What Motor Insurance cover should I buy? Should I buy Comprehensive Insurance or Liability Policy only?
Third Party Liability insurance is mandatory for all vehicles plying on public roads in India. This covers Liability for injuries and damages to others that you are responsible for. In addition, it is prudent to cover loss or damages to the vehicle itself by way of Comprehensive/Package policy, which covers both “Liability” as well as “Own damage” to the insured vehicle. Liability Only cover is also known as Act Only cover.
How is the premium determined?
Many factors determine the premium you will pay. For Own Damage cover different insurance companies charge different premiums for similar coverage. Shop around; getting three or more comparison quotes is worthwhile. Check various insurers’s websites; it will help you compare premiums. Do not forget to compare deductibles, coverage and IDV’s as premium may be lesser of one insurer but with higher deductibles, lower coverage and lower IDV, which will adversely impact you in the event of claim settlement. Be prepared to give your agent information about the following items that are commonly used to determine your premium: Vehicle registration details with Engine No., Chasis no., Class of vehicle, cubic capacity, seating capacity, etc. (In fact, all relevant details are in the RC book/card and a copy of same may be handed over) Tax paid details; Certificate of fitness, Driver details – age, gender, qualifications, licence validity Previous insurance history, if any. The Own Damage coverage is left to be rated by individual insurance companies after duly filing rates with the Insurance Regulatory and Development Authority. The same is determined on following factors amongst others -Age of vehicle; Discounts / loadings- Appropriate Bonus / loading/ discounts along with past claims experience are taken into account while calculating premium. IDV (Insured Declared Value). Third Party Liability Premium rates are laid down by IRDA. In case of break in insurance, vehicle inspection would be required and extra charges will have to be incurred for the same.
What coverage limits meet my needs?
The sum insured for the vehicle is called “Insured’s Declared Value” and should reflect the current market value of the vehicle. Under Liability insurance, Third Party Liability insurance is covered. There is unlimited coverage to Third parties injury and Third party property damage is covered up to a sum of Rs 7,50,000. The Insured has the option to restrict coverage for Third Party Property damage to Rs 6,000 and this will result in a lower ”Liability Only” premium. FAQ ON MOTOR INSURANCE
What is the period of the policy?
A motor policy is usually valid for a period of one year and has to be renewed before the due date. Pay the premium on time. No Insurer offers a grace period for paying the premium. In case of lapse of policy by even one day, the vehicle has to be inspected. Moreover, if a comprehensive policy is allowed to lapse for more than 90 days, the accrued benefit of NCB (No Claim Bonus) is also lost.
What is “No Claim Bonus”?
No Claim Bonus (NCB) is the benefit accrued to an insured for not making any claims during the previous policy period. As per current norms in India, it ranges from 20% on the Own Damage premium (and not on Liability premium) and progressively increases to a maximum of 50%. If, however, a claim is lodged, the No Claim Bonus is lost in the subsequent policy period. NCB is given to the insured and not to the insured vehicle. Hence, on transfer of the vehicle, the insurance policy can be transferred to new owner but not the NCB. The new owner has to pay the difference on account of NCB for the balance policy period.The original owner can, however, use the NCB on a new vehicle purchased by him.
Will my No Claim Bonus get migrated if I want to change my insurance company ?
Yes, you can avail of the NCB facility if you change the insurer on renewal. You would have to produce proof of the NCB earned by way of renewal notice from the current insurer. Alternately, you can produce your original, expiring policy along with a certification that you have lodged no claims on the expiring policy. For this the proof can be in the form of a renewal notice or a letter confirming the NCB entitlement from the previous insurer.
Are there discounts that will lower my premium?
In addition to NCB, there are additional discounts available under Own Damage Premium for membership of Automobile Association of India, Vintage Cars (Pvt. Cars certified by the Vintage and Classic Car Club of India); Installation of anti-theft devices approved by Automobile Research Association of India (ARAI), Pune and whose installation is approved by AAI; Concessions for specially designed/modified vehicles for the Blind, Handicapped and mentally challenged persons, which are suitably endorsed in the RC by the RTA concerned; – opting for voluntary additional deductible/excess. Under “Liability Only Section”, discounts are available for reduction in Third Party Property Damage (TPPD) from Rs. 750,000 to Rs. 6,000.
Is Service Tax applicable and how much is it?
Yes, Service Tax is applicable and would be as per prevailing rule of law.
What is deductible?
Deductible or “excess” is the amount over and above, which the claim will be payable. There is a normal standard/compulsory excess for most vehicles ranging from Rs 50 for two-wheelers to Rs 500 for Private Cars and Commercial Vehicles which increases depending upon the cubic capacity/carrying capacity of the vehicle. However, in some cases the insurer may impose additional excess depending upon the age of the vehicle or if there is high frequency of claims.
What is the procedure for recording any changes in the policy?
If there are any changes in the policy like change of address or modifications to the vehicle or its use, it will be done by an Endorsement by the insurance company. Submit a letter to the insurer with proof for the changes and obtain the endorsement. Some endorsements may require you to pay additional premium. Check the correctness of the endorsement.
If I am using the car in a particular city, what premium rate is applied?
For the purpose of applying premium rate, the place where the vehicle is registered is reckoned (not the place where the vehicle is used). If your vehicle is registered in Chennai, the rate applicable for Zone A is charged. Even when you shift to a different city / town, the same rate will continue to be applied. Similarly if a vehicle is registered in a town, it attracts Zone B premium rate. Subsequently if the owner shifts to a metro, he will continue to be charged the Zone B rate. What is a Certificate of Insurance under Motor Vehicle Act? As per Rule 141 of Central Motor Vehicle Rules 1989, a certificate of Insurance is to be issued only in Form 51. It is only in Motor Vehicle Insurance, apart from the policy, that a separate certificate of insurance is required to be issued by insurers. This document should always be carried in the vehicle. The policy should be preserved separately at home / office.
If I fit CNG or LPG kit in my vehicle, is it necessary to inform the Insurance Company?
If a CNG / LPG kit is fitted in the vehicle, the (Road Transport Authority (RTA) office where the vehicle was registered should be informed so that they make a note of the change in the registration certificate (RC) of the vehicle. The insurance company should also be informed so that the kit is covered on payment of extra premium on the value of the kit under “OD” section and also under “LO” section.
What are the documents to be kept in the vehicle while plying in public places?
• Certificate of Insurance
• Xerox copy of Registration Certificate
• Pollution Under Control Certificate
• Photocopy of Driving Licence of person who is driving the vehicle
Can I transfer my insurance to the purchaser of my vehicle?
Yes, the insurance can be transferred to the buyer of the vehicle, provided the seller informs in writing of such transfer to the insurance company. A fresh proposal form needs to be filled in. There is a nominal fee charged for transfer of insurance along with pro-rata recovery of NCB from the date of transfer till policy expiry. It may be noted that transfer of ownership in comprehensive/package policies has to be recorded within 14 days from date of transfer failing which no claim will be payable for own damage to the vehicle.
Can I continue the insurance in the name of the previous owner even after the vehicle is transferred in RTO records in my name?
No. Registration and insurance of the vehicle should always be in the same name with the same address. Otherwise the claim is not payable. A fresh proposal form needs to be filled in. There is a nominal fee charged for transfer of insurance.
I have lost the insurance policy. Can I get a duplicate one?
Yes, please approach the same office, which had issued the policy, with a written request. A nominal fee is charged for issuing a duplicate policy copy.
What are the documents that are required to be submitted for a Motor Insurance claim?
Generally, the following documents are required to be submitted. However, read through your policy to see the complete list—duly filled in claim form, RC copy of the vehicle, Original estimate of loss, Original repair invoice and payment receipt. In case cashless facility is availed, only repair invoice would need to be submitted and FIR, if required. For theft claims, the keys are to be submitted. Theft claims would also require non-traceable certificate to be submitted.