Do I need to have auto Insurance?
Motor Vehicle Act states that every motor vehicle plying on Indian roads has to be insured, with atleast a “Liability Only” policy. One can be penalized if found driving vehicle without a valid insurance cover. However the customer can choose whether he/she would prefer a third party insurance cover or a comprehensive insurance.
What is Third party insurance cover ?
Third party insurance covers you against death or injury (caused by your vehicle) to pedestrians, passengers and pillion riders, occupants of other vehicles, and outsiders other than passengers. In case of commercial passenger vehicles, it insures owners against death or injury caused to the passengers by their vehicle.
What is Comprehensive insurance cover ?
Besides covering the entire set of benefits of the Third party option, Comprehensive insurance also covers any loss or damage caused to the vehicle due to accident, fire, explosion, self-ignition, lighting, burglary house breaking, theft, riots and strikes, earthquakes, flood, type cop hurricane, storm, cyclones, malicious acts and terrorism. It also covers the cost incurred in towing the vehicle in case of an accident.
What is the significance of a certificate of Insurance?
The Certificate of Insurance issued by the insurers in relation to every vehicle is the only evidence acceptable to the police authorities to show that valid insurance exists.
If a Policy is not renewed on or before the expiry date, the Certificate of Insurance in respect of new Insurance will be effective only from the date of New Insurance. For every renewal, a fresh certificate must be obtained. If there is any alternation in the risk during the currency of the insurance, the old certificate should be surrendered and a fresh one to be obtained.
What if I don't receive my Insurance certificate right away?
In case you do not receive your Insurance certificate right away, you will be given a cover note. This is a temporary Insurance document establishing proof of Insurance. A cover note is valid for 60 days from the date of its issuance and is replaced by an Insurance policy.
How is the premium calculated?
It's based on the cubic capacity of your vehicle's engine, its age, place of registration and value of the motor vehicle. For extended coverage to include Personal Accident, accessories, etc. - you may have to pay an additional premium. The premium is also subject to certain deductions including No Claim Bonus, Automobile Association and Anti-theft Device discounts.
How can one get discounts in premium ?
A discount is offered if:
- The insured is prepared to bear a fixed amount in respect of every claim for damages to the vehicle.
- There are no claims made against the policy during the relevant previous year.
- A discount is typically allowed if the insured is a member of a recognised Automobile Association (the amount of discount will not exceed Rs.100/- for private cars).
What is No Claim Bonus?
It's a discount one gets while renewing the motor policy after a claim-free year.It can build into a substantial discount over a 3-4 year period, and is an incentive for driving carefully and avoiding accidents. Also you benefit from the No Claim Bonus as long as you do not make a claim under your Insurance policy.
What is Bonus/ Malus system?
In case of any accident occurring in a year for which a claim is lodged on insurance company, in the very next year, the insurance company loads the premium by way of charging a malus- a percentage of extra premium. Whereas when there is no claim lodged during the year the insurance company grants a discount in the premium by way of bonus.
On sale and transfer of vehicle, what happens to the Bonus/Malus?
TheBonus/Malus goes with the original owner since he can claim bonus on his next purchased vehicle. However the purchaser enjoys the bonus under seller's policy till the renewal date. On date of renewal, the bonus/malus has to start afresh.
Why must I renew my auto Insurance every year? Can I buy a multi-year policy?
Your vehicle's Insurance is governed by the India Motor Tariff which does not permit a policy period of more than 12 months. However, you can extend your policy for a period not exceeding 12 months, by paying an additional premium and detailing your reasons for extension. If the Insurer accepts your request, the policy will carry a warranty specifying that on the extended period's expiry the policy will be renewed with the same Insurer.
Can I renew my Insurance with another Insurance company?
Yes, you can. However, you need to fill in a fresh proposal form and the new insurer may ask for a physical inspection of your vehicle.
What happens if my Insurance premium is not paid on time?
If the premium is not paid, you will not be covered and the Insurance company will not be liable, should anything happen to your vehicle. Also its illegal to drive an uninsured vehicle in any public place.
Can Motor Policies be issued for a longer term than a year?
No policy can be issued for a period of more than one year ordinarily. However, for motor cycles and scooters only, the Act Policy in Form A, which is the minimum compulsory insurance required by law, may be issued on a long term basis. Such policies once issued remain valid up to the cancellation of the registration of the vehicle by the Regional Transport Authority (R T A).
This insurance is particularly useful for owners of comparatively older vehicles, for whom the Comprehensive Cover becomes a little too expensive considering the age and market value of the vehicle.
Can Motor Insurance Policies be taken for a shorter term than the normal period of one year?
Motor Insurance Policies are normally taken for a period of one year. However, according to the requirements of the vehicle owner, a policy for a shorter term can be issued.
Situations do arise when a person plans to sell off his vehicle within a couple of months and he does not intend to renew his policy for another year. In such circumstances, he may go for a shorter period of cover. Short period insurance attracts Short Period Scale for calculating premium and obviously comes out costlier than the pro rata for the said period.
Can I cancel my Insurance and get a refund during the policy period?
Yes, but only if you show that your vehicle has been insured elsewhere, or your vehicle has been legally cancelled by the RTO. Once the policy has been cancelled, the balance of the premium can be refunded to you. The balance premium will be calculated on the basis of short period scale of rates and the refund will be subject to :
- There being no claim during the policy period.
- Minimum premium as per the Tariff, being retained by the company.
What documents are needed to make a claim?
You will need to submit a claim form along with the following :
- A copy of the vehicle's registration book.
- A copy of the driving license of the person driving the vehicle at the time of the accident.
- An estimate of the repairs.
- A copy of the police FIR/panchnama in case of theft or any third party personal injury/death or property damage.
If the vehicle is declared a total loss, either due to an accident or theft, you will also have to provide the following documents - RTO transfer papers, original RC book, original Insurance policy, the vehicle's original keys, a no objection certificate from you for transfer of the vehicle, a letter of indemnity on judicial stamp paper and a letter of subrogation on judicial stamp paper.
How do I file a claim?
As soon as your vehicle meets with an accident or injures a third party or damages the property of a third party, inform your insurance company.
If your vehicle is involved in an accident which injures a third party or damages a third party's property, you must report the matter to the police. If your vehicle is stolen and/or has been damaged by miscreants, terrorists or arsonists, report the matter to the police and obtain a FIR (First Information Report).
Take the vehicle to a reputed workshop for repair and get a repair estimate from the workshop.
Submit the estimate to the insurance company. A surveyor from the insurance company will come for an inspection of the vehicle, and to assess the cost of restoring the vehicle to its pre-accident condition. Based upon the surveyor’s report, the insurance company will make a final settlement of the estimate and the deal is closed.
Do I need a FIR in case of any accident?
An FIR in required in the following cases:
- Any third party personal injury or death due to an accident involving your vehicle.
- Any personal injury or death of a paid driver/ owner-driver/ passenger.
- Any third party property damage.
- Theft of the entire vehicle/accessories, stereo-recorders, other vehicle parts.
- Any loss or damage to the vehicle by miscreants, rioters, terrorists, arsonists, etc.
What is meant by Total Loss?
Total Loss refers to accident damage to your vehicle where the cost of repairs amounts to more than 75% of the depreciated value (of the vehicle) on your policy. Typically, one can claim total loss damages as follows:
- Inform the insurance company the time, date and place of the accident.
- File a First Information Report (FIR) at the police station closest to the place of mishap. Documents like registration book, tax paid receipt, insurance papers, driving licence, etc. are needed while lodging the FIR.
You will need to provide the following to the insurance company:
- Original registration certificate book.
- Duplicate key.
- The ownership of the car is then transferred to the insurance company and documents pertaining to transfer of ownership are filed. A No Objection Certificate (NOC) is required from the Regional Transport Authority (RTO) for the transfer of the vehicle.
- If the vehicle has been damaged by fire, then a report from the Fire Brigade authorities will also be required.
Total Loss claims could take a long time depending on how quickly or otherwise you are able to arrange for reports from the police and the fire brigade. Do keep the documents ready to enable a smooth process.
What do I do if the vehicle is stolen and the original policy is lost?
Report the matter to the Insurance company, Police (FIR) and the Road Transportation Office (RTO) where the vehicle is registered. Also obtain an acknowledgement from the RTO on a copy of your letter intimating the loss of the vehicle to them.
What if the accident takes place in a city other than where the policy was issued?
It doesn't matter where the accident happens.
What happens if someone else is driving at the time of the accident?
Legally, anyone driving a particular category of vehicle has to hold a valid driving license for that vehicle category. As the owner, you must ensure that only those with a valid driving license are given control of your vehicle. Also ensure that no one drives your vehicle while under the influence of liquor or any other intoxicant.
What are the rules about insurance transfer when transferring vehicle from one person to another. Is old policy transfers to the buyer or he has to take new policy. Is there any time limit about it?
Yes, the old policy can be transferred in the name of buyer by submitting the copy of Form 29/30 and copy of Registration book/Owner book. The above process preferably should be done within 30 days.
If any accessories are stolen from my vehicle, do I get their full value or is depreciation taken into account?
Depreciated value is what you would get. Also the rate of depreciation varies according to the type of accessory.