A Guide To: Purchasing A Car Insurance Policy In India

Source: HDFC ERGO General Insurce Company

In India, one usually refers to a Car insurance policy as a mandatory document essential to drive on the streets. However, the benefits of the policy are rarely explored by policyholders. Every other article on the web says that a Car insurance policy protects your car from liabilities arising from collisions. But what exactly are the liabilities and how your car policy works, needs to be known. Often, it is noticed that post-collision, a policyholder refers to the Car insurance certificate just to find that what he is exactly looking for in the policy, is actually not covered or comes with T&C.

It is at this point of time that he realizes what expenses are incurred upon him and how he could have saved them. I therefore take this opportunity to share with you a detailed information on Car insurance policies in India. On further reading, I am sure you will appreciate the information provided as this gives a better look into the product you (may) possess.

Before proceeding ahead, I am sure you have kept a couple of insurance companies at the back of your mind. May be its your first car insurance policy and your best friend has suggested the best policy plan for your car. Or you see your neighbor happy and content with his car insurance policy because the premiums on their policy plans are lower than the rest.

Source: HDFC ERGO General Insurce Company

You might be wondering what must be the next step. How will you choose the best policy for your car? Don’t worry. All you need to do is follow the steps below:

Step 1: Identify the insurance companies that caters the customers in your area

Step 2: Shortlist 3-4 Insurance companies based on their online claim settlement process, network of garages, etc

Step 3: Understand the primary coverage that comes along with the car insurance

Step 4: Gain complete knowledge of the add-ons the insurance company provides

Step 5: Select only those add-ons for which you are willing to pay a little extra and include them in the primary policy

Step 6: Calculate the total payable premium

Step 7: Weigh the premium against sum insured and other benefits

Source: HDFC ERGO General Insurce Company

The best companies to consider for your car insurance:

Be it car insurance or any other insurance, you would want to possess an insurance policy from the best known insurance company. Although there are many factors to be considered in determining the best general insurance company, the needs and priorities of every individual is different and hence it becomes difficult to point out the best one. Yet, if you are considering one of the following general insurance companies, you are looking at the best one’s in the industry:

1. HDFC ERGO General Insurance Company2. Bajaj Allianze General Insurance Company3. ICICI Lombard General Insurance Company4. Bharti AXA General Insurance Company5. TATA AIG General Insurance Company6. IFFCO Tokio General Insurance Company7. Future Generali India Insurance Limited8. New India Assurance Company Limited (Public sector)

Selecting an insurance company is never easy. The products offered by most of the general insurance companies are similar and hence they compete on the grounds of the customer services. In metro’s and tier 1 cities, almost all GIC’s have succedded in catering to the needs of their customers. The services offered to the customers in tier 3 and tier 4 cities and rural parts tend to differ significantly. As I mentioned earlier, the needs and priorities of individuals determine the best suited company for them, the GIC’s offering good services to a rural section becomes that parts’ favourite.

Source: HDFC ERGO General Insurce CompanyTerms you must know

GIC : Refers to the General Insurance Companies offering a range of insurance products providing financial securities in the event of mishaps. Car insurance, Health insurance, Travel insurance, home insurance are some of the products offered by GIC’s

IMT: India Motor Tariff

NCB: No claim bonus

Sum Insured/IDV: In case of a car insurance, the Sum Insured or the Insured’s Declared Value (IDV) of the car refer’s to price of the car less the depreciation. One can safely assume that it is the Market Value of the insured car. The IDV is calculated and quoted by the insurance companies at the starting of the policy period.

Premium: It is the sum that you pay to insure your car for an amount equivalent to the mutually agreed IDV.

Claim: The purpose of purchasing insurance is invoking the policy as and when required. When invoking the policy, you ask the insurance company to reimburse for the financial losses i.e. you CLAIM your financial losses. Making a claim is simply telling the insurance company that it needs to handle the finances for you.

Source: HDFC ERGO General Insurce CompanyAfter purchasing a car policy, does your insurance company serves you well?

Lower premiums are more alluring to customers than the benefits it offers, let alone the post-purchase services. From a range of car insurace policies with same benefits, what is the sense in purchasing a policy offered at a lower premium, if the insurance company does not stand by you at the hour of need? Your insurance company may take days to process your claim leaving you stranded in a situation from where you can only wish to have selected the better company for your car insurance.

The claim settling process thus becomes a vital element in deciding the right insurance policy for your car. Lately, almost all GIC’s have come up with cashless claim services in a network of garages to service its customers better. Make it a point to visit the company’s website and identify the number of garages around you where you can avail these cashless claim services.

The more the number and the better the quality of garages should prove more useful for you. The GIC’s are also striving hard to ensure a better claim proc by facilitating their customers to make the claims online with minimum documents.

Documentation is a headache especially when you have just passed from the trauma of a collision. Making claims online requires minimum documentation and hence ensure that this facility is provided by your car insurance company. Post policy-purchase services also include reminders for renewal. When your existing policy nears the expiry date, you get a reminder regarding same ensuring that you do not drive without a car insurance.

Source: HDFC ERGO General Insurce CompanyWhich are the primary covers on your car insurance policy?

The covers mentioned below are basic covers provided by almost all the car insurance companies in India. Some of the clauses have terms and conditions (T&C) which most people tend to ignore. I have included the T&C’s wherever applicable and important.

Loss/Damage to your car:

Primarily, a car insurance policy in India covers for the car damages under various scenarios. These scenarious may be listed as below:

Accident/Collision:When involved in a collision, your car might suffer from bruises on the body and the parts within. Depending upon the impact, your expenses might put a dent on your savings and ruining your near future plans. With a car insurance policy in hand, you need not worry about the expenses incurred in repairing your car as your car insurance company will handle the finances on your behalf.

All you need to do is make a claim and if found genuine, the insurance company will reimburse the repair charges. More importantly, if the garage working on repairing your damaged car is on the list of the company’s network garages, you will be entitled to enjoy a cashless service.

T&C role play:

Claims are not entertained if the driver of the vehicle does not possess a valid driving liscense or is under the influence of alcohol or drugs.

Claims for accidents occuring in India only are acceptable.

Source: HDFC ERGO General Insurce CompanyBurglary/Theft of vehicle:

GIC’s in India includes this clause as well under the car insurance policy wherein you are insured against loss or theft of your car. This is especially beneficial for those who drives a high-priced car or who has affordability issues. The insurance company does not pay you the price of a new vehicle, but only reimburses an amount based on the valuation of your car i.e. the IDV. You need to file an FIR following which, the police investigates and verifies. Your car insurance company will pay only after you submit a proper police verification report.

T&C role play:

If your car is installed with an anti-theft device, you will be entitled for a discount on premium payable

Claims for loss/burglary/theft occuring only in India are acceptable

Source: HDFC ERGO General Insurce CompanyFire/explosion/Lightning:Due to the malfunction in the working of the machine, your car may catch fire. It may happen that the fuel line in your car is cut, spraying enough around to catch fire. There may be other reasons as well for the fire to start. Usually, a car does not explode; it is designed in that manner.

But unfortunately, we modify our cars to the extent of changing the fuel type. Although this is not considered as accident by the car insurance companies in India, this clause is included in your policy under fire/explosion/self ignition section, to cover for the damages.

T&C role play:

If your car is installed with an anti-theft device, you will be entitled for a discount on premium payable

Claims for loss/burglary/theft occuring in India only are acceptable

Source: HDFC ERGO General Insurce CompanyTerrorism/Riots/Strike:

Some events are completely out of your control and you are absolutely not at fault for the damage to your car. Events like terrorism acts, riots where a mob is responsible for your car loss, you have no one to blame. Such events are considered under your car insurance policy and the company is liable to pay the repair costs for your dented vehicle.

Source: HDFC ERGO General Insurce CompanyTransit Mishaps:Damage to your vehicle when in transit i.e. carried by rail, road, air or waterways is also covered by the car insurance policy. The packaging of your car during transit may be improper or the transit vehicle itself has collided resulting in damaging your car. This clause ensures that you do not incur additional expenses on shifting your car to other area.

Source: HDFC ERGO General Insurce Company

Third Party Liabilities:

When your car is involoved in an accident, you might have been bounded legally to pay for the damages of third party involved. According to the Motor Vehicles Act (MVA), bodily injuries or death of the passengers in accident involving your car will hold you liable for a penalty. Also, you will be held liable to pay for the damages occurred to the third party’s property. These liabilities are taken care of by your car insurance company.

T&C role play:

If not the owner, the driver must be permitted by the insured to drive The company can undertake the defence of the proceedings in the event of the death of the

insured

Source: HDFC ERGO General Insurce Company

Personal Accident Insurance Cover:

While involved in a collision, if the insured member suffers one of the following, then the company will compensate for the loss, an amount predefined in the policy:

Death Total permanent Disability

T&C role play:

In the event of death, 100% compensation is given. In other cases, a pre-defined percentage of the total compensation is given Suicidal attempts are not accounted for under this clause

Source: HDFC ERGO General Insurce Company

Which add-ons to your car insurance policy should you look for?

As per the IMT endorsements, you may insure almost anyhting related to your car provided you are willing to pay more premium. Included in the add-ons are specific clauses as mentioned below; you ought to be careful in making a choice. Most of these clauses might be new to you or you may have assumed them to be included in the basic policy. Read for yourself and discover what’s new for you.

Zero Depreciation:When a claim is made, the IDV of the insured car depreciates. On additional premium amount, under this clause, you will enjoy a depreciation-free claim in the period insured. This clause is valid only when a claim is made for loss/damage of the car and not otherwise.

Daily Allowance Claim:When your car has suffered damages and is laid up in the garage for repair works, you need not compromise on the mode of commuting. Till the time your car is released from the garage, you will get a daily allowance from your insurance company. The amount compensated by the insurance company is decided at the beginning of the period.

No Claim Bonus Shield:If you make a claim, you are not eligible for a bonus. Simple. But opting for this add-on feature shields your NCB whenever you make a claim. Different car insurance companies have different terms and hence you are advised to go through the fine prints thoroughly.

Consumable Items:Consumable items in the context of a car insurance policy are items like – nut and bolts, grease, washers, screw, ac gas, lubricants clip, distilled water, bearings, engine oil, etc. which needs to be consumed continously and permanantly by the car. Expenses incurred on such consumable items can be saved if you opt for this clause.

Source: HDFC ERGO General Insurce Company

How much premium is the right premium on car insurance?

Answering this question is difficult unless you have correctly identified your needs after analyzing your driving pattern, your surrounding, accident/collision chances and so on. Simply stated, I would prefer a lower Premium to Sum Insured Ratio considering the reputation of the insurance company and its settlement history.

Understand that benefits come along with a price. So better the company and better the benefits; more will be the price. Add-ons opted by you will add to the premium amount as they offer to widen the scope of securing your finances.

Ensure that the Sum Insured is sufficient so that at the time of making a claim, your savings are least affected. It may happen that you already have a Personal Accident Insurance Policy in place. In that case, avoid redundancy and do not pay larger premium for more coverage on Personal Accident clause, under car insurance. A Personal Accident Insurance Policy is way more comprehensive than the mandatory clause mentioned under your car insurance.

Source: HDFC ERGO General Insurce Company

What is the procedure to be followed and the documents required for filing a claim for Accidental Damage to the Insured Car?

Often after a collision, one wonders what next. If you have made a claim previously, probably you are a champion at filing one. But if you are reading this and have never ever filed a claim, here are the common 10 steps that you might want to have look at, before driving again.

1. Take out your car insurance policy copy and dial the insurance company’s helpline number.2. Give your policy number for reference and inform the customer care representative about

the accident and register your claim3. Take enough pictures of your damaged car for future reference.4. Register an FIR with the nearby police station.5. Identify the nearest garage,.preferably the one listed on the list of network garages6. If you can drive the vehicle to the garage, go for it. Else tow it.7. Get from the mechanic an estimate of expense for repairing your car.8. Keeping the estimate copy in hand, fill up the claim form. Attach a registration certificate

copy and a copy of driving license of the person in the driving seat at the time of the collision.

9. In case of cashless services, you only pay for non-accidental expenses like – Labor cost. In case of non-cashless services i.e. if the garage is not listed in your insurance company’s garage network, pay the total amount while the insurance company will reimburse you later.

10. Check your vehicle thoroughly before driving off the garage.

Source: HDFC ERGO General Insurce Company

To make your job easier, I have listed the common documents required at the time of making a claim. On a case to case basis, there may be a more specific document requirement.

Claim form duly filled and signed Registration Certificate copy (RC) Driving license of the person driving at the time of the accident A copy of the insurance policy, original repair estimate copy and the repair invoice Payment receipt in case of non-cashless claims Original invoice in case of cashless claims A copy of FIR/panchnama in case of death/Total Permanent injury/property damage

Source: HDFC ERGO General Insurce Company

About The HDFC ERGO General Insurance Company:

HDFC ERGO General Insurance Company Limited is a 74:26 joint venture between HDFC Limited, India's premier Housing Finance Institution and ERGO International AG, the primary insurance entity of Munich Re Group. HDFC ERGO offers complete range of general insurance products ranging from Personal Accident ,Travel, Home and Motor, Health Insurance in the retail space and customized products like Property, Marine and Liability Insurance in the corporate space.

HDFC ERGO is the 4th largest private sector general insurance company in India as rated by IRDA. HDFC ERGO has been expanding its presence across the country and is today present across 71 cities with 80 branch offices with an employee base more than 1100 professionals. The company has a wide distribution network comprising of brokers, retail and corporate agents, bancassurance besides its own direct sales force.

Contact Details:

HDFC ERGO General Insurance Company Ltd.6th Floor, Leela Business Park,Andheri Kurla Road,Andheri (East), Mumbai 400059Phone: +91 - 22 - 66383600

Visit: www.hdfcergo.com

Or call us on Toll Free #: 18002700700Email : care@hdfcergo.com

Source: HDFC ERGO General Insurce Company