Motor Vehicles Insurance : Frequently Asked Questions (FAQs)
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What Motor Insurance cover should I
buy? Should I buy Comprehensive Insurance or Liability Policy only? |
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A. |
Third
Party Liability insurance is mandatory for all vehicles plying on public
roads in India. This covers Liability for injuries and damages
to others that you are responsible for. In addition, it is
prudent to cover loss or damages to the vehicle itself by way
of Comprehensive/Package policy, which covers both “Liability” as well
as “Own damage” to the insured vehicle. Liability Only cover is also known as
Act Only cover. |
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Category
Name :
Motor Insurance
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Q. |
How is the premium determined? |
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Many
factors determine the premium you will pay. For Own Damage cover different
insurance companies charge different premiums for similar coverage. Shop
around; getting three or more comparison quotes is worthwhile. Check various
insurers’s websites; it will help you compare premiums. Do not forget to
compare deductibles, coverage and IDV’s as premium may be lesser of one
insurer but with higher deductibles, lower coverage and lower IDV, which will
adversely impact you in the event of claim settlement. The Own
Damage coverage is left to be rated by individual insurance companies after
duly filing rates with the Insurance Regulatory and Development Authority.
The same is determined on following factors amongst others -- Age of
vehicle; Discounts / loadings- Appropriate Bonus / loading/ discounts along
with past claims experience are taken into account while calculating premium.
IDV (Insured Declared Value). Third
Party Liability Premium rates are laid down by IRDA. In case
of break in insurance, vehicle inspection would be required and extra charges
will have to be incurred for the same. |
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Q. |
What coverage limits meet my needs? |
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The sum
insured for the vehicle is called “Insured’s Declared Value” and should
reflect the current market value of the vehicle. Under Liability insurance,
Third Party Liability insurance is covered. There is unlimited coverage to
Third parties injury and Third party property damage is covered up to a sum
of Rs 7,50,000. The
Insured has the option to restrict coverage for Third Party Property damage
to Rs 6,000 and this will result in a lower ”Liability Only” premium. |
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Q. |
What is the period of the policy? |
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A motor
policy is usually valid for a period of one year and has to be renewed before
the due date. Pay the premium on time. No Insurer offers a grace period for
paying the premium. In case of lapse of policy by even one day, the vehicle
has to be inspected. Moreover, if a comprehensive policy is allowed to lapse
for more than 90 days, the accrued benefit of NCB (No Claim Bonus) is also
lost. |
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Q. |
What is "No Claim Bonus"? |
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No
Claim Bonus (NCB) is the benefit accrued to an insured for not making any
claims during the previous policy period. As per current norms in
India, it ranges from 20% on the Own Damage premium (and not on Liability
premium) and progressively increases to a maximum of 50%. If,
however, a claim is lodged, the No Claim Bonus is lost in the subsequent
policy period. NCB is
given to the insured and not to the insured vehicle. Hence, on transfer of
the vehicle, the insurance policy can be transferred to new owner but not the
NCB. The new owner has to pay the difference on account of NCB for the
balance policy period.The original owner can, however, use the NCB on a new
vehicle purchased by him. |
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Q. |
Will my No Claim Bonus get migrated
if I want to change my insurance company? |
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A. |
Yes,
you can avail of the NCB facility if you change the insurer on renewal. You
would have to produce proof of the NCB earned by way of renewal notice from
the current insurer. Alternately, you can produce your original, expiring
policy along with a certification that you have lodged no claims on the
expiring policy. For this the proof can be in the form of a renewal notice or
a letter confirming the NCB entitlement from the previous insurer. |
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Q. |
Are there discounts that will lower
my premium? |
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In addition to NCB, there are additional
discounts available under Own Damage Premium for membership
of Automobile Association of India, Vintage Cars (Pvt. Cars certified by the
Vintage and Classic Car Club of India); Installation of anti-theft devices approved
by Automobile Research Association of India (ARAI), Pune and whose
installation is approved by AAI; Concessions for specially designed/modified
vehicles for the Blind, Handicapped and mentally challenged persons, which
are suitably endorsed in the RC by the RTA concerned; - opting for voluntary
additional deductible/excess. Under “Liability Only Section”,
discounts are available for reduction in Third Party Property Damage (TPPD)
from Rs. 750,000 to Rs. 6,000. |
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Q. |
Is Service Tax applicable and how
much is it? |
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Yes,
Service Tax is applicable and would be as per prevailing rule of law. |
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Q. |
What is deductible? |
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A. |
Deductible
or “excess” is the amount over and above, which the claim will
be payable. There is a normal standard/compulsory excess for most vehicles
ranging from Rs 50 for two-wheelers to Rs 500 for Private Cars and Commercial
Vehicles which increases depending upon the cubic capacity/carrying capacity
of the vehicle. However, in some cases the insurer may impose additional
excess depending upon the age of the vehicle or if there is high frequency of
claims. |
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Q. |
What is the procedure for recording
any changes in the policy? |
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A. |
If
there are any changes in the policy like change of address or modifications
to the vehicle or its use, it will be done by an Endorsement by the insurance
company. Submit a letter to the insurer with proof for the changes and obtain
the endorsement. Some endorsements may require you to pay additional premium.
Check the correctness of the endorsement. |
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Q. |
If I am using the car in a
particular city, what premium rate is applied? |
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For the
purpose of applying premium rate, the place where the vehicle is registered
is reckoned (not the place where the vehicle is used). If your vehicle is
registered in Chennai, the rate applicable for Zone A is charged. Even when
you shift to a different city / town, the same rate will continue to be
applied. Similarly if a vehicle is registered in a town, it attracts Zone B
premium rate. Subsequently if the owner shifts to a metro, he will continue
to be charged the Zone B rate. |
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Q. |
What is a Certificate of Insurance
under Motor Vehicle Act? |
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A. |
As per
Rule 141 of Central Motor Vehicle Rules 1989, a certificate of Insurance is
to be issued only in Form 51. It is only in Motor Vehicle Insurance, apart
from the policy, that a separate certificate of insurance is required to be
issued by insurers. This document should always be carried in the vehicle.
The policy should be preserved separately at home / office. |
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Q. |
If I fit CNG or LPG kit in my
vehicle, is it necessary to inform the Insurance Company? |
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A. |
If a
CNG / LPG kit is fitted in the vehicle, the (Road Transport Authority (RTA)
office where the vehicle was registered should be informed so that they make
a note of the change in the registration certificate (RC) of the vehicle. The
insurance company should also be informed so that the kit is covered on
payment of extra premium on the value of the kit under “OD” section and also
under “LO” section. |
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Q. |
What are the documents to be kept
in the vehicle while plying in public places? |
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•
Certificate of Insurance • Xerox
copy of Registration Certificate •
Pollution Under Control Certificate •
Photocopy of Driving Licence of person who is driving the vehicle |
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Q. |
Can I transfer my insurance to the
purchaser of my vehicle? |
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Yes,
the insurance can be transferred to the buyer of the vehicle, provided the
seller informs in writing of such transfer to the insurance company. A
fresh proposal form needs to be filled in. There is a nominal fee charged for
transfer of insurance along with pro-rata recovery of NCB from the date of
transfer till policy expiry. It may be noted that transfer of ownership in
comprehensive/package policies has to be recorded within 14 days from date of
transfer failing which no claim will be payable for own damage to the
vehicle. |
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Q. |
Can I continue the insurance in the
name of the previous owner even after the vehicle is transferred in RTO
records in my name? |
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No.
Registration and insurance of the vehicle should always be in the same name
with the same address. Otherwise the claim is not payable. A fresh proposal
form needs to be filled in. There is a nominal fee charged for transfer of
insurance. |
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Q. |
I have lost the insurance policy.
Can I get a duplicate one? |
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A. |
Yes,
please approach the same office, which had issued the policy, with a
written request. A nominal fee is charged for issuing a duplicate policy
copy. |
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Q. |
What are the
documents that are required to be submitted for a Motor Insurance claim? |
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A. |
Generally,
the following documents are required to be submitted. However, read through
your policy to see the complete list—duly filled in claim form, RC copy of
the vehicle, Original estimate of loss, Original repair invoice and payment
receipt. In case cashless facility is availed, only repair invoice would need
to be submitted and FIR, if required. For theft claims, the keys are to be
submitted. Theft claims would also require non-traceable certificate to be
submitted. |
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(Source: IRDA Web) |
