People spend most of the time researching about the latest model, colors, specifications and safety features of the car. But while choosing the insurance, most of the people blindly proceed with the deal without making sound research about the different policies. Thus they find it hard to pay the premium cost in the later stages.
It is mandatory in India to have an insurance policy for all the cars plying on the road. To avail the motor insurance policy, one needs to pay a certain amount of premium. If you don’t get involved in an accident where you claim your insurance, you lose the premium amount paid for the protection. However, on the other hand, you receive the No Claim Bonus [NCB] as a reward, if you don’t make a claim in one policy year. By making own damage premium, one can avail the benefits of NCB ranging from 20% to 50%. Following points illustrate the benefits on Own Damage Premium on account of no claims for consecutive years.
- 20% – No claim made during the preceding full year of insurance
- 25% – No claim made during the preceding 2 consecutive years of insurance
- 35% – No claim made or pending during the preceding 3 consecutive years of insurance
- 45% – No claim made or pending during the preceding 4 consecutive years of insurance
- 50% – No claim made or pending during the preceding 5 consecutive years of insurance
Before buying motor insurance you must need to know about the IDV of your vehicle. Your insurance policy is based on the IDV- Insured Declared Value. It is the amount your insurer pays you which is equal to the market value of your vehicle. Initially, when you buy new motor insurance, the IDV is calculated on the showroom price of your vehicle. However, IDV is never constant. During the time of motor insurance renewal, the IDV gets decreased because of the rate of depreciation. Also, make sure to complete motor insurance renewal before the stipulated amount of time to avoid paying penalties. This period is usually 90 days.
Before signing the policy papers, you need to know what are the inclusions and exclusions of the motor insurance policy.
Inclusions
Comprehensive policy covers loss or damage due to natural calamities. It also covers loss or damage caused due to man-made calamities. For example, natural calamities such as lighting, earthquake, flood, hurricane, storm, etc and man-made calamities like theft, riot, and terrorist activity.
The motor insurance policy also covers personal accident damage. This includes permanent disability or death of the insured person. You can get coverage of rupees 2 lakhs for the damage caused due to an accident.
Motor liability insurance is also called as third party insurance. As per the Motor Vehicle Act 1988, it has made mandatory in India. This protects you against any legal liability and the damage or bodily injuries cause to any third party in an accident.
Nowadays, all general insurance companies also offer ‘add-ons’. It increases the protective cover compared to the basic policy. However, addition of the add-ons in your policy increases your premium cost.
Exclusions
Insurance companies try to claim the best coverage to protect you against any mishap. However, there are some exclusions to the motor insurance policy.
The exclusions are as follows:
- Normal ageing, wear and tear of your vehicle
- Mechanical or Electrical Breakdown
- Damage caused by a person driving without a valid driving license
- Damage caused by a person under influence of alcohol, drugs and any other intoxicating substances
- Loss or damage outside India