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How does Car Insurance Work in India?

By Finserv MARKETS - Feb 4,2019
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How Does A Car Insurance Work In India?

Car insurance is a mandatory aspect to look in to, while purchasing a car. Most car owners are offered car insurance by their retailer at the time of purchasing the vehicle. Due to this reason, a lot of car owners do not get time to go through all the terms and conditions in the policy cover. However, as time goes by, you may come to realize that the insurance policy sold to you by the retailer is inadequate as per your requirements.

To simplify your understanding, let us walk you through how car insurance typically works in India.

Choosing the right car insurance

Car insurance is a contract between you and the insurance company that protects you against financial loss in the event of accident or theft of your car. There are 2 main types of car insurance available in India.

  • Comprehensive Insurance- This is a complete package in which the insurance company offers coverage against both, the damages faced by the car coverage against both, the damages faced by the car owner and the damage caused to the 3rd party by the vehicle of the insured. This policy covers damage caused due to
  • Natural calamities (floods, storms and earthquakes.)
  • Manmade calamities (thefts, riots, burglary and strikes.)
  • Physical injury of the car owner or the driver of the insured vehicle. The passengers are also covered if the accident occurs while they are travelling in the car, mounting or dismounting it.
  • Third Party Insurance- This policy covers only damage caused to 3rd party vehicles by the insured vehicle. The expenses related to legal disputes arising due to accidents are also covered under this plan. This policy covers 3rd party damage like
  • Permanent injury/ death of the person.
  • Damage caused to others’ property by the insured vehicle.

Calculating the premium and sum insured

Once you’ve chosen a car insurance, the premium is what needs to be looked in to next. The car insurance premium is calculated based on the following factors:

  • The car make and model (size and cubic capacity of your vehicle)
  • The age of your car
  • Net worth of the car as per the current market prices
  • The sum insured or the amount of compensation the policyholder wants in case of any unforeseen event
  • Policy period; that is, the number of years for which the policy will be valid
  • No claim bonus applicable if you have had claim-free years in your policy period/previous policy
  • The appropriate taxes that are eligible to be levied on your premium amount

Submitting the documents

The policy seeker is required to submit a few documents at the time of applying for the insurance cover and some at the time of claims. The documents needed at the time of filling an:

Application to buy car insurance plans online are:

  • Duly filled application form.
  • Car details along with photocopy of the car documents.

Application for claiming insurance are

  • Duly filled application form.
  • License plate of the 3rd party vehicle.
  • Photocopy of the car insurance
  • FIR copy in case there is a theft or physical injury.

Approval/ rejection of the claim

The car insurance can be rejected in the following cases:

  • General wear and tear of the vehicle due to time.
  • Mechanical or electrical breakdown of the vehicle.
  • If the vehicle faces issued while it is outside Indian borders.
  • If the driver is under the influence of drugs/ alcohol while driving.

If the claim is found genuine, it is credited directly to the beneficiary’s account.

Add-ons provided

The premium insurance companies also provide some car insurance add-on covers like

Car insurance is a must for those who love riding their vehicle. Buy car insurance plans online with Finserv MARKETS and secure your brand-new set of wheels!

“Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!”

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522