Taxi insurance explained in details

Taxis are the means of public transport that help you travel from one place to another if you don’t own a vehicle or if your vehicle is otherwise unavailable for commuting. Taxis are commercial vehicles, also called Passenger Carrying Vehicles (PSVs). Thus, they have to fulfil the traffic rules and regulations to run on Indian roads. Under the provisions of the Motor Vehicles Act, 1988, taxis in India should carry a valid insurance policy before they commute on the road and/or carry passengers. This is where a taxi insurance policy comes into the picture.

What is taxi insurance?

Taxi car insurance is a commercial vehicle insurance policy available for vehicles used commercially to transport passengers. The policy is issued by general insurance companies and should be bought by taxi owners before they use their taxis for transportation purposes.

Features and benefits of taxi insurance

A taxi car insurance policy has various features and benefits. Some of these are mentioned below –

  • There are two types of insurance plans available for insuring a taxi – a third party liability cover and a comprehensive package policy.
  • Third-party coverage is mandatory as per law. It protects you against legal liabilities suffered if any third party suffers a financial loss due to your taxi
  • Comprehensive taxi insurance plans provide an all-round coverage for third party legal liability as well as for the damages suffered by your car
  • A comprehensive taxi car insurance policy also provides different types of add-ons for enhancing the scope of coverage 
  • The taxi driver also gets coverage against accidental death and disablement under the personal accident cover available with the plan
  • You can buy or renew taxi insurance online in simple steps
  • Cashless claims are available at networked garages

Types of taxi insurance in India

As mentioned earlier, there are two types of taxi car insurance plans available in India. They are detailed below –

  1. Third-party liability policy

    This policy is the basic mandatory cover required as per the Motor Vehicles Act, 1988. The policy covers financial liabilities suffered in case of death, injury or property damage suffered by another individual.

  2. Comprehensive taxi insurance

    A comprehensive policy has two coverage components. The first is the mandatory third party liability coverage. The second is the own damage cover that covers the damages suffered by the insured taxi.

Inclusions in taxi insurance

The instances covered under a taxi car insurance policy depend on the type of policy that you buy. Coverage under the mandatory third party cover includes the following –

  1. Financial liability faced for causing a physical injury to a third party where the insured taxi is at fault
  2. Financial liability faced for causing death where the insured taxi is at fault
  3. Financial liability faced for causing third party property damage where the insured taxi is at fault

Under the own damage component of the coverage, available under comprehensive taxi insurance plans, the following instances are covered –

  • Damage to the taxi due to natural calamities like earthquakes, hurricanes, cyclones, landslides, lightning, etc.
  • Damages to the taxi due to man-made calamities like riots, fire, self-explosion, strikes, malicious acts, etc.
  • Theft of the taxi
  • Damages to the taxi when it is being transported to another place through air, road or water

Moreover, a personal accident cover is also available for the driver/owner of the taxi. This cover is mandatory and covers the driver against accidental death or disablement. However, if the driver has a personal accident cover on his/her life, you don’t have to buy the cover again with the taxi insurance policy.

Exclusions in taxi insurance

There are some instances of loss that a taxi insurance policy does not cover. These instances include the following –

  1. Depreciation and normal wear and tear of the taxi
  2. Mechanical or electrical failure or breakdown
  3. Any type of consequential loss
  4. The loss suffered when driving without a valid license
  5. The loss suffered when driving under the influence of alcohol or drugs
  6. The loss suffered when driving outside the territory of India
  7. The loss suffered when using the taxi in violation of its limitations
  8. The loss suffered when your taxi insurance policy has expired
  9. The loss suffered when engaging in a criminal act
  10. Deliberate losses

Add-on covers under taxi insurance

A comprehensive taxi car insurance policy allows a range of add-on coverage benefits that help in enhancing the scope of coverage. These add-ons are available at an additional premium and you can add as many add-ons that you want. Some of the most popular add-ons available with taxi car insurance are as follows –

  1. Zero depreciation cover

    This is, by far, one of the most important add-ons covers that you can opt for. This cover eliminates the deduction for depreciation at the time of claims. Since depreciation is not covered under the insurance plan, your claims get reduced considerably due to the depreciation on the repaired or replaced parts. However, if you have the zero depreciation cover, the insurer pays the full claim amount, without deducting depreciation.

  2. Personal accident cover for named individual

    You can opt for an optional personal accident cover for any driver other than yourself if the taxi is used by someone else too.

  3. Emergency assistance

    In case your taxi breaks down in the middle of the road and cannot be towed to the nearest garage, you can opt for the emergency assistance add-on. Under this add-on, you get accommodation as well as a transportation facility.

  4. Return to invoice cover

    Under this add-on, if your taxi is stolen or damaged beyond repairs, you get the invoice value of the taxi as claimed and not the policy’s Insured Declared Value (IDV).

  5. Engine protection cover

    If the engine of your taxi gets damaged due to water seepage, such damages would not be covered under a basic taxi insurance policy. To get this coverage, you can opt for this add-on.

  6. Key replacement cover

    This add-on provides coverage for lost key replacement.

  7. Electrical accessories cover

    The electrical accessories of the taxi are insured against damages under this add-on.

Optional covers under taxi insurance

Though add-ons under a comprehensive policy are available as optional add-ons, there are other coverages features too that you can add to the policy if needed. These optional covers include the following –

  1. Coverage for the bi-fuel kit if you add one to the taxi
  2. Coverage for additional accessories added to the taxi that did not come factory built into the vehicle

How to compare taxi insurance online?

Many leading general insurance companies offer taxi insurance policies. To find the best coverage, you should compare taxi car insurance online and then buy. So, here’s how you can compare taxi insurance online –

  1. The coverage benefits

    Though most taxi insurance plans offer standard coverage benefits, some plans add attractive coverage benefits to the inbuilt coverage for a wider scope of protection. For example, you can avail yourself of the free towing facility or emergency roadside assistance inbuilt under some plans. So, the first thing that you should check is the coverage benefits offered and buy a plan with the widest scope of cover.

  2. The Insured Declared Value (IDV)
    The IDV of a taxi car insurance policy is the market value of the vehicle after deducting depreciation based on the vehicle’s age. The IDV determines the maximum claim payable under the taxi insurance policy. So, when comparing taxi insurance online, you should try and opt for an IDV as close to the market value for maximum claim settlement.
  3. The premium charged

    The premium is another important criterion that should be checked when comparing taxi car insurance online. Try and opt for a plan that offers the lowest premium rate without compromising on the coverage benefits.

  4. The add-ons offered

    Compare taxi insurance plans on the basis of the range of add-ons they offer. The wider the range of add-ons the more flexibility you can avail of for customizing the coverage as per your needs.

  5. Discounts

    Comprehensive taxi insurance plans allow premium discounts for multi-car insurance, for choosing a voluntary deductible, for fitting safety devices in the vehicle, etc. Look for the discounts and choose a plan offering the maximum discounts.

  6. Claim process

    Nowadays, companies have eased up their motor insurance claim process to make their policies customer-friendly. Look at the claim process of different insurers and choose one that offers the simplest settlement process.

  7. Garage network

    Networked garages allow cashless claims and so an insurer with the widest network of garages should be preferred for easy cashless claims.

    Compare taxi insuranceonline keeping the aforementioned points and you would be able to find the best plan for your coverage needs.

How to buy taxi insurance?

You can buy a taxi insurance policy in two ways. They are as follows –

  1. Offline 

    You can get in touch with an insurance agent or broker and buy a taxi insurance plan. You can also visit the branch of an insurance company that sells taxi insurance and apply for a policy by filling up a proposal form for availing of coverage. Pay the premium and submit the proposal form. The insurance company would assess the form, accept the premium and issue the taxi car insurance policy.

  2. Online 

    An alternative and more convenient way to buy taxi insurance is the online mode. You can visit the website of the insurance company, provide the details of your taxi and buy the plan online. You can also choose to buy the taxi insurance policy through an aggregator’s website wherein you get the benefit of comparison. You can check out the different taxi insurance plans available in the market, compare them and then buy the most suitable policy.

    Turtlemint also offers taxi insurance online from the leading general insurers of India. You can compare leading plans and then choose the best policy for your vehicle. Just visit https://www.turtlemint.com/car-insurance/, enter your car details and find the leading plans. Compare the plans, pick one and make an online payment of the premium. The taxi insurance policy would be issued instantly.

How to renew taxi insurance?

Just like buying, renewing the taxi insurance policy can also be done in the following two ways –

  1. Offline renewals

    Get in touch with your agent or broker or visit the insurance company’s branch and renew the policy offline.

  2. Online renewals

    Visit the website of the insurance company from where you bought the policy. Choose the renewal option, enter the policy number, pay the renewal premium and renew taxi car insuranceonline. If you have bought the plan from Turtlemint, you can log into your online Turtlemint account and renew the policy from there itself. You can also port to another taxi insurance policy at the time of renewals. You can check the different taxi insurance plans available on Turtlemint’s website and renew with a different plan if it offers better coverage at low premiums.

How to make a claim under taxi insurance?

If you incur any claim in your taxi insurance plan, inform the insurance company immediately. The claim process is as follows –

  1. For your own damage claims, the insurance company would guide you to the nearest networked garage. You can also check the garage list online on the company’s website or mobile application.
  2. Take your taxi to the garage where the insurer’s surveyor would come and assess the extent of damages. The surveyor would also prepare a claim estimate and submit the same to the insurance company.
  3. The company would approve of the claim based on the surveyor’s estimate
  4. Once the claim is approved, the garage would repair your taxi and the bills would be settled by the insurance company.
  5. Pay the deductibles and non-admissible expenses to take delivery of your vehicle. You should also file a claim form and submit the relevant documents for claim settlement.
  6. In the case of third party claims, you would have to file a police FIR. The claim would be handled and settled by the motor accidents tribunal. Once the tribunal gives its ruling, the insurance company would directly pay the claim to the third party.
  7. If your taxi is stolen, you would again have to file a police FIR. If the police are unable to trace your vehicle, they would issue a certificate certifying the same. Submit this certificate with the insurance company to get a settlement of your claim.
  8. In the case of your own damage claims, if you get your vehicle repaired at a networked garage, you would have to bear the repair charges yourself. Once the repairs are done, file a claim with the insurance company and the company would reimburse you for the costs incurred.

For claim settlement, you would have to submit the following documents –

  • The policy bond
  • Copy of the RC book of the taxi
  • Copy of the driving license of the driver riding the taxi at the time of claim
  • Identity proof of the policyholder
  • Police FIR for theft and third party claims
  • Medico-legal certificate for personal accident claims
  • All repair bills in original in the case of reimbursement claims
  • Any other document as required by the insurance company 

If you have bought the taxi insurance policy from Turtlemint, you can call 1800 266 0101 or send a mail to support@turtlemint.com. Turtlemint’s claim department would help you get your claim settled at the earliest.

To understand what taxi insurance is all about and then buy a suitable policy for your vehicle.

Frequently Asked Questions

  1. How is the third party premium calculated for the taxi insurance policy?

    The third-party premium of a taxi insurance policy is calculated by the Insurance Regulatory and Development Authority of India. It is fixed and reviewed every financial year. For taxis, the premium depends either on the engine capacity of the vehicle or the number of passengers the taxi is licensed to carry.

  2. What is the applicable depreciation on the parts of the taxi?

    The depreciation depends on the different parts. It is as follows –

    Parts of the taxi

    Applicable depreciation rate

    Nylon, rubber or plastic parts of the car

    50% depreciation 

    Fibreglass parts of the car

    30% depreciation 

    Glass parts of the car

    Nil depreciation

  3. Do I get any discount if I do not make claims under my taxi insurance policy?

    Yes, if you do not make claims on your taxi insurance policy you can claim a no claim discount. This discount starts from 20% for the first claim-free years and goes up to 50% if you have five successive claim-free years. 

  4. What details of the taxi would be needed when buying taxi insurance online?

    When buying taxi car insurance online you would have to provide the following details to the insurance company for calculating the optimal IDV as well as the premium amount –

    • The make, model and variant of the taxi
    • The year of manufacture
    • The year of registration
    • Registration location
    • Additional accessories added to the taxi if any
    • The engine and chassis number

    After these details are correctly entered the insurance company would calculate the IDV and the corresponding premium for the comprehensive taxi insurance policy.

  5. What are deductibles in the taxi insurance plan?

    Deductibles are your out-of-pocket expenses. In the case of a claim, the insurance company pays the claim only if it exceeds the deductible limit. Claims up to the deductible would have to be borne by you. There are two types of deductibles in taxi insurance plans. One is the compulsory deductible which is mandatorily applicable at each instance of a claim. The other is the voluntary deductible which you can choose yourself for availing of a premium discount. If you choose a voluntary deductible, you would have to pay the compulsory deductible as well as the voluntary deductible amounts from your pockets and the insurance company would pay the rest of the admissible claim.

Types of General Insurance in India

General insurance policies are those that cover non-life risks, i.e. risks not associated with life. They cover various types of financial risks that you might suffer in unexpected contingencies. There are different types of general insurance plans available in the market to cover the different types of risks that you face. All these plans cover the financial risks that you face and compensate you for the financial loss suffered. Some general insurance plans also give you tax benefits thereby helping you save taxes on your income.

Different types of general insurance plans in India

As mentioned earlier, there are different types of general insurance policies in India. These plans are as follows –

Different types of general insurance

Furthermore, each type of general insurance policy is further subdivided into other types of plans. Let’s have a look at these plans in brief –

Type of general insurance plan

Brief description 

Health insurance

A policy that covers medical contingencies suffered due to an illness, injury or accident

Motor insurance

A policy that covers third party liabilities incurred if your vehicle damages third party property or causes third party injuries. Comprehensive motor insurance plans also cover the damages suffered by the vehicle itself

Travel insurance

A policy that covers the financial risks you might face when you are travelling for business, leisure or studies. Travel insurance plans cover both international and domestic trips

Personal accident insurance

A policy that covers accidental death and disablement. A lump sum benefit is paid in case of deaths or disablements suffered in an accident 

Home insurance

A policy that covers the financial loss suffered due to damages caused to the structure and/or the contents of the house

Commercial insurance

A range of policies designed to cover the different types of risks that businesses face. Some example of commercial insurance policies include the following –

  • Property insurance
  • Fire insurance
  • Marine insurance
  • Commercial general liability insurance
  • Workmen’s Compensation Insurance, etc.

How to choose the best general insurance policy?

Amidst the various types of general insurance plans available in the market, you need to pick the right plans for the best coverage. To find the right general insurance policy, you should, first, assess the financial risks that you face and then choose the relevant plans that cover such risks. For example, the risk of medical contingencies is quite common and universally applicable to all. As such, a health insurance policy becomes a must. Similarly, if you own a vehicle, you would need to buy a third party motor insurance plan which is mandatory as per law.

Other insurance policies can be bought depending on your needs. For example, if you are travelling abroad and you want to cover your financial risks, an international travel insurance policy would help you with the same. If you are an organisation, you should consider the different commercial insurance policies for securing your finances against unforeseen calamities.

After you have shortlisted the types of general insurance plans that you would need, you should compare similar plans against one another to find a plan that offers the best coverage benefits at the lowest rate of premiums.

Coverage under general insurance plans

Different types of general insurance plans have different coverage benefits, depending on the financial risks that they cover. So, let’s have a look at some of the common types of general insurance plans and the coverage that they offer –

  1. Health insurance 

    Health insurance plans come under two main variants. The first variant is the indemnity plan which covers the medical bills that are incurred when you are hospitalised. The second variant is the fixed benefit plan which pays a lump sum benefit if you suffer a medical contingency covered by the policy.

    Coverage of an indemnity health plan is quite comprehensive and includes the following benefits –

    Inpatient hospitalization

    Inpatient hospitalization includes expenses incurred on room rent, treatment cost, nurse’s fees, ICU room rent, etc. if you are hospitalized for 24 hours or more

    Ambulance cost

    Expenses incurred for transporting the insured to the hospital in an ambulance for treatment. 

    Pre and post hospitalization

    The expenses which are incurred before actual hospitalization, as well as the expenses incurred after being discharged from the hospital, are also covered. 

    Maternity

    Some health plans also cover the maternity expenses incurred in case of childbirth. 

    AYUSH treatment

    AYUSH treatments are non-allopathic treatments such as Ayurveda, Unani, Siddha and Homeopathy. Most of the health insurance plans cover the expenses incurred on such treatments. 

    Day Care treatment

    Daycare treatments include treatments that do not require hospitalization for a minimum period of 24 hours due to advanced technology 

    Domiciliary treatment

    The cost of treatment taken at home when the insured is not in a condition to be shifted to a hospital or because of the non-availability of hospital beds is called domiciliary treatment. These treatments are covered in many health insurance plans. 

    Organ Donor expenses

    It includes the expenses incurred on harvesting an organ from an organ donor. 

    OPD coverage

    OPD cover includes all the medical expenses incurred on an OPD basis as diagnosis test, investigative reports, doctor’s consultation and pharmacy expenses

    Covid-19

    All health insurance plans also cover hospitalization due to COVID

    Free health check-ups

    Health insurance plans allow free preventive health check-ups after specified periods, i.e. once every 1-4 policy years

    No claim bonus

    If you do not make claims under health insurance plans, you get a no claim bonus. This bonus either allows an increase in the sum insured free of cost or a discount in the renewal premium.

  2. Motor insurance

    Motor insurance plans cover the financial losses associated with cars, bikes and other commercial or private vehicles. The coverage offered by motor insurance plans are as follows –

    Third-party liability

    Financial liabilities that are incurred if your vehicle causes physical injury, death or property damage to any third party are covered. A third party cover is mandated under the Motor Vehicles Act, 1988 and is a must for every vehicle

    Natural calamities

    Damages due to natural calamities such as storms, earthquakes, floods, hurricanes, etc. are covered

    Man-made calamities

    Damages suffered by the vehicle due to man-made disasters such as burglary, fire, self-explosion or ignition, riots, strikes, etc. are covered

    Theft 

    In case the insured vehicle is stolen, a lump sum amount will be paid under the motor insurance policy to compensate the policyholder for the financial loss suffered

    Accidental damages

    Damages suffered when the vehicle is involved in an accident is covered under the motor insurance plan

  3. Travel insurance 

    Travel insurance plans cover financial losses that you might suffer while travelling. Travel plans provide coverage for the duration of your trip. Different types of travel insurance plans have different coverage benefits. However, there are some common coverage benefits under all travel plans which are called standard coverage benefits. These include the following:

    Medical emergency

    If the insured falls sick while travelling or is hospitalized, the travel insurance policy will pay the cost and expenses of such hospitalisation as well as the medical bills. 

    Delay of checked-in baggage

    In case of delay in receiving the checked-in bag, a claim would be paid by the insurance company to help you buy the items of personal use until your baggage is returned 

    Trip Cancellation

    If your trip gets cancelled due to unavoidable circumstances or reasons, the expenses incurred in pre-booking the tickets and hotel accommodation would be reimbursed

    Loss of passport

    The travel insurance policy also covers the cost of arranging a duplicate passport if your passport gets lost on the trip

    Mortal remains repatriation

    The cost of repatriating the remains in case of death on the trip is covered

    Loss of baggage

    In case your baggage is misplaced by the airlines and is lost, the financial loss suffered would be covered 

    Accidental death or disability

    A lump sum benefit will be paid under the policy in case the insured suffers accidental death or disability while on the trip or while travelling by air

    Alliance for hijack distress

    In the event of hijack of the flight by which the insured is travelling, the travel insurance policy pays a benefit for the distress suffered 

    Emergency cash advance

    In case of loss of wallet or theft, a cash advance is offered so that you can meet the travel-related expenses. 

    Third-party liability

    Loss to third parties due to your fault would be covered under travel insurance plans

How much do general insurance policies cost?

The cost or the premium of general insurance companies is determined using different parameters. These parameters depend on the type of general insurance policy that you buy. Let’s have a look at the factors that determine the premium of the popular types of general insurance policies –

  1. Health insurance premium

    The cost of a health insurance policy depends on a lot of factors. The factors which affect the premiums of health insurance plans are discussed below: 

    Age of the insured

    Higher the age of the insured, higher will be the premium and vice versa. Hence, it is advisable to buy a health insurance policy at a young age

    Sum insured in the plan

    The higher the sum assured, the higher will be the premium. Sum assured is the maximum liability undertaken by the insurer in the event of a claim

    Number of members covered in the plan and their age

    A family floater health plan allows you to opt for a single policy for multiple family members. More the family members, higher will be the premium and vice versa

    Claim history

    Some Health Insurance providers allow a discount on the amount of renewal premium if you have not made a claim in the previous year. Others might load the premium based on your claim history

    Applicable Discounts

    Health insurance plans provide different premium discounts. These discounts reduce the amount of premium payable

    Medical history and condition of the insured

    Health risk increases in case of existing medical condition or in case of family history of any particular disease. This increase in health risk increases the chances of making a claim. Hence, health insurance premiums are higher for individuals with an adverse medical history

    Add- ons selected

    Optional coverage benefits are offered along with health insurance plans for enhanced protection. Each add-on involves an additional premium which increases the overall premium payable for the policy 

    Location

    Health Insurers have classified Indian cities as Tier I, Tier II and Tier III cities as the medical expenses in different cities are different. Medical expenses in tier I cities which are metropolitan cities are higher than in tier II and tier III cities. As such, their corresponding premiums are also higher.

  2. Motor insurance premiums

    The premiums of motor insurance plans differ across insurance companies and depend on various factors. Such factors are as follows –

    Insured Declared Value (IDV)

    IDV represents the market value of the vehicle after depreciation. It is the sum insured of a motor insurance policy. The more expensive the vehicle, the higher will be the premium. 

    Age

    The vehicle’s age determines the premium. Older the vehicle lower would be the premium and vice-versa

    Type of motor Insurance plan

    Third-party liability-only policies are cheaper than comprehensive insurance policies due to their limited coverage.

    The make, model and variant of the vehicle

    The make and model of your vehicle is one of the factors for the motor insurance premium. The premiums for vehicles like sports cars are generally higher than for lower or standard cars.

    Geographical location

    Premium calculation is divided into two zones in which Zone A represents metropolitan cities and Zone B covers the rest of India. Premiums for vehicles registered in Zone A are higher than those in Zone B

    Discounts

    Motor insurance plans offer different types of discount. The eligible discounts lower the premium

    Add-on covers

    The coverage of motor insurance policy can be enhanced through add-ons. These add-on covers come with an added premium cost which increases the total premium payable

    Engine size

    The engine size of the vehicle plays an important role in calculating the insurance premium. The larger the engine size higher the premium and vice versa

    Purpose of the vehicle

    If you intend to use your vehicle for commercial purposes, then the insurance company will charge a higher premium. However, if you purchase a vehicle for personal purposes, the premiums would be lower. 

    No claim discount

    By making no claims under an existing motor insurance policy you can avail of discounts on the renewal premiums. This no claim discount, thus, reduces the premium payable

  3. Travel insurance premiums 

    There are certain factors that determine the cost of a travel insurance policy. These factors are mentioned below: 

    Pre-existing medical conditions

    If the policyholder has any pre-existing medical conditions then the premiums of the travel insurance policy will shoot up.

    Duration of the travel

    The longer the duration of the plan, the higher the premium will be and vice versa. 

    Age of insured travellers

    Older travellers are more prone to illnesses and injuries. Hence, premiums increase with the age of the insured members

    Number of members covered

    The higher the number of members covered, the higher would be the premium

    Travel destination

    The farther and expensive the destination is, the higher the insurance premium. Also, in case the policyholder moves to a remote location or area with a certain risk, the insurance premium will be higher

    Type of coverage

    A comprehensive travel insurance policy costs a higher premium compared to a basic plan

    Sum insured

    The higher the sum insured in the plan, the higher will be the amount of premium and vice versa. 

    Adventure sports coverage

    In case the plan covers adventure sports, the premiums would increase due to the higher risk involved. Higher the risk, the higher the premium. 

    Add-ons selected

    Adding extensions to the policy would increase the premium because of the wider scope of coverage 

How to buy general insurance plans?

There are two modes of buying the different types of general insurance plans. They are as follows –

  1. Offline mode

    You can get in touch with a general insurance agent and buy the policy that you need. Alternatively, you can visit the branch of an insurance company and apply for a suitable general insurance plan. You would have to fill up a physical application form, submit your documents and the premium amount while making a proposal for buying insurance. If the company accepts your proposal, the policy would be issued and you get the coverage.

  2. Online mode

    The online mode is a more convenient way of buying general insurance plans. Almost every general insurance company offers its plans online and so, you can visit the website of the company, choose a policy and then buy the policy online.

Alternatively, you can choose aggregator websites like Turtlemint wherein you get the benefit of comparing across different insurance companies. You can visit www.turtlemint.com and select the type of general insurance policy that you want. Provide your details and compare the quotes of different insurers. Find a policy that provides the most suitable coverage benefits and comes at the best premium rate.

How to make a claim in your general insurance policy?

For making claims under general insurance policies you have to follow a specific claim process. Just like premiums, the claim process is also different for different types of general insurance plans. Let’s have a look at the claim process under the most popular types of general insurance plans –

Health insurance claim process

Health Insurance claims can be made in the event of hospitalization or any covered medical contingency. Health insurance claims can be made in two ways – cashless or reimbursement. Here is the process of both these claims: 

  1. Cashless claim

    Cashless claims can be settled in case of hospitalization only in the networked hospitals of the insurance company with which it has tied- up. Steps for making a cashless claim are as follows: 

    • Inform the insurance company by filing a pre-authorisation form and submit it to the insurance company within 24 hours of emergency hospitalization. In case of planned hospitalization, submit the form at least 3-4 days before being hospitalized.
    • The insurance company will assess the claim on the basis of the pre-authorisation form and approve the cashless facility.
    • Submit all the medical bills, documents and reports to the insurance company along with original document proofs of other hospitalisation expenses, if any, for settlement.
  2. Reimbursement claim

    Reimbursement claims can be made if you are hospitalized in a hospital that is not tied up with the insurance company. For reimbursement claims, the following steps are needed for claim settlement: 

    • Inform the insurance company that you have been admitted to a non- tied up hospital.
    • Retain all the original medical bills and reports of the hospital and avail a discharge summary or a discharge certificate from the hospital from which the treatment has been availed.
    • Pay the hospital bill out of your pocket and submit all the documents and the bills to the insurance company
    • The insurance company will assess the claim and expenses and reimburse the bills that you have paid.

Motor Insurance Claim Process

When your vehicle is stolen or is involved in an accident, you can make a motor insurance claim by following these steps: 

  1. Inform the insurance company immediately. The company would guide you to the nearest networked garage.
  2. The company would send its surveyor to assess the damage and prepare a claim report
  3. Based on the surveyor’s report, the claim would be approved. You can, then, avail of cashless repairs.
  4. The repair bills would be settled by the company with the garage
  5. If, however, you get your vehicle repaired at a non-networked garage, you would have to pay the repair bills yourself. Then, file your claim with the insurance company and the company would reimburse you for the costs
  6. In case of third party claims, file a police FIR. The claim would be handled by the motor accidents tribunal. Once the tribunal specifies the claim amount, the insurance company would pay the amount to the third party
  7. In the case of theft, file a police FIR. If the police are unable to find your vehicle, they would issue a certificate certifying the same. Submit this certificate along with other claim-related documents and the claim would be paid.

Travel Insurance Claim Process

It is very simple and easy to make a claim in your travel insurance plan. The steps are discussed below: 

  • Inform the insurance company or the service provider immediately when you face a travel insurance claim. One should be handy with the claim helpline number of different Insurance companies to register the claim.
  • After intimation, the insurance company will provide the details of the tied-up service providers in the country you are travelling to, to help you with the easy settlement.
  • You can inform the service provider and submit the claim related documents to process your claim.
  • The insurance company or the service provider will verify the documents and settle your travel Insurance claim. 

So, understand general insurance and its types and then buy suitable plans depending on your financial needs.

Difference between Zero Depreciation & Comprehensive Car Insurance

A car insurance policy is a mandatory requirement under the Motor Vehicles Act, 1988. However, the Act mandates only a third party cover which protects third party interests in any contingency. If you want to secure coverage for the damages suffered by your own vehicle, you should opt for a comprehensive policy. Furthermore, to expand the scope of coverage of a comprehensive policy, you can opt for a zero depreciation cover as well. 

Let’s understand the concepts of comprehensive vs zero dep coverage options and have a look at their comparative analysis.

What is a comprehensive car insurance policy?

A comprehensive car insurance policy is one that covers third party liabilities as well as the damages suffered by the car itself. The policy is issued for one year after which you can renew it for as long as you own a car.

What is a zero depreciation car insurance policy?

A comprehensive car insurance policy does not cover the depreciation suffered by the parts of the car due to normal wear and tear. As such, when a claim is made, the relevant depreciation is deducted from the claim amount leaving you to pay the depreciation cost from your own pockets. A zero depreciation policy protects you against such out-of-pocket expenses. It is a comprehensive car insurance policy that also includes the zero depreciation add-on. The policy covers third party liabilities, the damages suffered by the car as well as the depreciation suffered by the car’s parts. If there is a claim, the insurance company does not deduct any depreciation from the parts repaired or replaced. It pays the full repair costs incurred. 

In simpler terms, a zero depreciation policy is a comprehensive car insurance policy with the added coverage of a zero depreciation add-on.

Applicable depreciation rates on zero dep vs comprehensive plans

Here are the applicable depreciation rates which would be applied on your car’s parts in a comprehensive vs zero dep policy –

Parts of the car Only comprehensive policy Zero depreciation policy

Nylon, rubber or plastic parts of the car

50% depreciation 

Nil depreciation 

Fibreglass parts of the car

30% depreciation 

Nil depreciation 

Glass parts of the car

Nil depreciation

Nil depreciation 

Suppose a claim occurs wherein the rubber parts are repaired at a cost of INR 20,000 and the fibreglass parts are repaired at a cost of INR 10,000. The claim payable under a zero dep vs comprehensive plan would be as follows –

Parts of the car repaired

Admissible claim in a comprehensive policy

Admissible claim in a zero depreciation policy

Rubber parts

50% of INR 20,000 = Rs.10,000

100% of INR 20,000 = INR 20,000

 

70% of INR 10,000 = Rs.7000

100% of INR 10,000 = INR 10,000

Total admissible claim

INR 17,000

INR 30,000

While in the comprehensive policy you would have to bear a depreciation cost of INR 13,000 (INR 30,000 – INR 17,000), in a zero depreciation policy you would not have to bear any depreciation cost. The total claim of INR 30,000 would be paid by the insurance company.

Comparative analysis of comprehensive insurance vs zero depreciation insurance

Here is a comparative look into comprehensive insurance vs zero depreciation insurance for you to understand both these plans easily –

  1. Similarities
    • Both plans cover third party liabilities as well as damages suffered by the car
    • Both the plans are voluntary in nature
    • Both the plans allow no claim bonus discounts as well as other premium discounts for safety gadgets, membership of Automobile Association, etc.
    • Cashless claims are allowed under both the plans
    • The coverage duration of both the policies is one year
    • You can choose other add-on coverage benefits with both the plans
  2. Differences
    Points of difference 

    Comprehensive insurance

    Zero depreciation insurance

    Scope of cover

    Coverage for third party liability and own damage only

    Coverage for third party liability, own damage and depreciation on the car’s parts

    Premium 

    Lower compared to zero depreciation policy

    Higher due to wider coverage

    Claim pay-out

    Lower because depreciation is deducted from the claim amount

    Higher because depreciation is not deducted from the claim amount

    Availability 

    Available for cars of all ages

    Available for cars aged up to 5 years

    Number of claims

    Unlimited claims can be made as long as the IDV of the policy is not used up

    There might be a limitation on the number of claims for zero depreciation that you can make. 

Should you buy a zero depreciation cover?

The repairs of the car, especially in case of severe damages, incur considerable amounts of money. Moreover, if your car is an expensive one, the costs can be financially damaging. A zero depreciation policy, therefore, is a better option for ensuring that your out-of-pocket expenses are reduced. It provides a wider scope of coverage and allows you to get a higher settlement at the time of claims. So, it is always better to opt for a zero depreciation cover for your car.

That being said, when buying a zero depreciation cover, you should always compare the premiums across several insurance companies. Every company has its own pricing policy and so, the premiums differ across different insurers. Add the zero depreciation add-on to the coverage and compare the premiums across insurers. Choose a policy that offers the lowest premium without compromising on the Insured Declared Value or the coverage of the policy.

To compare, you can choose Turtlemint that offers you the choice of the best zero depreciation plans available in the market. Visit https://www.turtlemint.com/car-insurance/ and enter your car details to check out the quotes of leading insurers. Compare and choose the best zero depreciation policy and insure your car under the widest coverage.

Frequently Asked Questions

  1. How many claims can I make under a zero depreciation cover?

    The maximum limit to zero depreciation claims depends on the insurance company from where you buy the policy. Usually, many companies allow a maximum of two claims during the policy tenure. Some companies, however, also allow unlimited zero depreciation claims with their plans. So, find out the limit when buying the policy so that you know how many claims can be made on a zero depreciation basis.

  2. Can I convert my comprehensive policy to a zero depreciation policy?

    Yes, you can add the zero depreciation add-on to your comprehensive car insurance policy and convert it into a zero depreciation policy. This addition can be done either at the time of buying a new policy or when renewing an existing one.

  3. Is an additional third party policy required with zero depreciation cover?

    No, you don’t have to buy an additional third party cover with the zero depreciation policy. This is because the third party coverage comes inbuilt in the zero depreciation policy itself.

  4. Can I opt-out of the zero depreciation cover?

    Yes, at the time of renewal of the car insurance policy, you can opt-out of zero depreciation cover by opting out of the zero depreciation add-on benefit. Moreover, once your car is more than 5 years old, the zero depreciation cover would automatically be removed when your policy is renewed in the sixth year.

  5. Do all insurers offer zero depreciation insurance?

    Yes, all general insurance companies that offer a comprehensive car insurance policy offer zero depreciation add-on. You can add the add-on to the comprehensive policy to opt for the zero depreciation cover.

How to Treat Covid at Home? When Should a Covid Patient be Admitted?

With over 4 lakh people being diagnosed with Covid every day, Indian healthcare is crumbling. Hospitals and healthcare clinics are sending desperate messages that they are running out of oxygen and other necessary resources, which is putting the lives of hundreds of patients at risk. With the crisis deepening hospitals and healthcare experts are advising people with mild symptoms to treat covid at home. 

With the system unprepared for such a massive disaster, treating covid at home may help in subduing the havoc created by the second wave.

Important:
Senior citizens, people with a medical history, pregnant women, children, who are at a greater risk for becoming seriously unwell, must consult their doctor as soon as the symptoms start to show, as they may require hospitalisation. These symptoms are:

  • Fever 
  • Shortness of Breath
  • Cough
  • Chills/ Shivering
  • Muscle Pain
  • Headache
  • Loss of taste/ and smell
  • Congestion/runny nose
  • Diarrhoea
  • Sore Throat
  • Nausea/ Vomiting

What are asymptomatic cases of Covid-19?

A patient who gets a laboratory confirmation of being Covid positive but does not experience any symptoms or does not have any oxygen saturation at room air over 94% is an asymptomatic patient. 

Who Can be Treated at Home?

As per experts the patients who are asymptomatic, which means a person who is laboratory-confirmed covid infected but does not experience any symptoms can take treatment at home. Along with them, people with symptoms such as cough, fever, nausea, loss of taste and smell, muscle pain also fall in this group. 

The Government of India Ministry of Health & Family Welfare, consider the following patients to be eligible for treatment at home:

  1. A medical officer should ensure that the patient is clinically assigned as an asymptomatic or mild case
  2. These patients should have the required resources at home that allows self-isolation and also for quarantine of other family members
  3. A 24×7 caregiver should be present on a regular basis
  4.  The caregiver should be able to monitor the patient’s health and be in touch with the hospital
  5. Senior citizens and people with diabetes, hypertension, chronic liver/ lung disease must only be allowed self-isolation after an evaluation by a medical officer
  6. It is recommended that HIV, Cancer patients, Transplant recipients do not undertake home isolation. However, it may be allowed after an evaluation by a medical officer 
  7. Hydroxychloroquine prophylaxis as prescribed by the treating medical officer should be taken by the caregiver as well as other members who are in contact with the patient
  8. More guidelines are available at Ministry of Health & Family Welfare

How to Treat Covid at Home?

When you are treating coronavirus at home, you need to keep a healthy mental attitude. Dr Praveen Chandra, Medanta Hospital Gurugram said, “First of all understand, even if you have COVID – do not panic. Once you are diagnosed with COVID, do a lot of breathing exercises to keep your lungs healthy and take a lot of steam. You can do normal activities as well unless you have the warning signs like shortness of breath and low oxygen levels.”

The following points must be kept in mind when treating yourself/ a patient for Covid at home:

  1. Patient should be isolated from all other household members and pets
  2. One room should be allotted where he/she should stay alone. The room should be well-lit, well ventilated
  3. The patient must always wear a triple layer mask and discard it after 6-8 hours
  4. Respiratory etiquettes must be followed at all times 
  5. Patient and the other members in the house should wash their hand with soap and water for 40 seconds
  6. Symptomatic management of symptoms such as fever, cough, running nose etc must be followed
  7. Make use of a pulse oximeter and thermometer every 4 hours to monitor the patient’s health 
  8. Do not go out of the house, unless in an emergency to the hospital
  9. You can take steam inhalation or do gargles with warm water
  10. The patient must drink lots of fluids such as water, soups, coconut water, fresh fruit/ vegetable juice 
  11. The patient should take ample rest
  12. The surfaces that are frequently touched must be disinfected frequently
  13. Patients can indulge in light exercises and yoga 
  14. Allow cross ventilation in rooms, keep windows open
  15. No sharing of utensils, drinks, bed sheets, towel and linen items must be done
  16. If fever cannot be contained with the dose of Tab. Paracetamol 650mg, 4 times a day at an interval of 6 hours, the nearest doctor must be contacted
  17. A Metered-dose of Inhalational Budesonide should be given if fever or cough goes beyond 5 days, best after consulting the doctor
  18. You Must Not attempt to procure or administer Ramdev Shivir at home
  19. Seek consultation immediately in case:
    1. The oxygen saturation falls
    2. Shortness of breath
  20. Do not use an oxygen cylinder unless advised by the doctor
  21. In case the symptoms persist for over 2 weeks or if the patient’s condition deteriorates, consult the doctor at once 
  22. The medicines must not be stopped without consulting the physician

When Can Home Isolation be Discontinued?

When 10 days pass from the first days of experiencing the Covid symptoms, and the patient does not have a fever for the past 3 consecutive days. Once the home isolation period is over, there is no need for testing.

What Precautions should be taken by the Caregivers?

Along with the patient, it is imperative that the caregiver also follows all protocols carefully’

  1. Mask
    1. Wear a triple-layer mask. When in the same room with the patient wear an N95 mask
    2. Do not touch the mask when using it
    3. Change the mask immediately if it gets wet or dirty with secretions
    4. Dispose-off the mask in a closed dustbin after use 
    5. Avoid touching your face, mouth and nose
  2. Hygiene of the Hands
    1. When you are in contact with an ill person make sure to wash your hands properly afterwards
    2. Be regular in washing hands before and after cooking, before and after eating, after using the washroom, and whenever your hands look dirty
    3. Wash your hands with enough soap and water for 40 seconds at least
    4. Try using disposable paper towels. If you can’t make sure to use clean towels to wipe your hands dry
    5. Wash your hands after removing your gloves as well as your mask
  3. When in Contact with the Patient
    1. When in close contact with the patient make sure to avoid any direct contact with the body fluids of the patient, especially oral or respiratory secretions. Wear disposable gloves
    2. Do not share utensils, drinks, bed sheets, towel and other linen items
    3. The patient should be given food in his room. Wash the utensils separately using detergent and water. Wear gloves when washing
    4. Wear a triple mask and use disposable gloves when cleaning or handling surfaces, items of clothing or linen
    5. Remember hand hygiene
  4. Disposal of Medical Waste

    To prevent further expanse of the infection it is very important to dispose of the waste effectively. 

    1. You need to collect and store biomedical waste separately before you hand over the same to CBWTF
    2. Use a dedicated collection dustbin labelled as “COVID-19 Waste” to store all the waste and keep it separately in a temporary storage room
    3. For more info on Disposal of Covid-19 Medical Waste, visit Central Pollution Control Board.

When Should a Covid Patient be Admitted to a Hospital/ Healthcare Centre?

The patient’s health must be monitored regularly and under a doctor’s guidance. In case any of the following symptoms develop, you must seek medical guidance immediately:

  1. Shortness of breath/ difficulty in breathing
  2. When oxygen saturation dips (SpO2 < 94% on room air)
  3. Pressure or pain in the chest that persists
  4. Slurred speech
  5. Inability to arouse or mental confusion
  6. The CT Scan shows an increase in patching in the lungs
  7. Pale or blue coloured skin, nail beds or lips

Conclusion

If you or some family member is covid positive and requires care at home, follow these guidelines and protect yourself as well as the ones around you. These guidelines should be followed when the patient may not be showing any symptoms or is a mild case. In case the symptoms persist for over 15 days or the patient experiences too much discomfort, consult a doctor as soon as possible.

Ref:

Get Vaccinated

The last few months of this pandemic outburst has led mankind with an unseen virus killing us in millions at once. We’ve fought together by locking ourselves down, shielding ourselves with masks & sanitisers and perhaps a lot more. India needs us once again -Let’s rise up to this and join this battle as INDIA FIGHTS CORONA with the vaccination of its citizen. Lets #GetVaccinated We care for you and we want to extend our support to get you vaccinated. Leave the vaccination cost to us and get yourself ready to fight Corona.

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  1. Get yourself vaccinated at the nearest vaccine centre
  2. Upload your proud picture on Facebook and/or Instagram – Don’t miss to Tag Turtlemint on Facebook & Instagram with #GetVaccinated #IndiaFightsCorona
  3. Click on this link and upload your Facebook/Instagram link along with your contact details

Note:

  1. This is an initiative by Turtlemint in association with Digit Insurance & Manipal Cigna
  2. The vaccination reimbursements are available for verified Turtlemint POSP only
  3. The vaccination reimbursements are available for vaccines done by 30th June 2021
  4. The above process is mandatory to claim the vaccination reimbursements
  5. In case of conflict, Turtlemint holds the right to accept or reject the application
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Find out how many COVID claims Health Insurance paid this Pandemic

The alleged second wave of the pandemic started in February-March 2021 as COVID cases started climbing even when the vaccination drive is in full force. Many States have seen a considerable hike in COVID positive cases which has prompted them to take serious actions to stop the spread of the infection. Even health insurance companies are reeling under the heavy claim burden brought on by increased COVID related claims.

Insurance companies reported receiving increasing COVID-related claims from July 2020. Have a look at the claim trajectory –

Health Insurance

Source: Business Standard

As you can see, the number of claims started with 81,000 in July 2020 and climbed beyond 6.5 lakhs by December 2020. The total claim amount the companies settled during this period amounted to INR 9989.89 crores.

Talking about the current year, there has been a fresh surge in COVID cases and claims have started rising. As of 25th February 2021, companies have received more than 9 lakh claims related to COVID which amount to INR 13, 752.41 crores, as per GIC’s compiled data. Out of the claims that insurance companies have received, more than 7.6 lakh claims have been settled amounting to INR 7141.33 crores. This figure is close to 15% of the total health insurance premiums that the companies had collected till January 2021. The average claim settlement amounts to INR 93, 758.17 per claim.

Source: Business Standard

What so the insurance companies say?

Many insurance companies are stating that the number of claim settlements did not reduce despite the reduction in COVID cases towards the end of 2020. This is because many claims were reported on a reimbursement basis wherein the insurance companies need time to assess, analyse and settle the claims. So, even as COVID cases were declining in the last months of 2020, the claim settlements were not because of the payment of reimbursement claims. This is also the cause for the gap in the number of claims reported vis-à-vis the number of claims settled.

Impact on insurance companies 

The high claim volume is distressing for companies as it impacts their profitability. With COVID specific health insurance plans becoming popular, insurance companies might face more claims if the COVID cases continue to rise despite the vaccination.

The true picture would become clear only after the pandemic subsides but for now, the high claim volumes are becoming a cause of concern for insurance companies. This might also convert to an increased premium in the coming years if the claim burden does not reduce.

Impact on policyholders

The claim experience of insurance companies does not affect you, the policyholder. In the case of genuine claims, insurance companies are bound to settle the claims within the prescribed time limits to avoid penal interests. So, if you suffer a COVID related claim, you would get a settlement for the claim if it is covered under your health insurance plan, whatever is the claim experience of the insurer.

However, if the premiums are revised, then you might feel a higher pocket pinch when you renew or buy a new health insurance plan. 

The pandemic has been a rocky road for individuals and companies alike. Though it has resulted in higher claims, health insurance companies are also banking on the popularity and demand of health insurance plans, especially COVID insurance plans. A high claim volume is a short term phenomenon specific to the pandemic and as the pandemic subsides, things would settle down. Till then, insurance companies need to battle out the claims that they get.

Insuring your Car during the Pandemic? Ensure coverage against Fire, Theft and TP

Work from home became a common phenomenon as the COVID pandemic resulted in lockdowns and social distancing. Even though the lockdown norms have eased up in many places, companies are still promoting the work from home model to ensure safety. Moreover, many individuals have cut down on socialising and lifestyle activities due to safety concerns. As such, the usage of cars has become minimal. Thus, when it comes to insuring the car, many of you might be thinking of going only for the third party cover since you are using the car minimally. But would the third party cover insure the car against other contingencies which might occur even when not in use?

The perils of theft and fire

Even when your car is parked, it is prone to theft and fire. According to data furnished by insurance companies, thefts of SUVs increased by 15% to 20% in the financial year 2019 compared to the last year. About 10, 000 SUVs were stolen in FY 2019. Moreover, out of 100 cars that companies insure, 1% to 2% of them are reported stolen. (Source: Economic Times). Guaranteeing the safety of your car against theft is, therefore, not possible. 

Even if you live in a gated community with top-notch security, you can avoid the possibility of theft; but what about the possibility of fire? A short circuit or an electrical malfunctioning can lead to a fire that might damage your car considerably even when it is safely parked. Can you bear the financial loss in such cases?

Theft and fire are the major concerns of damage to a parked car when it is not in use. As such, mere third party coverage would not prove sufficient. You need coverage that would cover the resultant financial loss that you might suffer in case of either of the two perils.

The possible solution

To supplement your third party coverage, you can opt for independent theft and fire insurance plans. Both theft and fire insurance policies are offered by general insurance companies. While theft insurance, called burglary insurance would cover the loss suffered if your car is stolen, fire insurance would cover the loss suffered in case of fire-related damages. 

You can buy all three policies independently, i.e. a third party policy, a burglary insurance policy and a fire insurance policy. These policies would secure your car against mandatory third party liability as well as possible theft and fire-related losses.

What if you can buy one single policy instead? Wouldn’t it be more convenient?

An alternative solution – comprehensive car insurance

There is another alternative which would eliminate the need of buying three distinct and independent covers – comprehensive car insurance.

A comprehensive car insurance policy not only covers the mandatory third party liability but also the losses suffered when your vehicle suffers any damage, including theft. So, even if the chances of road theft are eliminated when you don’t use your vehicle, you can get covered against theft and fire under a comprehensive plan. Here are the benefits that you can avail of –

  • A single policy to service with a comprehensive scope of protection
  • A single premium which might work out to be lower than the aggregate premium of three independent plans
  • Customization through the option of add-ons
  • Premium discounts for making no claims
  • Hassle-free purchase and renewals
  • Cashless repairs at networked garages

The bottom line

A comprehensive car insurance policy is, therefore, relevant even if you don’t use your car too often. Besides covering theft and fire, the policy would also provide coverage when you do use the car, however seldom it might be. So, don’t take any chances when it comes to insuring your car. Opt for a comprehensive coverage and get the most inclusive scope of coverage against possible damages.

How to get tax benefits beyond the 80C limit for Life Insurance Premium in 2021?

Life insurance plans are known for their tax benefits apart from the financial protection that they provide. The premiums paid for the policy qualify as a tax-free deduction under Section 80C of the Income Tax Act, 1961. However, Section 80C allows various other investments and expenses as deductions and the maximum limit of deduction is INR 1.5 lakhs. For example, investment into an ELSS scheme, NSC, PPF, EPF, etc. also qualify for deduction under Section 80C. Thus, most often than not, you might end up exhausting the limit of INR 1.5 lakhs on other investments. 

To provide you additional tax relief on your life insurance premiums, the Government has introduced an alternative avenue. In 2021, you can claim tax deduction on life insurance premium under the LTC scheme. Let’s understand what the scheme is all about and what tax benefit does it offer.

The LTC scheme 

A Leave Travel Concession (LTC) is allowed to salaried employees as a part of their salary component. Under the LTC benefit, the expenses incurred on travelling can be claimed as a deduction from your taxable income. Thus, the LTC scheme provides tax benefits on travel related expenses. 

What are the changes in the scheme?

Given the pandemic situation, many individuals did not take vacations or travel anywhere in 2020. Thus, salaried employees were not able to utilize the LTC benefit to reduce their tax liability. Considering this fact, the Government has allowed the LTC scheme to be widened to include other expenses for claiming tax benefits. If you buy goods and services, on which a GST of 12% or more is charged, 

Life insurance premiums have been included under the purview of the LTC benefit and you can claim a deduction under the LTC scheme for premiums paid. In other words, life insurance premiums can be claimed as a tax-free deduction even under the LTC scheme if your 80C limit has been exhausted.

Details of the changed LTC scheme

Here are some conditions which should be fulfilled to claim tax benefit on life insurance premiums under the LTC scheme –

  • You should be a salaried employee and have the LTC component in your salary structure
  • A new life insurance policy should be bought between 12th October 2020 and 31st March 2021 to claim this benefit
  • If you are already claiming a deduction under Section 80C on the premium paid, deduction under LTC scheme would not be allowed
  • If, however, you have not claimed deduction under Section 80C on the premium paid, you can choose to claim under Section 80C or under the LTC scheme

Limit of deduction

If you are claiming the deduction for life insurance premium under the LTC scheme, the maximum limit of deduction would be up to the amount of LTC allowed by your employer. This means that the maximum LTC component of your salary would be allowed as the maximum limit of deduction. You can claim a deduction on the actual premium paid or the LTC amount allowed in your salary, whichever is lower. 

The premium would include the premium inclusive of GST. Moreover, in case of single premium plans, you can claim deduction on the entire amount of premium paid while under regular premium plans, the deduction would be available only on the premium paid up to 31st March 2021.

The GST applicable on life insurance premiums depends on the type of policy that you buy. Thus, the amount of deduction that you can claim also varies depending on the policy type. Let’s understand with the help of an example.

Suppose you pay a premium of INR 50, 000, the deduction available would be as follows considering your LTC benefit amount is INR 1 lakh –

Type of life insurance policy

Premium amount

Applicable GST

Deduction that you can claim under the LTC scheme

Term insurance plan

INR 50,000

18% of the premium 

= INR 9000

INR 59,000

Unit Linked Insurance Plan

INR 50,000

GST is only levied on ULIP charges. Thus, no GST is charged on the premium 

INR 50,000

Immediate annuity policy

INR 50,000

18% on 10% of the premium paid 

= INR 900

INR 50,900

Endowment or money back insurance plan

INR 50,000

18% on 25% on the first year premium 

= INR 2250

INR 52,250

Even though the LTC benefit is INR 1 lakh, the actual premium paid would be considered for claiming deduction. If, however, the LTC benefit would have been INR 50, 000, the maximum deduction available would have been limited to INR 50, 000 even if the premium is higher in some cases.

What it means for you?

If you are looking to save additional taxes this year, you can utilize the benefit of the LTC scheme to reduce your tax liability. You can use Section 80C to claim deductions for other types of investments and expenses while the deduction for life insurance premium can be availed under the LTC scheme. Thus, you get a higher scope of deduction which would help you bring down your tax liability considerably, especially when you are in the higher tax brackets.

This is a limited period offer which would expire at the end of this financial year. So, what are you waiting for? Buy a new life insurance policy and make the most of the scheme.

Violating Traffic Rules? You might end up Paying a Higher Motor Insurance premium

The Insurance Regulatory and Development Authority of India (IRDAI) continuously makes changes in insurance plans to make them relevant to the changing dynamics of the market. Recently, with respect to motor insurance plans, IRDAI appointed a working committee to draft a proposal which would link your driving history to your motor insurance premium. Let’s have a look at what the committee has proposed.

Proposals of the working committee

  • A new section called the ‘Traffic Violation Premium’ (TVP) would be inserted into a motor insurance policy’s premium break-up. This section would record additional premium payable depending on your history of traffic violation
  • The TVP section would be included in both comprehensive and third party liability plans
  • The history of traffic violations over the last two years would be considered 
  • In case of new vehicles, the TVP would be applicable from renewal
  • In case of second-hand vehicles, the TVP would be calculated after the vehicle has been sold to another individual. It would be applicable at the time of renewals
  • Even if you give your vehicle to another individual, any offence committed by another driver would reflect on your policy premium

How would be the TVP calculated?

To calculate the Traffic Violation Premium payable by you, a point system would be devised. There would be specific points for a specific violation. For example, according to the draft designed by the committee, 100 points would be allotted for drunk driving while wrong parking attracts only 10 points. The points would keep on accumulating over the policy year for the violations that you make. On renewal, the points would be aggregated. If you have up to 20 points, additional premium would not be charged. However, if your points are 21 or more you would have to pay the additional Traffic Violation Premium.

For two-wheelers, the additional Traffic Violation Premium ranges between INR 100 and INR 750 while for four-wheelers, both private and commercial, the premium can range between INR 300 and INR 1500.

How would the system work?

The committee stated that the Insurance Information Bureau (IIB) would co-ordinate with the traffic police of different States as well as the National Informatics Centre. The IIB would collect the data of traffic violation and calculate the violation points of every vehicle. This information would, then, be shared with general insurance companies offering motor insurance policies so that they can charge the Traffic Violation Premium when they issue the policy for the respective vehicle. 

Objective behind this move

The main objective behind implementing the concept of Traffic Violation Premium is to make individuals aware about traffic rules. This move is expected to reduce traffic violations and make Indian roads safer. The additional premium would discourage traffic offenders who manage to dodge traffic penalties as their insurance policy would become expensive for their habits. 

In many foreign countries, the motor insurance premium is linked to the driver’s driving history and by bringing this system in India, IRDAI is trying to match motor insurance policies with international standards.

What it means for you, the customer?

As a customer, you can benefit from a reduction in premium if you have a clean record. Though the committee has not mentioned it in their proposal, experts believe that insurance companies would give good drivers a discount in their premium while penalizing offenders. So, if you clear your driving history, you can benefit from reduced motor insurance premiums.

Though the proposal is still in the development stages, it is expected to be rolled out, on a pilot basis, in National Capital Territory Delhi. So, let’s see when and how the proposal unfolds but for now, try and avoid traffic violations as much as you can. If the proposal is implemented, your traffic history would increase your premium.