In very simple term, Motor Insurance means insurance cover for your vehicle which pays for damages in case of accident, or some other loss scenarios. The resultant Claim can be settled by Cashless facility or through reimbursement of your claim, depending on the insurer. If you are a new Car owner, it is very important to understand the basics of Motor Insurance, as it can save you a lot of hassles and money. Third Party Insurance is a statuary requirement. It was made mandatory under the Car Vehicles Act, 1988, and you need to carry it with you all the time. We often see a lot of adventurous youths avoiding Insurance, to save some money which they see as unnecessary risk cover. In case of accident, either they pay dearly from their pocket, or take their vehicle to sub standard service stations for 2nd hand spare parts. This leads to a higher lifecycle cost of the vehicle.
Types of Motor Insurance:
There are 2 types of policies:
- Third Party liability cover or Act only Cover.
This covers the cost of damage or injury caused by your car to people/property. This is compulsory as per Car Vehicle Act, 1988. It is also mandated to carry these papers at all times, in your car.
- Comprehensive Coverage.
This type is highly recommended and most popular, as it covers both third party and own damages. Thus it covers cases like theft and personal accident cover. You can also include add ons for covering costly accessories, at a small incremental cost.
How is the Motor Insurance policy premium determined?
Simply put, it is determined by each insurance company in their own way. It also reflects their past experiences of a certain segment, or customer group, etc. So its better to compare 3 – 4 quotes for getting the best quotation possible. However, you need to ensure that the insurer does not reduce the valuation of your vehicle (known as IDV) to reduce premium, as it is counter-productive. Same is the case with deductibles and coverage amount. Lowering these parameters, to give you a lower premium amount, may adversely impact you when you go for a claim.
Some of the parameters are:
- Your car value as per the insurance company database.
- Last IDV
- Your age, profession.
- City where the car is registered (not where it is being used).
- Past claims.
- Model/make and year of manufacture of the car.
If you need any assistance in selecting the best insurance for your vehicle, please fill in the form above and get the best insurance quote.