The growth of auto insurance companies is directly linked to growth of the auto industry in India. The booming car industry from the last decade resulted in increased volume of car insurance business. Hence many private insurance companies also have entered the fray and are offering services. According to Indian law, vehicles have to be compulsorily insured before they venture on to the road. A auto insurance term is one year after which it has to be renewed for another year.
Buying a insurance policy becomes the first priority after buying a new vehicle. Hence many new car buyers often seek assistance from car dealers to buy a policy for them. A new car buyer has to be careful to choose the best car policies in the industry which offers maximum coverage against maximum number of risks. Car dealers help new car buyers pay all the necessary taxes and fulfill all necessary paper work associates with taxes and insurance. However, some car dealers also recommend insurance policies with lower premium amounts- beware of them as they could cover lesser number of risks, leaving the car owner with a huge list of expenses.
Types of Insurance
A car insurance policy covers damages on the specified car and also liability arising out of an accident. A third party liability coverage is mandatory for all policy holders. Vehicles should also be covered while transporting them through rail, road, water and air.
A car buyer should also seek coverage foe usual wear and tear of the vehicle, and breakdowns from electrical/mechanical faults also. Insurance also covers damages for the vehicle mentioned in the agreement. Third party coverage offers protection in case of expenses arising due to accident that cause permanent injury, death and damages to the property.
The insurance companies call the total insured amount as the Insured Declared Value (IDV). This amount is arrived at after ascertaining the manufacturers selling price and value of the accessories.
The nationalized insurance companies usually charge 3-4 percent of the IDV amount as premium. The premium is calculated after considering parameters like the cubic-capacity of the car engine, year of manufacture, make and model of the car, age of the car owner, profession of the car owner and other factors. In case the car owner has had no history of past claims, insurers charge lower premiums.
Many insurance companies also offer discounts to attract customers, They are ready to offer 20 percent discounts to car owners above 50 years of age in white collar jobs. These are reviewed the next year and premium are increased if claims are made. Those who have made no claims attract a discount of 10 percent, when the policy is renewed.
Car owners who get modern safety systems like anti-theft devices and engine immobilisers are also given insurance premium discount.
Claims are two types of – cashless claims and reimbursement claims. In the latter, the company pays for the damages while the owner takes responsibility for the repairs. In cashless claims the insurance company takes care of the damaged vehicle and restores it through its network of garages. In both events, a insurance company surveyor ascertains the damage of the vehicle and the payment of amount to the car owner.