Here is important information regarding car insurance policy and car insurance procedure in India.

Car Insurance

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:
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:
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.
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.