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Private Car Insurance FAQ- My Insurance Bazaar

Private Car Insurance FAQ- My Insurance Bazaar

What is Private Car Insurance
Is Private Car Insurance Cover mandatory
What are the types of car insurance
What is a Liability Only Policy
What is a Comprehensive Policy
Who is Third Party
What additional covers are available
What is not covered
Is the vehicle need to be inspected
How to calculate insurable value (IDV) of a car
Are car accessories also covered in car insurance
What if a car has an additional CNG/LPG kit
What is the rate of depreciation applied to arrive at the insurable value (IDV)
How is insurance premium calculated
What are various discounts available on the insurance premium
What is No Claims Bonus (NCB)
Can No Claims Bonus (NCB) on old car be transferred to a new car
Does No Claims Bonus (NCB) earned on driving a company car count
What happens to No Claims Bonus (NCB) earned in another country
What happens to No Claims Bonus if my policy has expired
What happens to No Claims Bonus (NCB) if I change insurance company
What is Automobile Association Membership discount
Documents ordinarily needed for claims
What if a vehicle meets with an accident outside the city / state from where policy is issued
What is cash less facility
What is a deductible
What is a voluntary deductible
What is Constructive Total Loss
What if a car is stolen along with original policy documents
What happens if someone else is driving at the time of the accident
What happens to insurance if a car is sold off
What is the procedure for Transfer of Insurance
How to change the registration address or any vehicle information
How to add/ delete the Hypothecation in insurance policy
What if the current policy is already expired
Can a policy be renewed from Current Third Party to Comprehensive insurance


What is Private Car Insurance
Private Car insurance policies cover against any loss or damage caused to the vehicle or its accessories due to accidents. It also covers the owner’s legal liability to the third party for damage to the third party property or bodily injury. It provides compulsory personal accident cover for individual owners of the vehicle while driving as also an optional personal accident cover for passengers.

Is Private Car Insurance Cover mandatory
Under the provisions of the India Motor Vehicles Act 1988 car insurance is mandatory in India.

What are the types of car insurance

  • Liability Only policy
  • Comprehensive Package Policy

What is a Liability Only Policy
Liability only Policy covers third party liability for bodily injury and/or death and property damage and personal Accident cover for owner-driver. It can further be combined with fire and theft covers.

  • Liability Only Policy with Fire Only Cover
  • Liability Only Policy and Theft
  • Liability Only Policy and Fire & Theft

What is a Comprehensive Policy
Comprehensive car insurance covers damage to own car along with third party liability. It covers damage to or loss of vehicle against the following –

  • Fire, explosion, self ignition, or lightning
  • Natural disasters like floods, hurricanes and storms, earthquakes, Landslide etc.
  • Burglary, housebreaking or theft
  • Riot, strike or terrorist activity
  • Accidents
  • Malicious act
  • Whilst in transit by road, rail, inland, waterway, lift, elevator or air
  • Personal accidental benefit for the owner of the car. You can also take personal accident cover for unnamed passengers

Who is Third Party
According to the Motor Vehicles Act, a third party is any person who is not the insured or the insurer and includes the Government.

What additional covers are available
One can buy some additional covers on payment of an extra Premium that might not be covered otherwise.

  • Depreciation cover
  • NCB protection cover
  • Personal belongings cover
  • Daily allowance cover
  • Loss of keys
  • Road assistance cover

What is not covered
Varying from insurer to insurer, there are certain conditions and situations which are not insured. But some of these can be bought back.

  • Normal depreciation, wear and tear
  • Mechanical or electrical breakdown failure or breakages
  • Damage to tyres and tubes unless the vehicle is also damaged
  • Car driven under the influence of intoxicating liquor or drugs at the time of loss
  • Damage by person driving without a valid driving licence
  • Damage due to war or nuclear crises
  • Use of vehicle other than it is meant for
  • Use of vehicle beyond specified geographical area
  • Consequential loss
  • Compulsory deductibles.Yes, under provisions of the India Motor Vehicles Act 1988 car insurance is mandatory in India. Any vehicle used for social, domestic and pleasure purpose and for the insured’s business or profession.Yes, under provisions of the India Motor Vehicles Act 1988 car insurance is mandatory in India. Any vehicle used for social, domestic and pleasure purpose and for the insured’s business or profession

Is the vehicle needs to be physically inspected
The vehicle might need to be inspected by the insurance company if –

  • There is a break in insurance
  • There is a change in type of policy
  • There is a change in policy ownership
  • You have added accessories that you want insured

How to calculate insurable value (IDV) of a car
IDV (Insured's Declared Value) is estimated on the basis of the manufacturer's listed selling price of the model, variant of the vehicle and additional accessories at the start of the insurance policy after adjusting for depreciation for every year. A deviation of (+/-) 10% of estimated IDV value is permitted by most insurance companies. (IDV = Ex-Showroom price plus sales tax minus depreciation minus registration minus insurance)

Are car accessories also covered in car insurance
Accessories provided by the manufacturer are covered under car insurance based on the depreciating value as specified. Other accessories need to be insured separately.

What if a car has an additional CNG/LPG kit
 An additional CNG/LPG kit fitted in a vehicle needs to be insured separately. It needs to be declared at the time of proposing for insurance.

What is the rate of depreciation applied to arrive at the insurable value (IDV)
Age of Vehicle (Private Car) % of Depreciation
Not exceeding 6 months 5%
Exceeding 6 months but not exceeding 1 year 15%
Exceeding 1 year but not exceeding 2 years 20%
Exceeding 2 years but not exceeding 3 years 30%
Exceeding 3 years but not exceeding 4 years 40%
Exceeding 4 years but not exceeding 5 years 50%
For vehicles aged over 5 years of age and of obsolete models the IDV is a value agreed upon between the owner and insurance company.

How is insurance premium calculated
The insurance premium of a vehicle depends upon on multiple factors such as the following-

  • Insured Declared Value (IDV)
  • Vehicle Make & Model
  • Place of registration (Zone)
  • Additional covers opted for
  • No Claims Bonus

What are various discounts available on the insurance premium

  • Voluntary Deductible
  • No Claim Bonus
  • Automobile Association Membership
  • Presence of anti-theft devices

What is No Claims Bonus (NCB)
No Claims Bonus is a discount on the insurance premium allowed to the owner of the vehicle (Insured) on the Own Damage section of the policy by an insurance company, if no claim is made or pending during the preceding year(s). The following is the scale of discount.
Period of Insurance NCB
The preceding year 20%
Preceding Two consecutive years 25%
Preceding Three consecutive years 35%
Preceding Four consecutive years 45%
Preceding Five consecutive years 50%

Can No Claims Bonus (NCB) on old car be transferred to a new car
Yes, the no Claim accumulated over your old car can be transferred to your new car.

Does No Claims Bonus (NCB) earned on driving a company car count
The NCB earned on a vehicle owned by an institution during the period when it was allotted to and exclusively operated by an employee can be passed on to the employee if the ownership of the vehicle is transferred in the name of the employee. This will however require submission of a letter from employer confirming that prior to transfer of ownership of the vehicle to the employee, it was allotted to and exclusively operated by the employee during the period in which the NCB was earned.

What happens to No Claims Bonus (NCB) earned in another country
An insured may be granted NCB on a new policy taken out in India as per entitlement earned abroad, provided the policy is taken out in India within three years of expiry of the overseas insurance policy, subject to relevant provisions of NCB under these rules.

What happens to No Claims Bonus if my policy has expired
If you renew your policy within 90 days of expiry of previous policy, you are entitled to NCB.

What happens to No Claims Bonus (NCB) if I change insurance company
No claim bonus can be transferred from one insurance company to another. You need to provide a renewal notice or a letter confirming the “No Claim Bonus” entitlement from the previous insurer. If you are not eligible for no claim bonus and wrongly claim this on your policy then the contract of insurance is void ab-initio and insurance company reserves the right to reject your claim.

What is Automobile Association Membership discount
If you are a member of a recognised automobile association, you are eligible for a premium discount on the own damage part of vehicle insurance.

Documents ordinarily needed for claims
Damage claims

  • Claim form
  • Copy of vehicle insurance policy
  • Copy of vehicle registration
  • Copy of driving licence of the person driving at the time of accident
  • Repairs estimate
  • Repairs invoice or payment receipt
  • RTO transfer papers ( in case of total loss
Third party claims
  • Claim form
  • Copy of vehicle registration
  • Copy of driving licence of the person driving at the time
  • Copy of FIR
  • Copy of vehicle insurance policy
Theft claims
  • RTO transfer papers
  • Original registration papers of the vehicle
  • Copy of driving licence
  • Original Insurance papers
  • Original keys

What if a vehicle meets with an accident outside the city / state from where policy is issued

  • If you know the toll free number of the Insurance Company, intimate the occurrence of the accident and act on the advice of the company.
  •     
  • Otherwise, intimate the occurrence to the local office of the insurance company.
  • Lodge an FIR with Police, especially if there is third party damage / loss / Injury / death involved.

What is cash less facility
Cashless facility means settlement of claims on cashless basis whereby the insured does not have to pay for repair of damages upfront. Only the uninsured component and deprecation amount is to be paid by a customer. You need to take the vehicle to a service centre or a garage authorised by the insurance company. The repair bills are settled between the repairer and the insurance company directly.

What is a deductible
Deductible is the amount of loss (e.g., repair charges), pre-determined at the time of taking out insurance, that an Insured person has to bear and pay for. From the finally assessed amount of loss, the amount equivalent to the deductible is deducted to arrive at the amount of loss payable by the insurance company. There are two types of deductibles i.e., (1) Compulsory (which an insured person necessarily has to bear and (2) Voluntary (which an insured person chooses to bear in return for a discount in insurance premium).

What is a voluntary deductible
Voluntary deductible is the minimum amount that you choose to bear in the event of a claim. When you opt for a voluntary deductible, you are eligible for a higher discount. There is an inverse relationship between the deductible and the premium. When voluntary deductible increases, the amount of premium falls.

What is Constructive Total Loss
The insured vehicle shall be treated as a Constructive Total Loss if the aggregate cost of retrieval and / or repair of the vehicle, subject to terms and conditions of the policy, exceeds 75% of the IDV of the vehicle. In this case the insurance company pays for the car loss and the ownership of the vehicle is transferred to the insurance company.

What if a car is stolen along with original policy documents
Lodge an FIR for the theft of your vehicle and inform the insurance company accordingly.

What happens if someone else is driving at the time of the accident
If the driver has a valid driving licence and is not driving under the influence of drugs or alcohol, the vehicle insurance remains valid for the claims.

What happens to insurance if a car is sold off
In this case there are following options.

  • The buyer can get the policy transferred in his name by applying to the insurance company. However, the no claim bonus (NCB) on the policy is not transferred and the difference has to be paid. NCB is retained by the seller.
  • You can cancel your policy and the buyer can buy a new policy. You will get a refund for the unexpired / unused period provided there is no claim on the policy. In this case too, you can retain your NCB and transfer it to your new insurance policy if you have purchased another vehicle.
  • Also, you can transfer the policy to your new vehicle and the unexpired premium amount can be adjusted accordingly.

What is the procedure for Transfer of Insurance
For Transfer of Insurance from one owner to another the following documents are required.

  • New RC copy /form 29-
  • Old policy document
  • NOC from the previous insured
  • Rs. 50/- transfer fee
  • New application form.
  • Inspection Report (to be carried out by the insurance company)
  • NCB difference amount

How to change the registration address or any vehicle information
For any change or correction in registration address/ Vehicle Information you need to submit RC copy along with a request letter

How to add/ delete the Hypothecation in insurance policy

  • For Addition of Hypothecation: Letter from the bank / Endorsed RC copy has to be submitted.
  • In case of Deletion of Hypothecation: NOC / Endorsed RC copy has to be submitted.

What if the current policy is already expired
You can still renew your policy after your vehicle inspection is complete. Insurance companies may apply additional loading on premium if policy has expired 45 days earlier.

Can a policy be renewed from Current Third Party to Comprehensive insurance
Yes, but the vehicle needs to be inspected before it can be renewed to comprehensive policy.