Having a personal vehicle is no less than a necessity these days. But with its ownership comes the responsibility to ride safely and follow all the road safety rules. Since uncertainties do not come knocking at our doors, all the vehicle owners need to stay prepared with the help of motor insurance.
You might have witnessed motor insurance purchase as an utmost requirement at the time of buying a vehicle. But what is it and how is it useful for vehicle owners? This comprehensive guide to motor vehicle insurance will cover it all.
To start with, you should know that motor vehicle insurance is an important document that every vehicle owner and driver should have. It is designed to provide protection against loss or physical damage incurred by the insured vehicle. It comprises both third-party and own-damage cover. Before we get into the details, let’s start with the basic definition.
What is Motor Insurance?
In insurance terminology, motor insurance is a type of insurance policy that is meant for all vehicles, including two-wheelers, four-wheelers, and commercial trucks. A motor insurance policy provides financial protection against physical damage or losses sustained due to unforeseen events like road accidents or natural calamities.
Buying a certain type of motor insurance is mandatory by law for all vehicles, including cars, scooters, or bikes plying on the Indian roads.
What are the Features of Motor Vehicle Insurance?
A vehicle insurance policy has several features that are beneficial for the policyholder. Although the exact features of motor insurance depend on the policy you select, some of its common features are:
- Ease of buying vehicle insurance either offline or online
- Ease of renewing the insurance policy online from wherever you are
- Easy to include or remove add-ons or riders as per your requirements
- Coverage against damages caused in an accident along with fire damages, theft, and man-made disasters
- Cashless claim facility
- No Claim Bonus for every claim-free year (varies from one insurance company to another)
- Round-the-clock claim assistance
What are the Types of Vehicle Insurance?
Vehicle insurance is classified into three types based on the kind of vehicle insured under it. These include:
- Car insurance
- Bike or two-wheeler insurance
- Commercial vehicle insurance
What are the Types of Motor Insurance Coverage Available in India?
Third-party motor insurance coverage
If you and your vehicle are the doers/cause of an accident, then this coverage benefits the third-party or victim of the accident. This type of motor insurance policy does not provide any financial benefit to the insured (you).
As per IRDA rules, it is mandatory to buy third-party vehicle insurance for all types of vehicles.
Comprehensive vehicle insurance coverage
This type of vehicle insurance protects the owner of vehicles (you) from a financial loss incurred from damage or theft of the insured vehicle. In most cases, a comprehensive insurance policy includes third-party insurance cover. It can also be considered an add-on to third-party insurance.
Pay as you drive insurance
It is a newly introduced motor insurance product as per the recent IRDA guidelines. It allows the policyholder to pay the insurance premium based on the distance covered in kilometers. The premium is decided at the time of buying the policy depending on the distance that the insured expects to drive during the policy tenure. It covers both third-party liability and comprehensive insurance coverage.
Inclusions – What is Covered Under Motor Policy?
The following perils which can cause damages to vehicles are generally covered in motor insurance:
- Fire and burglary
Exclusions – What is Not Covered in Motor Insurance?
Any vehicle insurance policy will not provide you coverage in the following situations:
- If the driver is influenced by alcohol or drugs
- If the vehicle is used for illegal activities or any purpose not stated in the policy
- If the driver does not have a valid driving license
- If the damage or loss occurs outside the Indian territory
Why Should You Buy Motor Insurance?
Statistical data about deaths due to road accidents reveal that the count of deaths has increased significantly in the last two decades.
Accidents on the road have become a major concern for both the government and the Indian citizens. Considering such information and road conditions in most parts of the country, buying motor insurance has become a necessity before you ride vehicles on the Indian roads.
You can buy the right type of motor vehicle insurance policy either offline or online.
What to Consider While Buying Motor Insurance Plans Online?
As per law, it is mandatory to buy a third-party motor insurance plan in India. However, when you choose a comprehensive plan, you become eligible for a wide range of benefits. When you buy motor insurance online, keep in mind the following things:
- Check if the plan you have chosen provides adequate insurance coverage.
- Look for the available add-ons offered by the insurer and add them to the base policy to get more benefits.
- Check if the policy you have selected comes with personal accident coverage.
- Dig deeper to know about the claim settlement ratio of different motor insurance providers.
- Look at the clauses related to No Claim Bonus offered under your policy.
- Know about the zero-depreciation add-on and add it to your policy to get the best insurance coverage.
- Read the policy’s terms and conditions carefully at the time of buying motor insurance.
Also Read: How to Get Insurance Gyan Online?
Which Factors Affect the Premium of Vehicle Insurance Policies?
The premium of a motor insurance policy is calculated based on the following factors:
- Vehicle’s make and model
- Age of the vehicle
- Type of engine – petrol or diesel
- Location of the vehicle owner’s residence
- Included add-ons if any
- No Claim Bonus availed if any
- Mode of insurance purchase – offline or online
- Type of vehicle – personal or commercial
- Driving history of the vehicle owner
What are the Benefits of Renewing Motor Vehicle Insurance Online?
Motor insurance purchase is not a one-time act as the policies come with an expiry date. It means that you need to renew the policy once its tenure ends. At the time of motor insurance renewal, you can also decide if you want to continue with the same policy/insurer or choose a different one.
Given below are some of the advantages of renewing vehicle insurance online:
- Easy to compare insurance policies online at the time of renewal
- Cost saving as there is no need to pay the agent fees
- Easy to add riders or add-ons as per your needs
- No need to visit the local insurer’s office
- Time savings
- Easy to make premium payments online
What are the Recent Motor Insurance Rule Updates by IRDAI?
To make motor insurance policies better and more affordable for vehicle owners, IRDAI keeps on updating the related rules. Given below are some of the IRDAI updates you should know about:
- Only third-party insurance to be bought for minimum of three years for cars and five years for two-wheeler vehicles (IRDAI 2018 regulation)
- Third-party motor insurance with comprehensive coverage to be bought for three years and five years (IRDAI 2018 regulation)
- Three years and five years third-party vehicle insurance with one year comprehensive coverage (as per IRDAI 2020 regulation update)
- The sum insured for personal cars is based on factors like on-road price, road tax, and manufacturer.
- The premium amount will also be based on the driving habits of the policyholder.
- No Claim Bonus has been standardized under the range of 20-50% by the IRDAI.
- The insurance premium for electric vehicles will be payable with a 15% discount. The owners can also port long-term insurance from one company to another.
How to File a Motor Vehicle Insurance Claim?
The process to be followed to file a claim under motor insurance may vary slightly depending on one person to another. However, the common details for claim filing are given as follows:
For claims related to damage to the insured vehicle
In this case, you need to submit a detailed estimate of the loss incurred to the insurer. After the claim submission, the surveyors will assess the reason for the loss, inspect the damaged vehicle, and submit their survey report. Once the claim is approved, you will get the insurance benefits as expected.
For third-party claims
Once the notice is received from the third-party or insured, the case is given to an advocate, who will then handle it. He will ask for the complete information related to the accident along with a police report and other required documents.
Why Read BimaBandhu Before Buying Motor Insurance?
With so many options of motor insurance plans available, it is easy to get overwhelmed and feel confused about making the right choice. At BimaBandhu, we are dedicated to making you aware of various aspects related to different types of insurance policies with our comprehensive guide. This way, you can gain adequate knowledge and then proceed with making the right insurance-buying decision.
Which vehicle insurance plan should I buy – third-party or comprehensive?
It is always suggested that you buy a comprehensive motor insurance policy for maximum benefits as it also covers the third-party insurance in it along with own-damage coverage.
How to calculate motor insurance premium?
The total premium payable for this type of insurance is calculated based on the vehicle’s IDV, capacity, deductibles, previous insurance history, and many other factors. Comparing different insurance policies in terms of premium is a must.
What is IDV in motor insurance?
IDV or Insured Declared Value reflects the current market value of a vehicle. Based on this value, the insurance premium is calculated.
What is the tenure of a motor vehicle insurance policy?
In general, the tenure is one year after which the policy needs to be renewed for continued insurance benefits. However, you can also buy the insurance plan for more than one year.
What is NCB in motor insurance?
NCB or No Claim Bonus is the benefit given to the policyholder in case he has not filed any claim during the plan tenure. Also, NCB is not applicable to any third-party vehicle insurance policy.
Can NCB be migrated if I change my vehicle insurance provider?
You can surely avail NCB if you change your insurance provider while renewing the policy. Ask your insurer for the steps to be followed in this regard.
Do I need to pay service tax on my motor insurance policy?
Yes, service tax is levied as per the current laws on motor insurance premiums.
How does the vehicle insurance premium vary in different cities?
The location of vehicle registration is used to calculate insurance premium. However, you can still use the same vehicle in other cities wherever you want.
Can I transfer the motor insurance policy on selling my vehicle?
In such cases, motor insurance gets transferred to the new owner of the vehicle. You can ask the insurer for the process followed.
Which documents are required to submit a motor insurance claim?
In general, the insurer will ask for duly filled claim form, an estimate of loss, and photocopy of the RC of vehicle. For an exact list of documents required to file a claim, read the fine print of your policy.
What will happen if I do not buy vehicle insurance?
Failing to buy a motor insurance policy can make you liable to pay fines for violating rules defined under the Motor Vehicle Act, 1988.
Is selecting the right motor vehicle insurance easy?
You will find it easier to buy the right policy once you gain adequate knowledge about how it works and how to buy it. For more details, read BimaBandhu.
Can I renew motor insurance online?
It is possible to renew your policy by visiting the chosen insurer’s website or through an online insurance broker.
What is a motor insurance cover note?
It refers to the certificate of insurance issued by the chosen insurer prior to the actual policy document.