Month: February 2017

Is car insurance enough to keep your newly bought car safe?

So you just bought a new car. Now all you have to do is get the car insurance with lowest premium and you are good to go. Well, that is what you would like to think.

Now, imagine you are on a road trip,  everything is going fine, but just then your car breakdowns. What do you do? Simple, hitchhike to the nearest gas station, get the mechanic and resume your exciting adventure. Sorry to snap you out of fantasy but this phenomenon is only restricted to ideal and lucky situations. There have been cases when people were stranded for days after car breakdowns.

So, what is the precautionary checklist one has to refer?

To start with, buying car insurance add-ons like roadside assistance is a smart way of getting the most out of your insurance. To get the least premium rates, you need to follow maximum safety measures like ARAI approved anti-theft device, etc.

Next is a car emergency kit which can be used during distress. This will find you a temporary fix to avoid further damage and depreciation. We have noted down a list of essentials for your car emergency kit.

1. First-aid box
   A comprehensive first aid kit with your prescriptions, pain-killers, sterile dressings, plasters, anti-septic wipes and cream, cotton, tweezers, bandages, a pair of scissors.

2. Solar-cum-battery gadgets
   These dual-powered gadgets should include flashlights, phone charge and radio along with extra batteries.
3. Multipurpose utility tool
   A Swiss Knife or a Leatherman Tool have numerous uses, right from opening a can of food to cutting wires and ropes, you name it and these tools have it.
4. Non-perishable snacks and water
   There have been cases where people were stranded for weeks at a stretch without help. To sustain in such situations, there are protein bars and packaged drinking water products with a shelf-life of up to five years available in the market.
5. Foam tire sealant
   A quick solution to repair flats until you find the next gas station or roadways help.

6. Rain Poncho
   Monsoons can get rough, especially in the southern parts of India. A rain poncho can be used to cover not just yourself but anything and is pretty versatile in use.
7. Mechanical Toolkit
   On purchase, the cars usually come with a mechanical toolkit which has everything you will need, from pliers to screwdrivers, in a case of a mechanical breakdown. Make sure you always have it in the vehicle while travelling.
8. Fire Extinguisher
   Always carry a small and easy-to-store fire extinguisher in your car. In certain cases, you are unable to claim the insurance benefit on extinguishing the fire yourself. For clarity on the types of fire and other claims covered under a car insurance, you can ask the Turtlemint chatbot.
9. Cash
   Having cash in lesser denominations is quite practical for emergencies.
10. Documentation and Contact Cards
    We suggest a copy of your car-related documents in the kit for reference and contacts. Your insurance company and agent can be your helpline in a disaster due to their expertise in handling such cases. Contact numbers of the car insurance company, especially the 1800 number and your insurance agent need to be accessible at such times.

Don’t forget to add miscellaneous stuff like duct tape, match box, rags and tissues and a plastic whistle, that can come handy during a crisis.

If you are a Turtlemint customer, our Roadside Assistance feature is included in every policy, so you can get in touch with us at 1800-266-0101 or even use the Turtlemint chatbot.

Read more about All you need to know about car insurance in India

Read more about Anatomy of car insurance

Read more about Benefits of purchasing car insurance online

Neha just received her motor insurance claim from the insurance company which she made two days back. Her car was badly damaged in an accident involving a drunk driver. Though she did not hassle with the driver, she filed her claim and got her car repaired. She thought she was past the accident when the insurance company informed her that they would be suing the driver for the damages to her car in her name. When she enquired about the company’s action, she was told of the principle of subrogation. Unable to understand what it meant, she researched the concept on the internet. Let us see what she found out.

In health insurance plans and auto insurance plans, there is a concept of subrogation. Subrogation is in conjunction with the principle of indemnity. The principle of indemnity does not allow you to make profits from your insurance policy. After you receive a claim for damages suffered, subrogation transfers your right to sue the responsible third party to the insurance company. This prevents you from availing double compensation for your loss – one from the insurer and one from the third party.

How subrogation works?

Suppose your car is hit by the negligent driving of another person. After you incur a loss due to that person, you can either sue the person for your damages or you can simply raise a claim in your car insurance policy. If you raise a claim and are compensated by the insurance company, you give up your right to sue the third party (the person who hit your car) responsible for the loss. This right then passes on to the insurance company who can sue the third party on your behalf to recover the money the company paid on your claim. This, essentially, is how subrogation works.

Where is subrogation applicable?

Subrogation is applicable in both health and auto insurance policies.

• Health insurance – if you seek medical treatments due to an accident, you can raise your health insurance claim. The insurer would pay you the relevant medical expenses. If the accident was not your fault, the insurance company would have the right to sue the negligent third party who was responsible for your accident. This right passes to the insurer automatically through subrogation. Subrogation, in health insurance plans, is applicable only in case of accidental claims.
• Auto insurance – auto insurance plans have two facets of coverage – third party cover and own damage cover. Subrogation is applicable in all instances of claim wherein a third party is responsible for causing damages to your car. After paying you the claim raised, the insurer then sues the third-party for the claims paid. If, however, your car or two-wheeler gets damaged due to a natural calamity (act of God), subrogation is not applicable.

Subrogation is a technical concept but is easily understandable. There are some important points to note about subrogation which are as follows:

• Even if the insurer sues the third-party for the claims paid, you have no obligations. The whole process is between the insurer and the third-party and you, as the insured, would not be hassled.
• The insurer might ask your assistance in cases where it is required.
• The insurer sues the third party on your behalf and in your name even though you are not an active part of the whole action. However, it does not terminate your right to sue the third party completely.

So, this is the concept of subrogation which is applicable in health and auto insurance plans. The next time you read the term ‘subrogation’ in your policy contract, don’t get stumped. It is simple enough and the above-mentioned points would tell you what exactly subrogation is and how it works.

Here is a video to understand the important principle of subrogation:

As you all are aware that Car Insurance is mandatory in Indian Laws as per Motor Vehicle Act. So, while purchasing your Car insurance ensure that your insurance premium is reasonable and provides you with all necessary benefits. There are many factors that affect your car insurance premium. Some factors are beyond anyone’s control. While, some factors are controllable. There are few things that you didn’t know impacted your Car Insurance Premiums:

 #1 IDV, Coverage amount, voluntary deductibles and compulsory deductible

• IDV: Insured Declared Value is the highest Sum Assured fixed by the insurance company. IDV is given at the time of theft or loss of vehicle. The insurance company will compensate their policy holder if your car undergoes complete loss.

• Coverage Amount: Coverage amount is the maximum amount paid by the insurance company for the loss of insured vehicle. Every coverage of a policy has its own limit. You can adjust it as per your needs and requirements. The premium amount is based on your coverage amount. Higher the coverage amount, higher will be your premium amount.

• Voluntary Deductible: Voluntary deductible is usually fixed by policyholder themselves. It plays a significant role in your premium amount. Here, the policyholder will fix a certain amount as their deductible. This amount they will pay during every claim. For example, Mr. Raj has met with a car accident. Their claim sums up to ₹10,000. The policyholder decides to pay ₹3,000 of the claim. This amount is said to be voluntary deductible. The remaining ₹7,000 will be paid by the insurance company. Thus, voluntary deductible provides sufficient percentage of discount on your premium.
• Compulsory Deductible: Compulsory deductibles is that amount which is fixed by the insurance company on the premium amount. This amount has to be paid to get your damage claim. For example, the policyholder decides to fix their voluntary deductible to be ₹3,000. In that case, policyholder will get a discount of about 20-25% on their insurance premium amount. But, they will have to pay the compulsory deductible amount decided by the insurance company.

 #2 Driving record and geographical boundaries

• Driving record: Your driving record depends on the company and your recent traffic violation or accident record. Some insurance companies look back for three years of your record. While some of them look back for 5 years or more. So, the company’s quotation and your driving record have a massive impact on your insurance premium amount.
• Geographical boundaries: Your geographical boundaries, i.e., where you live also have a huge impact on your premium. Some localities are more accident prone. Insurance companies investigate about your crime rates, number of claims made in a year. These insurance companies are more aware about your neighborhood.

 #3 Whether your car has any anti-theft device

Due to increase in number of car thefts in our country, people prefer installing an anti-theft device for the security of their cars. Installing anti-theft device not only provides you security but also lowers your premium amount by offering discounts. This is because there will be less chances of your car being stolen, thus less claims will be made. Therefore, insurance companies encourage people to install an anti-theft device.

 #4 Discount for membership of any recognized automobile associations

If you are a member of Automobile Association of India, you can get discount on car insurance premium amount.

 #5 Discount for vintage car

In case of any vintage or classic car, ensure that while availing an insurance policy, the coverage should be as per car owner’s own requirement. For example, your vintage car is taken for rallies or to events on frequent basis. Then, the policy should cover any damages caused during the events. So, the insurance company provides coverage for damages caused due to restoration of the car or for public events. It also offers flexible premiums depending on the mileage of vintage car.

Conclusion

Thus, no insurance company will offer low rates to everyone. But there are some insurance companies who will offer low rates only to you. You need to search for them. So, look out for insurance companies who offer low rates of premium, discounts and claims on time.

Just as you health needs a cover in form of insurance, your car needs one too. You can easily avoid the expense of an uncalled breakdown if you choose the right plan. Let us understand the components of a car insurance plan.

Be a smart guy like Rahul. To know more about CAR INSURANCE call our Car Expert at 1800-266-0101
or visit our website at: https://www.turtlemint.com/car-insurance

Also read about Car insurance terminologies you should know

Read about Know what to look for in a car insurance  

Read about Benefits of purchasing a car insurance online

Ramesh had bought a health insurance plan two years back. Last year he found out that the Sum Insured under his plan had increased by 10% due to No Claim Bonus (a term he didn’t completely understand). This year, again, his Sum Insured was poised to increase by another 10% (No Claim Bonus) when he decided to find out about the concept. Furthermore, on renewing his car insurance plan, he availed a premium discount of 25%, compared to last year’s discount of 20%. Though he was delighted of the discount, he wanted to know how and why the discount is increasing. He talked to his friend who then gave him a detailed lesson on the concepts of No Claim Bonus and cumulative bonus. Let us see what the lesson was.

A health and a motor insurance policy has become a quintessential requirement in modern times. While the latter is legally mandatory, the former is helpful in a medical crisis. Both these insurance plans are one-year renewable contracts where benefits are paid only if a claim is made in the year. If there is no claim in any policy year, no benefit is paid. However, to ensure that you do not lose out in the absence of a claim, a No Claim Bonus is paid in both health and car insurance plans. This bonus also accumulates for every consecutive claim-free year and is called a cumulative bonus. Let us understand the two different concepts with the help of some examples.

Example 1

Suppose a health insurance policy provides a No Claim Bonus of 10% increase in the Sum Insured (SI) for each claim-free year. If you buy a policy of Rs.5 lakhs SI and there is no claim in the first year, the Sum Insured would increase by Rs.50, 000. Again in the next year, if you do not make a claim in your policy, the Sum Insured would further increase by 10% becoming Rs.6 lakhs. After 3 claim-free years, the Sum Insured would increase to Rs.6.5 lakhs after having increased Rs.50, 000 in that year. So, the No Claim Bonus was Rs.50, 000 which was allowed every year while the cumulative bonus amounted to Rs.1.5 lakhs within 3 claim-free years.

Example 2

Auto insurance plans provide a premium discount for the subsequent year if no claim is made in the current year. The rate of this discount in the first year is 20% and it increases for each subsequent claim-free year. For two consecutive years, this No Claim Bonus becomes 25%, for three claim-free years it is 35% then 45% and finally a maximum of 50% discount in premium. This increase in the rate of No Claim Bonus is due to the cumulative effect of claim-free years. If in any year the claim is made, there would be no discount in next year’s premium. In later years, the discount would again begin from 20%.

So, while No Claim Bonus allows a bonus for each claim-free year, Cumulative Bonus is the aggregated bonus which accumulates after a spell of claim-free years.Find out a quick guide to common terms here

Check out our video which simplifies the term cumulative bonus

Types of No-Claim Bonus

Insurers offer different types of No Claim Bonus to customers. Here are the three types of No Claim Bonus offered in a typical health or auto insurance plan:

• Increase in Sum Assured – as explained earlier, the most popular form of No Claim Bonus is an increase in the Sum Assured. The premium remains the same while the Sum Assured increases every claim-free year by a specified percentage. The rate of increase differs between different health plans. This increase in the Sum Assured is allowed as a No Claim Bonus only in health insurance plans.
• Decrease in premium – auto insurance plans and few health insurance plans allow this form of No Claim Bonus. In this option, the premium payable for the subsequent year is discounted by a certain percentage. The rate of premium discount is cumulative in nature and increases every year if a claim is not made (in auto insurance plans). In health plans, the discount rate is a flat rate and does not increase for subsequent claim-free years.
• Discount vouchers – this type of No Claim Bonus is usually found in few health insurance plans. In this variant, health insurers allow you discount vouchers and other health and wellness related benefits. The Sum Assured does not increase and neither is the premium discounted. The vouchers granted can be redeemed at merchant outlets for attractive discounts or gifts.

Do check our video below to know the very basics of No-Claim Bonus

A No Claim Bonus and the cumulative bonus is a feature of every health and car insurance plan. Though the type of No Claim Bonus allowed might differ, the bonus would be surely granted for each claim-free year. So, if you feel that your health or car insurance plan does not pay except in case of a claim, think again. The No Claim Bonus allowed under such plans is a truly rewarding benefit.

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