount depending upon the situation. Let's look at some of the conditions under which insurance claims are rejected.

1. Giving False Information

Giving false information during filing application may cause the claim to be rejected. We must always give the correct information in the insurance application.

2. Improper Use Of Vehicle

It is generally seen that people take insurance for normal private car and use it for commercial purposes. In any such case, the insurance claims are rejected. So if you are using your vehicle commercially do get commercial insurance for it.

3. Driver Related Issues

Driving without licence or driving under the influence of alcohol are two very common reasons for rejection of insurance claims

4. Delay In In Reporting Accident

Insurance companies provide a certain time limit to report the accidents. If we cross this time limit your claim would be rejected. We should report the accident as soon as possible to the insurance company and also produce genuine documents to them.

5. Driving Out Of The Geographical Limits

Driving out of the geographical area mentioned in your insurance papers is a violation of the insurance clause and may cause your claim to be rejected.

We always research a lot before buying a car but we seldom do so before buying an insurance policy. We generally buy the Insurance policy offered by the dealer or suggested by our relatives. Buying an appropriate policy may protect us from unwanted burdens of accidental repairs or third party liabilities. We must always spend time choosing the right car Insurance Policy and appropriate Add-on Covers for our Car.