Car Insurance FAQ: Frequently Asked Questions about Car Insurance Policy

Frequently Asked Questions for Car Insurance

If you are planning to buy or renew car insurance, it is important to understand the various aspects that can affect the cost of the car insurance, claim amount as well as inclusions and exclusions. This will help you make much better decisions and be aware of the various concepts under a car insurance plan. Following is a comprehensive list of the most frequently asked questions everyone has when it comes to car insurance.

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Car Insurance Faqs

Q1. What is car insurance?

Car insurance is also called motor insurance. The policy is a contract between the insured and the insurer to protect them from unforeseen mishaps while driving on the road.

A car insurance policy provides the policyholder coverage against third-party liabilities and own damages arising due to accidents/collision while driving on the road.

Q2. Is car insurance mandatory in India?

Yes, car insurance is mandatory in India for many reasons, the first and foremost being the rising number of road accidents in India.

The Motor Vehicles Act, 1988 states that every owner-driver is legally required to carry a car insurance policy while driving on the Indian roads. Owner-drivers of the car are required to at least carry a valid third-party car insurance policy.

Q3. What does ‘premium’ mean in car insurance plans?

Car insurance premium means the cost you are required to pay to the insurance company to buy a car insurance plan. It is the amount that the policyholder pays to the insurer annually to get coverage against unforeseen accidents on the road and be able to drive legally. The amount of premium is charged differently by different insurance companies based on the type of coverage provided and the policy tenure. The premium also depends on the IDV of the vehicle, registration year, RTO, etc.

Q4. Is car insurance also required for old cars?

Yes, as per the Motor Vehicles Act, 1988, car insurance is mandatory for all types of cars in public places in India, irrespective of their age. Though, older cars generally attract a lower amount of premium as the value of the car in the market decreases with time.

Q5. Will I require car insurance for an electric/CNG/LPG car?

Yes, owners of electric cars or cars fitted with CNG/LPG are also required to carry a valid car insurance policy. However, the premium charged can be slightly higher.

Q6. What are the various types of car insurance plans I can buy for my vehicle in India?

There are 2 types of car insurance plans available in India that you can choose from. The most basic and mandatory car insurance plan is third-party car insurance. This plan covers the policyholder only against liabilities arising out of vehicular or bodily damages caused to a third party.

Meanwhile, comprehensive car insurance is a more premium car insurance plan that provides enhanced protection by covering the policyholder against third-party liabilities as well as the damage suffered by the owner-driver's car.

Q7. Can car insurance premiums be paid in installments?

No, you cannot pay car insurance premiums in installments. Section 64VB of the Insurance Act, 1938 does not permit insurance companies to take the risk of providing coverage to the policyholder till the time full premium payment is received from the policyholder before the start date.

Q8. What are the factors that affect car insurance premiums?

The cost of car insurance premiums is affected by a lot of factors. Having a basic understanding of the factors can help you save on the cost of car insurance at the time of purchase or renewal. Following are the factors that affect car insurance:

Car registration location: Cars registered in a tier 1 city tend to attract a higher amount of premium than the ones registered in tier 2 or 3 cities.
Manufacturer and variant type: Different variants of cars attract different premium amounts as the amount of coverage to be offered depends upon their value in the market.
Safety/Anti-theft security in cars: If there are adequate safety systems installed in cars that might prevent theft, the risk decreases leading to lower cost of the premium.
Policy type: Comprehensive car insurance is a little expensive than third-party car insurance as it provides extended coverage benefits for your car damages. Meanwhile, third-party car insurance comes with a relatively cheaper premium as it only provides basic third-party coverage benefits.
Add-On Covers: The additional coverage you will opt for with comprehensive car insurance directly impacts the amount of premium to be paid for the car insurance.

Q9. What is a 'No Claim Bonus' in a car insurance policy?

No claim bonus or NCB refers to the reward that your insurance company gives you for not filing a single claim throughout the policy tenure. This reward is the discount you get on the premium to be paid for car insurance renewal. NCB generally starts at 20% and goes up to 50% for 5 consecutive claim-free years. However, the NCB resets to 0% even if you make a single claim in a policy period.

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Third-Party Car Insurance Faqs

Q10. What is third-party car insurance?

Third-party car insurance is the most basic type of car insurance policy required to be carried while driving on Indian roads. This type of car insurance only provides coverage against third-party legal and financial liabilities arising out of unplanned accidents on the road.

Q11. What are the rates of third-party car insurance premiums?

Third-party car insurance premium rates are pre-defined by the Insurance Regulatory and Development Authority of India based on the Cubic Capacity of the car's engine. The latest rates as per the IRDAI are as follows:

Engine Cubic Capacity (CC)	Premium amount (w.e.f. 16^th June 2019, in Rs.)
Less than 1000 CC	2,072
More than 1000 CC but less than 1500 CC	3,221
More than 1500 CC	7,890

Q12. What is the highest compensation offered in third-party car insurance plans?

Under third-party car insurance, the maximum compensation offered by the insurer in case of damage to a third party's property is Rs. 7.5 lakh. When it comes to bodily damages sustained by the third party, there is no compensation ceiling and the final amount is decided by the Motor Accident Claims Tribunal (MACT) or by the court of law.

Q13. What is the duration of third-party car insurance?

Tenure of third-party car insurance is 1 year and is required to be renewed before the expiry of that period. However, you can opt for three to five years of third-party car insurance plans in India.

Q14. Will I be able to transfer my third-party car insurance to a new owner if I sell my car?

Yes, you can transfer your third-party car insurance in the name of the new owner-driver. The buyer has to submit an application within 14 days from the date of transfer and pay an endorsement amount to continue the third-party car insurance in their name.

Comprehensive Car Insurance Faqs

Q15. What is comprehensive car insurance?

Comprehensive car insurance is a premium car insurance policy that offers complete protection to the parties involved in an accident included damages sustained by the insured car. The plan also covers damages sustained by the insured car due to natural/man-made risks such as earthquakes, cyclones, floods, fire breakouts, vandalism, riots, etc.

Q16. Is comprehensive car insurance mandatory?

No, comprehensive car insurance is not mandatory, however, it is always advised to purchase comprehensive car insurance over a third-party insurance plan for higher coverage benefits.

Q17. Is it smarter to buy comprehensive car insurance?

Buying comprehensive car insurance is always a smarter decision than buying third-party car insurance because of the benefits it provides under a single plan. It not only helps you drive legally on the road but also provides coverage for the damages sustained by a third party, your car, and you as well.

Q18. What are the factors affecting the cost of comprehensive car insurance plans?

The cost of comprehensive car insurance plans is always higher than third-party insurance because of a wider range of coverage benefits. The factors affecting comprehensive car insurance primarily include the type of coverage opted for, the number of add-on covers bought, tenure of the car policy, location of registration of the car, and age and variant type of the car.

Q19. Can I switch from third-party car insurance to comprehensive car insurance at the time of renewal?

Yes, you can easily switch from third-party car insurance to comprehensive car insurance at the time of car insurance renewal.

Add-on Covers in Car Insurance Faqs

Q20. What are add-on covers available in a car insurance plan?

If you wish to enhance the existing coverage of your car insurance policy, you can opt for add-on covers. They offer extended protection and enhance the overall coverage offered by your car insurance policy. You can buy the most appropriate ones that suit your requirements while purchasing or renewing your car insurance policy. Following are some of the most commonly bought add-on covers with a comprehensive car insurance policy:

Zero-depreciation cover
No claim bonus cover
Roadside assistance cover
Engine protection cover
Tyre protection cover
Return to invoice cover
Consumables cover

Q21. Can I buy add-on covers with third-party car insurance?

No, add-on covers cannot be availed with third-party car insurance. You can only be availed if you have a comprehensive car insurance plan.

Q22. How many times can I claim with my zero depreciation cover?

Generally, insurers only allow a maximum of 2 claims during a policy period, therefore you should judiciously make use of your zero depreciation add-on cover and only make a claim for repairs that require heavy expenses.

Q23. Does a zero depreciation add-on cover every part of my car?

Zero depreciation add-on cover provides coverage for every part of your car excluding the tubes and tyres.

Raising a Car Insurance Claim Faqs

Q24. What are the steps to raise a car insurance claim?

Step 1: Raise a request for the claim – The first step requires you to immediately inform the insurer about the damage with video/photographic evidence.
Step 2: Inspection – After the claim is registered, a surveyor will be sent by the insurer to inspect the damage.
Step 3: Sending the car for repair - Once the inspection is done, the damaged car should be sent to the nearest network garage for repairs.
Step 4: Claim Settlement - The car will then be repaired by the garage and the insurer will directly settle the amount with the garage if you have opted for a cashless claim policy. Otherwise, you would be required to pay for the repairs and then file for a reimbursement claim.

Q25. What are the documents required to raise a claim?

While raising a car insurance claim, make sure that you keep the following documents handy:

Copy of the policy document
Copy of valid driving license
Filled car insurance claim form of your car insurer
Copy of valid registration certificate (RC)
Copy of police FIR (If required in the case of theft/third-party claims)
Car repair bills from the garage

Q26. How many car insurance claims can I file in a year?

Generally, insurers don’t put a ceiling or restriction on the number of claims you can file with your car insurance policy in a policy period. You can file as many claims as you want if your vehicle suffers frequent damage due to accidents.

Having said that, please note that if you make too many claims in a policy period, your insurer can also add a clause in your policy while renewing it. Such a clause can restrict the number of claims you can file during a policy period.

Car Insurance Renewal Faqs

Q27. How can I renew my car insurance online?

You can conveniently renew your car insurance policy online by following the below-mentioned steps:

Visit the official website of Policybazaar.com
Click on the ‘Renewal’ tab available on the menu bar at the top of the page
You will now be redirected to a new page, click on ‘Motor Renewal’ here
Enter your vehicle’s registration number
You can also enter other details of the vehicle such as registration year, location or variant if the registration number is not available
Enter your contact details
Select the type of policy coverage you prefer to buy
Select the type of car insurance plan you want to upgrade to or select your existing plan if you wish to continue with the same car policy
Make the payment online
Once done, your car insurance will be successfully renewed and the policy documents will be shared by the insurer over the registered mail ID.

Q28. Can my insurer refuse to renew my car insurance policy?

Yes, your insurer can refuse to renew your car insurance policy in case of documents mismatch, non-disclosure of information, fraudulent act, etc. If they intend to do so; the insurer will send a notice before the date of expiry and state the reasons for not choosing to renew your car insurance policy anymore.

Q29. Can I transfer my car insurance if I buy a new car?

No, you cannot transfer your car insurance if you buy a new car and the car policy will continue with the buyer of your used car or will lapse in case you scrap your car. However, you can transfer the accumulated no claim bonus to the new car so that you can earn discounts on the premium to be paid for car insurance renewal.

Q30. Will I lose my no claim bonus if I renew my car insurance after it expires?

It is always suggested to renew car insurance before it lapses. In case you are not able to renew it and the policy expires, you would need to renew it again within 90 days of the date of expiry to ensure that your accumulated no claim bonus does not become valid.