For every car owner in India, it is a matter of serious concern to choose car insurance. In this article, we have provided detailed information about car insurance to help you choose the best car insurance in India.
Given the rate at which new vehicles are entering Indian roads on a daily basis, having a car insurance policy in place is crucial as there are several perils of driving in the country.
Purchasing a car insurance policy can financially protect you as well as your vehicle in times of accidents. As per the Motor Vehicles Act 1988, it’s mandatory for all motor vehicle owners to have at least a third-party motor insurance cover.
Why You Need Car Insurance?
When someone say’s you to get your car insured, primary question aries in your mind is why you need car insurance. Here are the main reasons why you need car insurance in India.
- Mandatory By Law
- Effective investment
- Offers peace of mind
- Health insurance boost
- Saving time
Mandatory By Law
The Motor Vehicles Act of India has made it compulsory for all vehicles used in public spaces to have car insurance. A third-party liability policy is compulsory for all vehicles, but you can decide to go for a comprehensive car insurance policy too.
The reason why third-party liability insurance is mandatory is that in case of accidents, any damages or losses to the property of a third party along with injuries to the said person are covered.
Recent studies have shown that one in six car accidents take place in India. Whether you are at fault or not, these odds cannot be taken lightly.
As such, having a comprehensive car insurance policy in place will ensure that your vehicle is covered for the costs incurred on repairs in case of accidents.
It will also cover the policyholder for any bodily injuries. In case of collisions with other vehicles, the compensation could run into thousands of rupees, perhaps lakhs.
Your car insurance policy will help you breathe easy and cover the costs for you in exchange for a nominal premium, making it a worthwhile investment.
Offers peace of mind
Having a car insurance policy offers peace of mind in the sense that you can cruise on a highway or even squirm through peak traffic without having to worry about the consequences of potential accidents.
Sometimes, even the tiniest of scratches to another vehicle could urge the driver to create a scene on the road and demand money for repairs. With car insurance, you can put these worries in the back seat and drive easy.
Health insurance boost
Many of the car insurance policies out there provide coverage for the injuries you sustain or the injuries sustained by your fellow passengers during an accident.
If the policy you choose does not offer this cover, you can always purchase personal injury protection as an add-on cover, and it will boost your health insurance, covering things that may not be covered by your health insurance plan.
Meeting with an accident can be quite stressful. You have to get your vehicle repaired, pay for the expenses incurred on repairing the vehicle of a third party, pay for the treatment of any injuries sustained by you or a third party, making claims, finding a good garage, etc.
Basically, you will have to run around a lot. But with car insurance, your stress can be significantly lower and you can also save a good amount of time as the insurance company will handle everything for you.
How Car Insurance Can Protect
Here are the five ways through which you can be protected with car insurance:
- Lower liability
- Hospitalization expenses
- Compensation for the family
- Lower cost for online purchase
Cars are expensive to purchase and maintain, and repairing them if they meet with accidents can be a costly affair too. There may be an instance where your vehicle could sustain damages because of a third party’s negligence.
Another vehicle colliding with your car, or your vehicle crashing into a wall, or your swerving in an effort to avoid a jaywalker, etc. can make you incur a significant amount of money.
Having a car insurance policy will ensure that your damages are paid for by the insurance company.
It is mandatory to have third-party liability car insurance in India. This policy will provide cover against the legal liability of an accident you have caused.
For instance, if you crash your car into the property of a third party, the insurance will take care of the legal repercussions as well as cover the cost of repairs to the damaged property.
Similarly, the legal and financial ramifications of injuring a person will also be covered by your car insurance policy, thereby lowering your liability to a significant extent.
While some accidents are rather mild, there are some that see the driver and passengers suffer from more than just small bruises and cuts. There are times when people have fractures or other severe injuries that need them to be hospitalized.
Given the rate at which medical and hospitalization expenses are rising in India, having a car insurance policy will ensure that you don’t burn a hole in your pockets at times like these. The insurance policy will take care of these expenses and lower your financial liability.
Compensation for the family
The worst case scenario of a car accident is the demise of the car owner. If you are the sole breadwinner of your family, it can be extremely difficult for your spouse and kids to survive in your absence.
A car insurance policy will pay for the expenses your family will incur after your death, such as funeral expenses.
Lower cost for online purchase
Purchasing a car insurance policy online can be cheaper as the premiums are often lower. The reason for this is that the operating costs are lower for the insurance company when transactions are done online.
Since there are no commissions to be paid to brokers, the insurance company passes on the benefit of lower cost to the customer. Even renewing your policy online is simple and hassle-free in addition to being cost-effective.
Types of Car Insurance Policies
The two kinds of car insurance policies available to car owners in India include third-party liability and comprehensive insurance.
- Third-party Car Insurance
- Comprehensive Car Insurance
Third-party Car Insurance
Third-party car insurance is a type of car insurance policy that covers the policyholder against legal liabilities that arise to a third party in case of an accident.
If you are at fault in an accident and injuries are caused to a third party, or if their property is damaged, you will be covered by your third-party car insurance policy.
Third-party liability is compulsory under the Motor Vehicles Act, 1988 for those who purchase, own, or drive a motor vehicle in India.
- Offers financial assistance and legal cover
- Provides peace of mind
- Simple and quick procurement process
- Easily available
Comprehensive Car Insurance
If you wish to get the best kind of coverage for your vehicle, a comprehensive car insurance policy is what you need. As the term suggests, the policy offers comprehensive protection.
In comparison with third-party liability car insurance, a comprehensive car insurance policy not only covers the costs incurred on loss or damages to a third party’s property but also covers damages to your own vehicle in case of an accident.
It also offers a range of extensive services that cannot be availed through a third-party liability car insurance policy.
A comprehensive car insurance policy will cover damages caused by fire, vandalism, theft, severe weather, and natural disasters. It also covers damages to your car caused by falling objects like the branches of trees.
- Highest level of protection
- Easier to replace your vehicle if it gets stolen
- Cover for damages caused by natural disasters
- Cover for damages caused by man-made disasters
- Lower legal liability
How to Purchase a New Car Insurance
Car insurance can be purchased through agents, dealers, or brokers.
Insurance agents work with insurance companies and are paid by the company to sell their products to customers. As such, agents are experts so far as the insurance products offered by their employers are concerned.
They have the ability and the expertise to guide you and help you choose the policy that best suits your needs. If you wish to change your insurance company, you should find another insurance agent who works with the company from which you wish to purchase insurance.
Automobile dealers sell vehicles to customers, and these vehicles are sold with third-party liability insurance. Generally, dealers have tie-ups with insurance companies and may not be experts regarding insurance policies.
They take care of the paperwork associated with availing a third-party liability insurance policy sold by the dealership but do not have adequate knowledge to guide you to find the policy that best suits your requirements.
Brokers can either be individuals or companies that have a license from the Insurance Regulatory and Development Authority of India to sell insurance products. The products sold by brokers can be from various insurance companies as they have the expertise required to help you make an informed choice.
They also offer assistance in after-sales service. Brokers can help you compare various policies in an effort to find the best one for you. Brokers can also assist you through the claim settlement process.
Points to Consider while Purchasing Car Insurance
1. Do your research
You will have to compare a number of plans to find the one that best suits your four wheeler insurance needs. You will have to consider various parameters such as the cost of the premium, the claim settlement ratio of the company, the coverage provided, additional benefits, etc.
The Claim Settlement Ratio of an insurance company must be checked to ensure that you have a hassle-free claims process.
3. Third-party insurance is compulsory
If you are purchasing a car for the very first time, the auto-dealer will offer you third-party insurance. If not, you will have to purchase it from a broker or insurance company.
4. Understand the policy document
You must go through the policy document to understand who is covered, how much coverage is provided, What are the exclusions, inclusions and etc.
5. Comprehensive cover offers greater protection
Not only will it protect you and your vehicle, but will also take care of the claims made by third parties for damages caused to their body or vehicle.
6. Additional cover must be considered for your risk profile
Purchasing add-on covers for your car insurance policy will provide you with sufficient cover against various situations in case of accidents.
7. Periodical evaluation
Experts say that you must evaluate your insurance plan on an annual basis to know if you have adequate coverage or you need more.
8. Credit score
The credit-based insurance score of an individual can determine the premium rate applicable to him/her.
9. Personal accident cover must be considered
The benefit of purchasing this cover is that it provides global coverage and covers all legal expenses. It is also customizable based on the needs of the individual.
10. Understanding the No-Claim Bonus
In case you do not make any claims over the course of a year, the No-Claim Bonus will offer benefits such as a reduction in your premium amount.
11. Consider cashless claim options
Look for four wheeler insurance companies and plans that offer the cashless claims facility as it comes in handy during times of emergencies.
12. Customer service
When you purchase a car insurance policy, the customer support offered by the company is crucial to ensure that you don’t have any hassles in the future.
Top 10 Best Car Insurance Companies in India
If you wish to purchase a new car, you must also look at car insurance. It is essential to pick a reputed company in order to have a hassle-free experience when making claims. The following are the top 10 car insurance companies in India
1. ICICI Lombard General Insurance Company Limited
- ICICI Lombard is one of the leading private sector insurance companies in the country.
- A cashless Claim Settlement option is available in more than 3,400 network garages available in different parts of India.
- The Incurred Claim Ratio of ICICI Lombard stands at 77.44%.
2. Tata AIG General Insurance Company Limited
- Tata AIG General Insurance Company Limited is basically a joint business enterprise between the Tata Group and American International Group (AIG).
- Tata AIG commenced its operations in the year 2001. The firm provides a broad range of general insurance products for business and personal requirements all over India.
- The company is powered by 2,500+ employees and 9,400+ agents to serve the public nationwide.
- Tata AIG basically offers 5 plans with their motor insurance segment:
- Liability Only Policy
- Auto Secure-Two Wheeler Package Policy
- Auto Secure-Private Car Package Policy
- Long-Term Two Wheeler Package Policy
- Auto Secure-Commercial Vehicle Package Policy
3. New India Car Insurance
- New India Assurance Co. Ltd. currently operates in 28 countries and is headquartered in Mumbai.
- A cashless claim settlement option is available in all cashless garages across the country.
- New India Motor Insurance has an incurred claim ratio of 79.68%.
- The net earned premium of New India Motor Insurance stands at Rs.9,074.26 crore.
- New India Assurance offers both own-damage and third-party liability cover.
4. National Car Insurance
- National Insurance Company is the oldest general insurance company in India.
- Can get vehicles repaired using a cashless claim settlement facility available in all network garages across India.
- National Car Insurance has an Incurred Claim Ratio of 121.67%.
- National Car Insurance earned a net premium of Rs.5,008.23 crore.
- Liability–only cover and package covers are the covers provided under this insurance policy.
5. HDFC ERGO General Insurance Company Limited
- HDFC ERGO General Insurance Company is a general insurance firm based in India. It’s basically a joint business enterprise between HDFC Ltd and ERGO International AG.
- HDFC ERGO has a growing network with 108 branch offices spanning across 91 cities all over India.
- The company offers round-the-clock assistance every day of the week throughout the entire year. Offers cashless claim settlement service through 4,800+ authorized garages associated with HDFC ERGO
- In terms of buying car insurance, HDFC ERGO requires paperless/zero documentation.
6. Bharti AXA General Insurance Company Ltd.
- With 79 offices operating all over India, Bharti AXA General Insurance has a huge customer base. Bharti AXA has issued near to 9.8 million insurance policies.
- The company has also settled around 1.3 million claims in total, as of October 2017.
- Bharti AXA provides comprehensive and innovative insurance solutions for various sectors like health, home, motor, etc.
- Widespread cashless garage facility with 2,500+ registered garages all over India. It comes with special add-on covers like Zero Depreciation Cover, No-Claim Bonus Protector, etc.
7. United India Car Insurance
- United India Insurance Company was first set up as a company in 1938.
- There is an option for direct cashless settlement of claims in network garages across the country.
- United India Car Insurance has an Incurred Claim Ratio of 91.72%.
- Rs.5,748.32 crore is the amount of premium earned by United India Motor Insurance.
- Offers coverage for own-damage, third-party liability, and personal accident cover.
8. Reliance General Insurance Company
- Reliance General Insurance Company is India the very first insurer to receive the ISO 9001:2000 certificate for providing end-to-end services of various general insurance products offered all over India.
- Reliance General has a huge network of cashless garages with more than 3800 garages all over India
- Reliance General offers instant renewal of motor insurance without any paperwork
- 24×7 Roadside Assistance is provided by the company
- Comes with comprehensive vehicle insurance cover
- Let’s you choose from a number of effective Add-on covers to enhance your protection
9. Oriental Car Insurance
- Oriental Insurance Company was incorporated in 1947 and all the shares of the company now belong to the Central Government.
- Network garages can be used to avail cashless claim settlements across the country.
- Oriental Car Insurance has an Incurred Claim Ratio of 68.19%
- Oriental Car Insurance has a Net Earned Premium of Rs.4,000.26 crore.
10. Universal Sompo General Insurance Company Limited
- Universal Sompo General Insurance Company is basically a product of a joint business enterprise between the Indian banks viz.
- Universal Sompo General Insurance has an authorized network of garages across India from where you can avail cashless claim settlements.
- Availability of optional coverage for the paid drivers
- The company offers 24×7 customer support. The customer support makes sure that all customer’s concerns and queries are solved the quickest time possible.
- The company offers customer guidance via the web and SMS services.
- The company offers a number of discounts under certain terms and conditions.
Documents Required For Filling Insurance Claims
The following are the details/documents you will be required to send to your insurer when making a claim
- Name of the insured individual
- Policy number
- Contact number
- Date and time of the accident
- Number of the vehicle
- Make and model of the car
- Location and extent of loss
- Name of the garage along with contact information
- Brief description of the accident
In case of accident damages, the following documents will be required to make a claim:
- Proof of insurance – cover note or policy copy
- Registration book copy and original tax receipt
- Driving license copy along with the original (of the individual driving the car at the time of the accident)
- FIR or police panchanama (for bodily injuries or death or damage to the third party and/or his/her property)
- Estimate of the cost of repair
- Payment receipts and repair bills following the completion of repairs
In case of theft of your car, the following documents will be required to make a claim:
- Original policy document or certificate
- Registration book along with theft endorsement from the concerned Regional Transport Office plus tax payment receipt
- Details of the insurance policy, such as policy number, the period of insurance, and the insurance company
- All sets of service booklets, keys, and warranty cards
- FIR or police panchanama along with JMFC report or final investigation report
- Acknowledged copy of the letter addressed to the Regional Transport Office intimating theft.