As per the Indian Motor Vehicle Act, car insurance is mandatory in India.
However, you should know that only third-party insurance is compulsory. In order to choose the most suitable car insurance as per your requirement, it’s important to first know the types of car insurance offered by insurance companies. Let’s have a look at the different types of car insurances offered in India:
Third-party car insurance: A third-party insurance is mandated by law. If you come across an accident, a third-party car insurance policy takes care of the expenses that is incurred to the car you dashed into. The other party will receive reimbursement for the damage, and you will be saved from a financial catastrophe.
Comprehensive car Insurance: As the name suggests, a comprehensive insurance policy offers holistic coverage that not only offers the coverage of third-party insurance, but also provides protection for your own vehicle. This type of policy provides the most extensive coverage and is highly recommended by us.
While going through your car insurance documents you might have felt that you have entered a world full of big words and jargons. But, don’t you worry, we are here to solve your problem. Listed below are some of the important car insurance terms that will help you understand your policy documents in a better way:
Insured Declared Value (IDV)
The IDV of a vehicle is defined as the maximum sum that the insurer pays in case of theft or total loss of that vehicle. IDV is usually the current market value of a vehicle and comes into picture during insurance claims.
Zero Depreciation Cover
When a claim is registered after an accident takes place, insurance companies use a formula that factors in depreciation to determine the payable amount. As a matter of fact, cars do depreciate, which could leave you paying a hefty fraction of the overall expense even in case you have a comprehensive coverage.
No Claim Bonus (NCB)
We all love incentives, don’t we? Be it in the form of cashback, discounts or reward points. Similarly, in the world of insurance, NCB is a discount that a policyholder gets from the insurer for making zero claims during the policy term.
NCB is applied on policy renewal, which reduces the insurance premium amount significantly. It varies between 20% for the 2nd year and up to 50% for the 6th year. Therefore, it is advisable to refrain from making claim for minor damages, instead reap the benefits of the NCB.
Voluntary Deductible
Voluntary deductible is the limit chosen by a policyholder to meet a part of the claim from his own pocket. This amount depends on the policyholder who factors in his affordability and risk; however voluntary deductible is not mandatory. Remember, higher the voluntary deductible, lower the premium.
Third Party Liability Cover
A Third Party Liability Cover secures the vehicle owner against any financial obligation caused as a result of death, physical injury or damage to a third party i.e someone other than the vehicle owner and the insurance company. As per the Indian Motor Act, third party cover is a mandatory Insurance requirement to drive a vehicle legally on Indian roads.
What Does Comprehensive Insurance Cover?
Ok, now you bought a car insurance policy and have no idea what it covers and what does it not cover. To avoid any last-minute surprises, it’s always a good idea to go through the documents and have a detailed knowledge of the coverage. Here’s what covered under a comprehensive car insurance policy-
Fire
Theft
Vandalism
Damage to third party
Damage caused by Natural disasters or severe weather
Damage to your vehicle caused by falling objects such as trees
Damage or destruction of your vehicle caused by an act of civil disturbance such as riots
What Does Comprehensive Insurance Not Cover?
There are a bunch of things that have been excluded from a comprehensive car insurance. Let’s have a look at what isn’t covered under a comprehensive car insurance policy-
Depreciation
Wear and tear of the vehicle
Electrical or Mechanical breakdown
Damage caused to the vehicle by a person driving without a valid license
Damage caused due to drunken driving
Loss / damage to the car caused by war, mutiny or nuclear risk
Damage to tyres and tubes. However, if the vehicle is damaged at the same time, liability of the company will be limited to 50% of the replacement.
Remedies to reduce your car insurance premium
It is your responsibility to insure your vehicle with a car insurance policy to secure it against several unforeseen circumstances. Also, the Indian government has made it compulsory to get a car insurance policy for your vehicle. However, most of us buy a car insurance policy just to meet the basic requirement of law, which does not offer holistic cover, thereby placing us in a difficult situation. It is always a good idea to get a car insurance after through research. Apart from that, you can take these remedies to reduce your car insurance premium-
Opt for voluntary deductibles
One of the smartest ways of reducing your car insurance premium is by opting voluntary deductible. Keep in mind that voluntary deductible is usually advised to the customers with a good driving record and those who are certain about their driving skills. If you fall in this category, then opt for voluntary deductible at the time of buying motor insurance.
Set up safety devices in your car
It’s a brilliant idea to install safety devices in your car, as such devices further ensure your car’s security which is a good factor for any car insurance company. By doing so, you can get discounts on your car insurance premium. Moreover, a membership of the Indian Automobile Association (IAA) might also make you eligible for more discounts on your car insurance premium. Apart from these options, being a safe and cautious driver is the best way to save on your car insurance expenses. Drive your car smartly, this surely help.
What are add on covers and why do you need them in your car insurance?
By paying a little extra, you can avail some added benefits towards your car insurance. These additional covers are known as add on covers and are completely optional.
Take a look at some of the add-on covers offered by Reliance General Insurance:
Nil Depreciation:
At the time of a claim settlement, your insurer calculates depreciation on certain parts of your car. This leads to a decrease in the claim amount. However, if you include Nil Depreciation cover in your policy at the time of purchase, you would probably get full claim amount. Isn’t it amazing?
Total Cover:
In case of theft or damage total loss basic, a car insurance policy pays only for the Depreciated Car Value. However, Road Tax, Registration Cost and Insurance premium together form about 15%-20% of the total On Road Cost of your vehicle, which does not get reimbursed if your car is stolen or damaged beyond repair. But, if you get a total loss cover for your vehicle, all such financial needs are taken care of.
No Claim Bonus Retention Cover:
This add-on cover ensures that in case of an untoward occurrence where the sum value of single claim does not exceed 25% of your car’s IDV, your current No Claim Bonus stays unaffected while renewing with Reliance General Insurance. e.g. If you have earned 20% NCB on your previous year policy and your vehicle IDV is Rs 10 lakh. if there is any claim which is upto Rs 2.5 lakh, you are still eligible for 20% NCB if renewed with RGI.
Importance of renewing your car insurance policy in time
Buying a car insurance policy is imperative and keep renewing it when it expires is equally important. If your vehicle insurance policy is nearing renewal, here are a few key tips to keep in mind –
Mandated By Law-
The most important reason why you should get your policy renewed at time is that it is mandated by law. By not doing so, you will have to pay a hefty fine along with imprisonment.
Third Party Coverage-
In the event of an accident, involving other individuals or properties, your car insurance policy will save your day. It will cover the expenses arising out of the accident and handle the legal aspects.
No Claim Bonus (NCB)-
When you renew your car insurance policy without it being lapsed and with zero claims through the period, you will be eligible for a NCB. No Claim Bonus is a discount which you get on the insurance premium during policy renewal.
Optimum Security-
Most importantly, when you renew your car insurance policy on time, you get a sense of security. With a valid policy by your side, you can drive around with confidence and not be constantly bogged down by the thoughts of the financial implications of an accident.
How do I renew my expired car insurance policy?
Intimate your Insurance Company immediately
It is extremely important to inform your insurer about the lapse in your expired car insurance policy, but there might be certain exceptions to it. Renewing an expired policy is not as straightforward as renewing a normal, valid policy. Hence, it is advisable not to wait for your policy to expire, rather renew it few days prior.
Don’t waste more time
In case your policy has expired only a few days ago, you can expect some liberty from your car insurance company and get to renew your car insurance policy in the usual way. On the other hand, if the policy has expired several weeks ago, your insurer won’t be very lenient. In this case, your vehicle will go through a inspection again to check for any damages.
Pay the requisite premium
It is essential to be a little meticulous and renew your car insurance policy well in time to avoid unnecessary hassles later. Additionally, if your car is old or a bit damaged, your insurer will no longer be interested in insuring it. Therefore, you must make sure that you pay your premium on time and never let your car insurance expire.
List of best car insurance companies in India
Here is the list of the best car insurance company in India which qualify on all the above-mentioned parameters –
Privately owned car insurance companies
Name of the company Incurred Claims Ratio for the financial year 2022 Network of cashless garages Car insurance policies offered
—HDFC Ergo General Insurance Company Limited 76% 6800+ garages across India
Single year comprehensive car insurance
Standalone own damage cover – Private Car
Third party liability car insurance
—TATA AIG General Insurance Company Limited 78% Major garages across India
Auto Secure – Private Car Policy
3 Years Standalone Third Party Long Term Auto Secure – Private Car Package Policy
Bundled Auto Secure – Private Car Policy
—ICICI Lombard General Insurance Company Limited 75% 7800+ garages across India
Private Car Package Policy
—Royal Sundaram General Insurance Company Limited 85% 4600+ garages across India
Car Shield
—Bharti AXA General Insurance Company Limited 77% 4500+ garages across India
Third party liability only policy
Comprehensive policy
—Reliance General Insurance Company Limited 86% 4450+ garages across India
Car Own Damage (OD only) policy
Car insurance
Third party liability insurance
—Bajaj Allianz General Insurance Company Limited 69% 4000+ garages across India
Four wheeler insurance
Third party liability only insurance
—IFFCO Tokio General Insurance Company Limited 88% 4300+ garages across India
Car insurance
—The New India Assurance Company Limited 95.39% Major garages across India
Private car policy
Standalone Own Damage cover for Motor Private Car
Motor liability only policy
United India Insurance Company Limited 109.40% Major garages across India
Motor package policy
Motor liability only policy
Armed with this new information, you should be in a good position to compare and purchase top car insurance plans from the preferred company. We understand that with a variety of options available for car insurance in the Indian market, it is not straightforward to choose a car insurance policy, which is why we have done most of the work for you.
Enter a few required details and let our system hand-pick the most relevant and suitable insurance policies for you!
Benefits of car insurance companies
Here’s a complete list of the benefits offered by the Best Car Insurance Companies in India
1. HDFC Ergo General Insurance Company Limited
The features and benefits of HDFC Ergo car insurance company are –
The company has a large customer base of more than 1 crore policyholders which signifies that the company enjoys great trust.
The company offers overnight car repair services where the repairing is done within a night and the car is delivered to your doorsteps
The company offers approvals for its claims within 30 minutes through online verification of QR codes making claim settlements easier
HDFC Ergo has a wide network of 6,800 garages that provide cashless facility that make repair works hassle-free. The easy application process and multiple policy options also make HDFC Ergo an attractive car insurance option.
2. TATA AIG General Insurance Company Limited
The features and benefits of TATA AIG car insurance company are –
The company offers a range of add-ons with its comprehensive car insurance policies which help you to increase the scope of coverage
The claim settlement process of the company is quick and hassle-free
TATA AIG car insurance is known for the quick application process, the customer service team is known to be quite prompt and if you have installed anti-theft devices in your vehicle, you can also avail certain discounts.
3. ICICI Lombard General Insurance Company Limited
The features and benefits of ICICI Lombard car insurance company are –
The company has a high Claim Settlement Ratio. During the financial year 2019 the company has settled 93.14% of its motor insurance claims.
The claims are settled within the shortest possible time. The 93.14% claims settled in 2019 were done within 30 minutes of intimation
The company has won the ‘Claim Leader – General Insurance’ Award given by Indian Insurance Award
ICICI Lombard car insurance offers a number of benefits including roadside assistance in case of an accident to the policyholders. It is one of the most trusted brands for insurance solutions in India.
4. Royal Sundaram General Insurance Company Limited
The features and benefits of Royal Sundaram car insurance company are –
The company’s car insurance policy promises 100% refund of the invoice price of the car in case of total loss or theft
Free coverage for flat tyre and emergency fuel delivery is available under its car insurance plans
A range of extensive add-ons are available for a better coverage scope of your car insurance policy
These are some of the benefits offered by Royal Sundaram car insurance company for the policyholders.
5. Bharti AXA General Insurance Company Limited
The features and benefits of Bharti AXA car insurance company are –
The company has issued more than 27 million policies ever since it was established
More than 1.3 million claims have been settled
The company provides you with 24*7 assistance for your car insurance policy
Known for the great no-claim bonuses that are passed on to the policyholder for every zero-claim year, Bharti Axa car insurance company is a great option, especially after taking into account the network of 5000+ cashless garages all over the country that make car repairs hassle free.
6. Reliance General Insurance Company Limited
The features and benefits of Reliance car insurance company are –
The company promises hassle-free purchases as the policy is delivered within 10 seconds
You get free roadside assistance coverage in your car insurance policy worth up to INR 500
The company enjoys ISO 9001:2015 certification which makes it trustworthy.
7. Bajaj Allianz General Insurance Company Limited
The features and benefits of Bajaj Allianz car insurance company are –
The company’s car insurance policy can be bought within 3 minutes
The Motor On-The-Spot feature in the company’s car insurance plans lets you make instant claims through your Smartphones. Small claims can, therefore, be settled within 20-30 minutes
The company has a high claim settlement ratio of 98%
Bajaj Allianz offers a number of insurance plans for car insurance. It is one of the most trusted brands in India and offers a lot of flexibility for the insurance policies.
8. IFFCO Tokio General Insurance Company Limited
The features and benefits of IFFCO Tokio car insurance company are –
The company offers completely transparent products and services so that you know what you are buying
The claim settlement process of the company is quick and efficient ensuring that you get your claims settled within 4 hours
The company has various awards in its name which make it a reputed company
IFFCO Tokio car insurance offers protection from damages arising out of accidents and thefts, the company has a claim settlement ratio of about 79.19% and is known for the quick turnaround time to issue policies with minimal documentation.
Owned by the Government of India
9. The New India Assurance Company Limited
The features and benefits of New India Assurance car insurance company are –
The company has a strong financial standing as its net worth for the quarter ended 30th June 2019 stood at INR 37,483 crores
The company’s solvency ratio is 2.13 which further ensures of the string financial stability of the company
New India Insurance is an expert in the non-life insurance business and has been in the Indian market since long. New India Assurance company offers comprehensive car insurance plans for protection against accidental and theft-related risks along with a number of benefits.
United India Insurance Company Limited
The features and benefits of United India car insurance company are –
The company is a public limited company which is owned by the Government of India and enjoys immense trust among policyholders
There are more than 1 crore policyholders of the company till date
United India car insurance has a claim settlement ratio of about 91.72%, its policies also offer discounts to companies that install anti-theft devices on their cars. Click on the link below to know more about the company.