Here is important information
regarding car insurance policy and car insurance procedure in India.
Legally, no motor vehicle is allowed to be driven on
the road without valid insurance. Hence, it is obligatory on your part
to get your vehicle insured. There are two types of motor vehicle
insurances - "Act Only Risk - Motor Policy A" (also known as
third party risk) and "Motor Policy B" (also known as
comprehensive insurance policy). Although legal requirement is met by
Motor Policy A, it would be sensible on your part to go for
comprehensive insurance policy.
Motor Policy 'A' (Act Policy)
Policy A covers risks required to be covered under the Motor Vehicles
Act. It is mandatory that every car owner be covered against Act Risks
under Section 146 of Motor Vehicles Act 1988.
The scope of cover is to pay compensation for death of or bodily
injuries to third parties and damage to the property of third parties.
While the Insured is treated as the first party and the Insurance
Company second party, all others would be third parties.
For private vehicles and cars, the 'Act Only Policy' covers third party
property damages only upto Rs. 6000/-. Fire and theft risk can be
covered by paying additional premium.
Comprehensive Insurance Policy
A comprehensive insurance policy includes:
- Third party cover.
- Loss / Damage to vehicle as a result of an accident, fire or
- Risks against floods, earthquake, riots and strikes.
- Accessories like music system, air-conditioner, etc. can also be
covered by paying additional premium.
- Risk of loss/damage while in transit by road, rail, watercraft,
air, elevator, etc.
The insurance policy is valid for one year. It
becomes effective from the moment the payment of premium is received by
the insurance company, and ends at midnight, exactly a year later.
The insurance policy can be obtained through an insurance agent or a
development officer of the insurance company. Usually, the new car
dealer is also an insurance agent. The insurance premium depends on the
car's value, the engine power, its seating capacity, and the value of
other accessories like the air-conditioner.
Renewal of Insurance Policy
The insurance policy has to be renewed within the period of validity.
Any delay in the renewal of the policy renders the policy invalid and
you will not be able to avail any benefit of the policy. Also, driving
without a valid insurance policy is a legal offence.
No Claim Bonus
You are eligible for a discount in the premium of a comprehensive
insurance policy at the following rate:
- 20% for the 1st year.
- 35% for the 2nd year.
- 50% for the 3rd year.
- 65% for the 4th year and afterwards
The value of the discount depends upon the insurance
claims you have made in that particular year.
This discount is adjusted against renewal premium. You can avail the no
claim bonus when you renew your policy. In case your policy expires, you
can still avail the no claim bonus if you renew the policy within 90
days of its expiry.
Incase you are buying a new car you can transfer the no claim bonus
from the policy of your old car to the new one.
You need to intimate the insurance company in case you sell your car
and you are eligible for the no claim bonus. The no claim bonus is
adjusted against the premium of a new car, if the purchase is made
within a period of three years.
Transfer of Insurance Policy
In case you purchase a used car, you can transfer the existing
insurance policy to your name by informing the insurance company within
14 days from purchasing the car.
Insurance Claim Procedure
In case of an accident claim, following documents are to be submitted
to the insurance company.
- Proof of insurance-Policy
- Original and a Copy of Registration Book.
- Original and a Copy of Motor Driving Licence of the person
driving the vehicle at the material time.
- FIR, in case of accident involving Third Party Injury or Damage.
- Claim form along with the original estimate of repairs obtained
from the workshop.
On submission of these documents the insurance
company appoints a surveyor, who inspects the damaged car and verifies
the authenticity of the estimate of repairs. The car can be repaired
only after the insurance surveyor has inspected it.
Submit the final bill for damaged parts that have been replaced and the
stamped receipt for payment made to the workshop. Once the car has been
repaired, you need to make the payment as per the final estimate and
submit the final estimate and stamped receipt to the insurance company
for settlement of the claim. The repaired car is surveyed again by an
insurance surveyor and only then you can take delivery of your car.
In case your car is stolen, you need to inform about the theft to the
nearest police station and your insurance company immediately. You also
have to intimate about the stolen car and missing documents to the
concerned registering authority where the car was initially registered.
Obtain a duplicate RC Book from the RTO office immediately In case of
theft, the procedure for the insurance claim is similar to the accident
claim, however, in case of theft the settlement of insurance claim takes
longer as the RTO and the police is given a reasonable period of time to
recover the stolen vehicle.