Purchasing an insurance policy for your Car is mandatory as per Motor Vehicles Act. Most vehicle owners are aware and renew their car insurance on time. But still many make few common mistakes while choosing the right product which results in dissonance at the time of claim.
Here are the 6 common mistakes which you need to watch out:
It is very important that you claim insurance for an accident as and when it happens. Many times people tend to report occurrence of two different accidents as one accident and raise a single claim for both the accidents. The insurance company Licensed Surveyor will inspect the vehicle thoroughly and investigate the claim before approving it. For example, if you claim to have damaged the right hand side door due to a collision and at the same time also claim for left side back door and bumper, then the Surveyor will try to visualise the occurrence of accident and may not find the description appropriate and if he finds anything amiss he would reject your claim. So, refrain from giving any false information or claim any pre-existing damages as it may lead to denial of the entire claim altogether. It will also result in spoiling your record for falsifying insurance information and affect your future policies as the basic premise of any insurance policy is that it is based on the principle of utmost faith.
The insurance company will take into account several details regarding the vehicle to calculate the premium for your policy. The model of the car, safety ratings, fuel types, engine capacity, etc. all is taken into consideration before deciding the premium. The Third Party premium rates are fixed by IRDA based on the cubic capacity of the car. The Third Party premium rate is revised by the regulator each year as below 1000cc, above 1000cc but not exceeding 1500 cc, above 1500 cc but not exceeding 2500 cc and above 2500 cc. Many car variants come in multiple cubic capacities like 1398, 1498, 1598 or in small cars at 998cc and 1098 etc. As the Third Party premium for cars changes with the cubic capacity slabs it is important to provide correct details.
Add-on covers like zero depreciation, engine Protect (hydrostatic loss, consequential loss), return to invoice, consumables, no claim bonus, etc. though increase the premium amount but can be extremely beneficial in case of a major claim as it can provide adequate coverage at the time when it is needed. Hence it is always good to add such covers to your policy with an increased premium.
IDV stands for Insured Declared Value of the car in the insurance policy and is the maximum amount that the insurance company is liable to pay in case of theft or total damage to the vehicle. The premium for your car insurance is primarily dependent on the IDV of your car. Higher the IDV, higher is the insurance premium. It is a common practice to declare a lower IDV of the car in order to lower the premium. But in case of a theft or total loss, this small saving on premium can cost you dearly. Thus, it is always go for the optimum IDV. Also, once you lower the IDV in one year then the IDV of the car in subsequent year is also affected as it is dependent on the current year IDV.
Many people buy pre-owned cars from other owners. As the car is sold from one person to another, it results in change of ownership and hence it is extremely important to transfer the insurance policy too at the time of sale of car and not at the time of renewal. The insurance company can reject the claim on account of absence of a valid contract between the new owner and Insurance company.
Yes, if you do not make a car insurance claim in any policy year, you get a No Claim Discount (NCD). This discount reduces the subsequent year’s renewal premium. NCDs are cumulative in nature. They increase with every claim-free year. The applicable NCDs are as follows –
|After 1 claim-free year||20%|
|After 2 claim-free years||25%|
|After 3 claim-free years||35%|
|After 4 claim-free years||45%|
|After 5 or more claim-free years||50%|