All you need to know about car insurance

A car insurance policy is a mandatory requirement as per law. If you have a car and want to drive it on Indian roads, you should have a valid car insurance cover on your car. This mandate is prescribed by the Motor Vehicles Act, 1988. Since a car insurance policy is compulsory, you should have a complete understanding of the plan, its benefits and other features.

Read more about 5 consequences of driving without car insurance

Types of car insurance policies

In India, there are two types of car insurance plans which are described below –

Third party liability cover

It is also called ‘liability only policy’ or ‘third party policy’. This is the bare minimum coverage which is mandated by the Motor Vehicles Act, 1988. The policy covers any financial liability you face in the following circumstances –

  • When a third party (any individual other than you and your car) dies due to an accident involving your car
  • When a third party suffers physical bodily injuries due to your car
  • When your car damages third party property

Benefits of third party cover

  • The premium is very low and it depends on the engine capacity of your car. It does not depend on the car’s age and remains fixed.
  • For any third party injury or property damage, you get coverage for up to Rs.7.5 lakh. In case of death, however, there is no limit to the coverage.
  • Third party can claim a compensation from your policy under ‘no fault liability’

Limitations of a third party cover

Though a third party policy has benefits, it has limitations too. These limitations are as follows –

  • The policy does not cover damages suffered by your car
  • If you suffer an accidental death or disablement you, usually, do not get any coverage. However, in some plans, there might be a personal accident cover of Rs.2 lakhs for the owner/driver of the car.
  • You don’t get a discount if you don’t make any claim in a policy year
  • Add-on coverage features are not available in a third party policy

Read more Is it worth buying Third party car insurance policy?

 

Comprehensive package policy

The other type of car insurance policy is the comprehensive package policy also called package policy. The policy covers the mandatory third party liability and also damages suffered by you and your car. Coverage is provided for the following contingencies –

  • Death of a third party or bodily injury caused to a third party
  • Third party property damage due to your car
  • Damages caused due to man-made calamities like fire, theft, collisions, etc.
  • Damages faced by the car due to natural calamities like earthquakes, lightning, flood, hurricane, etc.
  • Damages faced when your car is in transit by air, water or road, etc.

Benefits of a comprehensive policy

A comprehensive car insurance policy has many benefits which include the following –

  • Coverage is given for both third party liability and damages faced you
  • Compensation is also paid when your car collides with a car or something other than another car
  • You can opt for various add-on coverage features
  • There is a no-claim discount in the premium if you don’t make a claim in any year

Limitations of a comprehensive policy

There are certain limitations under the plan which include the following –

  • Premiums are higher because of the comprehensive scope of coverage
  • Premiums increase further when add-ons are selected

 

Know why it is important to have comprehensive car insurance by watching this video

Add-ons in a car insurance plan

Add-ons are additional coverage features which are available in comprehensive car insurance policies at an additional premium. The most common and popular add-ons include the following –

  • Personal Accident/Personal Injury Protection (PIP)-This add-on covers death and disablements which you might suffer when involved in an accident.
  • Medical expenses –Under this add-on, the medical expenses incurred on an ambulance and treatments are covered if you are involved in an accident.
  • Vehicle replacement –Through this add-on the insurance company promises to replace your car with a new one of an equivalent value if your car is stolen or if it suffers a complete loss.
  • Rental reimbursement –When your car is at the workshop for repairs you might hire a rental car for your conveyance needs. This add-on covers the cost of such rental cars that you incur.
  • Zero depreciation –In case of damage, the claim is paid after deducting depreciation from the cost of the parts repaired or replaced. With this add-on, the complete cost of replacement is paid by the insurance company irrespective of the applicable depreciation.
  • NCB protect –When you don’t make a claim you earn a no claim discount. However, this discount is lost whenever a claim is made. This add-on ensures that even after you make a claim you don’t lose your accumulated discount.
  • Engine protect-This add-on covers the cost incurred in replacing or repairing the engine of your car.
  • Roadside assistance –This add-on ensures round-the-clock assistance by the insurer if your car breaks down. The company provides you with on-site repair and rescue services with this add-on.

Read more about No claim bonus in car insurance

Important car insurance terminologies

Insurance being a technical concept involves the usage of a lot of jargons which are not easily understood by an average customer. So, here are some common terminologies used in your car insurance plan which you should know about –

  • Premium –Premium is the cost of the insurance cover you take on your car. It is required to be paid to keep your policy active.
  • Third party liability -Financial liability which you face when a third party suffers death or bodily injury is called third party liability. You also face this liability when you damage third party property.
  • Own damage premium-The premium you pay for covering the damages suffered by your car is called own damage premium. The damage suffered by your car should be through external violent means which are not in your control.
  • Liability coverage –The coverage you get for any third party liability is called liability coverage
  • Rider –It is an add-on to your insurance policy which provides additional coverage benefits. An additional premium is required to be paid and choosing a rider is optional.

Read more about Are car insurance rider worth buying?

  • Personal accident rider –This is an add-on benefit which pays a lump sum benefit if you suffer from accidental death or disablement.
  • No Claim Bonus (NCB)-This is a discount given on the renewal premium if you do not make any claim in the current policy year.
  • At fault-At fault represents the extent of your contribution to a car collision.
  • Insured Declared Value –This is the market value of your car after being adjusted for depreciation based on your car’s age. IDV represents the maximum claim which you can get in your car insurance policy if your car is stolen or in case of total loss.
  • Claim adjuster –A claim adjuster is a person who investigates and settles your claim
  • Zero depreciation rider-This is an add-on cover which waives off the applicable depreciation on your car’s parts and gives you a higher claim settlement
  • Exclusions –These are conditions and instances which are not covered in your car insurance policy.

Read more about  Some common exclusions found in a car insurance plan

 Discounts available in your car insurance policy

Did you know you can reduce your car insurance premiums through various types of discounts?

Yes, car insurance providers offer a range of discounts on your car insurance premium. Here are the different discounts which you can avail to minimize your car insurance premium outgo.

  • Vintage car discount-If you are an owner of a vintage car you have reason to rejoice. You are entitled to a 25% premium discount on the car insurance policy for your vintage car. Vintage and Classic Car Club of India certifies cars manufactured before 31st December 1940 as vintage. So, if you have this certificate, you can claim this discount.
  • Membership discount –The Motor Vehicles Act, 1988 recognizes various automobile associations in India. If you drive safely you can become a member of any one of these recognized association. This membership is recommended as you can get a 5% premium discount because of your membership. The recognized associations include Automobile Association of India (AAI), Western India Automobile Association (WIAA) and Automobile Association of Eastern India (AAEI).
  • Anti-theft device discount-If you are a careful owner and install safety devices in your car you can get a 5% discount in your car insurance premiums. The safety devices include central lock, airbags, anti-theft mechanisms, ABS, etc. which should be approved by the Automobile Research Association of India (ARAI). Read more about Some common safety features in your car
  • Discount for the differently abled -If you are a handicap and have modified your car to suit your mobility needs, you can get a 50% premium discount. Moreover, institutions which are engaged specifically in serving the handicapped are also allowed this discount on their vehicles.
  • No Claim Bonus –In any policy year if you don’t make a claim, you earn a No Claim Bonus which gives a discount in your renewal premium. The discount starts at 20% and increases every subsequent year when no claim is made. The maximum discount that you can avail is 50%. So, avoid making small claims in your policy and protect your accumulated NCB discount. Furthermore, buy a NCB protect rider to protect your discount even in case of a claim.
  • Voluntary deductible discount –If you choose to pay a portion of the claim from your pockets you are choosing a voluntary deductible. Since you are lowering the burden of claim for the insurer you get a discount of 15% to 35% in your car insurance premium. So, if you are a careful driver or have a vintage car go for voluntary deductibles and lower your premiums.

The final word!

A car insurance policy is a mandatory cover. Know all about it before you actually set out to buy a policy for your car. You would be able to understand the coverage features, choose required add-ons, understand the technical parts of the plan and also enjoy attractive premium discounts.

Read more about Discounts on car insurance you did not know about

Did you know these taxation facts about your insurance policies?

Insurance is popular not only for its benefits but also for its tax saving nature. Whether you buy life insurance or health insurance you get tax saving on both. In fact, in a life insurance policy, even the surrender value is tax-free in your hands. However, when it comes to taxation, there are certain rules which should be kept in mind. For health insurance plans there are limits up to which you can claim a tax exemption. Furthermore, for the surrender value of a life insurance policy, there are certain conditions which, if fulfilled, will result in tax relief. Let’s explore these tax facts of your health and life insurance plans –

Tax benefit for health insurance

Premiums paid for a health insurance policy qualifies for tax exemption under Section 80D of the Income Tax Act. The maximum exemption which you can claim for the premiums paid is up to Rs.60, 000. Here’s how –

So, if you and your dependent parents are both senior citizens and you pay premiums for two separate health insurance plans (one for yourself and one for your dependent parents), you can claim a maximum tax exemption of Rs.60, 000 in one year.

Tax benefit on the surrender value of a life insurance policy

If you surrender your life insurance policy and avail the surrender value, the value can be claimed as a tax-free income. However, to avail this tax exemption, you have to fulfil the following conditions –

  • For your single premium policies, if you surrender the policy after the first two years of buying the plan, the surrender value you receive is tax-free.
  • If you have a regular premium plan, the surrender value is tax-free only if you have paid the premiums for the policy for at least 2 full years.
  • In case of Unit Linked Plans, the surrender value becomes tax-free only if the policy is surrendered after 5 years.
  • For your pension plans, the surrender value is always taxable. It is taxed at your income tax slab rate in the year in which you receive the value.

So, if you want to surrender your life insurance policy, find out the type of policy you have. Then determine whether the qualifying conditions have been fulfilled so that you can receive the surrender value without any tax implication.

Read more about Life insurance policy in india – How it works?

Tax is a complicated subject where there are various qualifying conditions and limiting amounts. Even though your life and health insurance plans promise you tax benefits you should read the fine print of availing this tax benefit. You would not be in for a surprise when you know the tax relief you would get, right?

Turtlemint helps you in buying the best life insurance policy and health insurance policies. It also helps you with your queries regarding the tax aspect of these plans. So, if you are planning on investing in life insurance, health insurance or both, come to Turtlemint. You would be surprised with the experience you get.

Read also What is insurance and how does it works?

Read more about What is health insurance?

Read more about Reasons to buy a life insurance now

Feel free to share your queries below:

Top 5 insurance myths that you need to bust NOW

When it comes to insurance, most of you shirk away from it. In spite of the innumerable benefits bestowed by an insurance plan, people shy away from it. Why? The reason is a lack of knowledge. Insurance is a technical concept which escapes the understanding of many. Other than the premium cost and the benefits promised, most of you don’t want to go deeper into the concept of insurance. As they say, a little knowledge is a dangerous thing and, therefore, limited knowledge of insurance gives rise to many myths. Most of you believe in these myths and don’t buy insurance. Are your myths justified?

Of course they are not. Here are five popular myths which most of you have along with their cold hard facts. Bust these myths NOW

#1 Life insurance is not worth the investment

When you put it this way, life insurance is not. But do you see the bigger picture? Life insurance is a tool of financial security. It secures your family financially in case you, the bread-winner, were to die prematurely (God forbid!). It, therefore, buys you financial security in case of an emergency, something which you can’t get with any other investment avenue. So stop looking at life insurance as an investment. If you want returns, look elsewhere. Life insurance is a gift of financial stability which you can give your family in your absence. When you talk about premiums, term plans guarantee such minimal rates that the benefits far outweigh the trivial amount you invest.

#2 Medical underwriting is just a formality

Is it? Then why can your claims be rejected if you lie about your medical health?

Your medical health is a very important consideration in both life and health insurance plans. It is important because of the simple reason that your health affects your longevity. If you are sick or have been sick, the insurance company undertakes a higher risk because any medical complication might cause death and a subsequent claim. That is why medical underwriting is done with utmost care. If your risk is found to be higher the company might either reject accepting your policy or accept it at higher premiums. If you lie about your medical health, your claim faces the danger of rejection. So, always fill your proposal form yourself and provide all the required medical information correctly and truthfully.

#3 Insurance companies don’t pay a genuine claim

This is a very common misconception which many individuals believe. They feel that though they pay premiums, their claims have a high risk of rejection because the company is perceived to be untrustworthy. It is not true. The insurance company cannot reject your claim if you correctly and honestly fill your proposal form at the time of buying the policy. If you provide all the required information without lying, the company knows the risk it is accepting. As such, they cannot reject your claims and are forced to pay the total claim as and when it arises.

#4 Stay-at-home parents don’t need life insurance

Don’t they? Aren’t they financially useful? Think of all the chores a stay-at-home parent does. Grocery shopping, cooking, laundry, keeping the house clean, looking after your kids and managing your entire home are not easy tasks. Stay-at-home parents multitask and complete their chores. In fact, as per an article in Economic Times, the average monthly salary of a home-maker is about Rs.45, 000 (Source:https://economictimes.indiatimes.com/news/economy/indicators/how-much-salary-should-a-homemaker-get/articleshow/61761686.cms) In the absence of the stay-at-home parent, you would have to engage the services of a maid, a cook, a personal shopper and what not. Don’t these appointments cost money? Stay-at-home parents definitely have a financial worth and they too require insurance coverage.

See how much India spends on health costs

#5 Term insurance is cheap. Why hurry?

Yes, term insurance is cheap. The premiums are peanuts compared to the benefits promised. But do you know that the premiums depend on age? Yes, as you age your premium increases. Why pay an additional premium outgo every year by delaying a term plan? Moreover, as you age you develop medical complications. These complications increase your mortality risk and your premiums are loaded to compensate for the high risk. Therefore, it is always advised to buy a plan younger.

Which of these myths do you believe in?

Bust your myths about insurance. Insurance is a financial life-saver when emergency strikes. So insure yourself against financial disasters and have a secured life. When buying insurance choose Turtlemint. You get the facility of comparing between the different plans before buying one. Moreover, Turtlemint offers you claim assistance too. So, understand the necessity of an insurance plan and insure yourself today.

Read more to know why insurance is necessary.

Read more about Separate health insurance plans for parents or floater?

Read more about Common terms in life insurance policies

Feel free to share your comments below:

Worried about filing your motor insurance claims? Get it expedited through video uploads

Though a motor insurance policy is mandatory for your vehicles (as per the regulations of the Motor Vehicles Act, 1988), the claim process is often a tough nut to crack. You are required to follow some protocols to report and get your claims settled with the insurance company. Though the claim settlement process is quite simple, it takes some time. What if I told you that you can get your motor claims settled within hours?

Yes, you heard me correctly. With the recent amendments effected by the Insurance Regulatory and Development Authority of India(IRDAI), you can now get your motor claims settled through video uploads. Intrigued? Let’s find out more –

What is the new change made by IRDA?

IRDA has allowed claims up to Rs.50, 000 to be raised and settled using video proofs and images. All you need is a Smartphone and an internet connection. In case of an accident where your vehicle suffers damages you can make a video of the damage suffered and send it to the insurance company. The company would analyse the video, estimate the extent of damages you have suffered and would approve the claim. You can, then, get your vehicle repaired and the company would settle the claim directly with the workshop.

How it works?

Leading insurance companies are now accepting video documentation of your vehicle’s damages. They have introduced automation facilities wherein you can shoot pictures and videos of the damages suffered and share it with them. If your insurance company has launched its app, you can upload the video and images on the app and the company can access them. Data analytics are used to assess and analyse the video uploaded or sent by you.

Important points to be remembered

Though the motor insurance claim process has been simplified with this change, there are certain things which you should know. These include the following –

  • A Smartphone is necessary with which you should record the video. Your Smartphone should have a camera resolution of at least 4 Megapixels.
  • You should record the video in complete daylight. Moreover, the video should capture a 360-degree view of your vehicle and the damages suffered in one single clip.
  • Your video should also contain the images of your RC book, policy document and driving license.
  • Though IRDA has allowed claims of up to Rs.50, 000 through video upload, different insurers have set their own limits. For instance, ICICI Lombard entertains claims of up to Rs.20, 000 only while Bajaj Allianz allows claims of up to Rs.50, 000 through its ‘Motor on the Spot’ facility.

The final word

Technology has indeed made a lot of difference in today’s world. The insurance segment is also adapting to the changing technology and is simplifying the purchase and claim settlement processes. You too can benefit from the technological advancement of the insurance industry. Since Smartphones and an internet connection have become very common, get your claims settled through your phone itself. It is simple, easy and also saves a lot of time and effort. If you have queries you can take the assistance of Turtlemint. Turtlemint not only lets you buy a motor insurance plan after comparison, it also helps you at the time of claims. So, you can contact Turtlemint for your claim related queries and you would get personalised services. Making a claim cannot be any easier!

Know more on how to claim for a theft of your car

Feel free to share your comments below: