How Does Car Insurance Work In India?

By BankBazaar | February 15, 2018

With the process of claiming Car Insurance getting better, it is now possible to get your vehicle repaired and ask the insurer to pay for it using your insurance policy. Here’s all you need to know.

How Car Insurance Works

With the changing features of insurance, it is now possible to get your vehicle repaired and ask the insurer to pay for it using your insurance policy. Here’s everything you need to know about how Car Insurance works in India.

The first thing you must do is to go through the insurance company’s preferred garages and get the repairs done at one of them. The insurance company will then pay for the repairs minus the items not covered under the policy, which will have to be paid by the owner of the vehicle, which is you. This is known as a cashless claim.

Additional Reading: How To Avail Cashless Insurance Without Hiccups

For most of us, owning a car has been a dream that we have nurtured since childhood. Protecting the vehicle by getting insurance for it becomes a priority once we own a vehicle. Vehicle Insurance (also known as Auto Insurance, Car Insurance, or Motor Insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of accidents and against liability that could be incurred in an accident.

Additional Reading: Why Is Car Insurance A Must In India?

Types of Vehicle Insurances

There are two types of Vehicle Insurances – Comprehensive and Third Party

Comprehensive Insurance

As the name suggests, a comprehensive insurance plan helps insure the vehicle against any risk arising out of theft or damage to the vehicle, death of the driver and/or passengers in the vehicle during an accident, and damage caused by the vehicle to other people or property.

Coverage with Comprehensive Insurance

Comprehensive Insurance insures the vehicle against:

Natural calamities

E.g. Earthquakes, floods, typhoons etc.

Man-made calamities

E.g. Burglary, thefts, riots, strikes etc.

Personal accident cover

Provides personal accident cover for the individual owner-driver and passengers of the insured vehicle while travelling in, mounting, or dismounting from the vehicle.

Third Party Insurance

Third Party insurance only covers the damage done by your vehicle to other vehicle or property. It does not cover accidents, theft or damage to the vehicle.

Coverage using Third Party Insurance

Third party legal liability coverage protects you against legal liability arising due to accidental damages, such as:

  • Any permanent injury/death of a person
  • Any damage caused to the property
  • Caused while anyone is driving the insured vehicle

Both kinds of insurance covers are valid for only a year. They need to be renewed every year. The premium of the insurance depends on certain parameters like vehicle classification, value etc.

Additional Reading: How To Choose The Right Car Insurance Policy

Car Insurance Clauses

There are some clauses which are a part of your Car Insurance that you need to be aware of. You won’t be able to claim for any damages occurring to the insured vehicle because of:

  • Wear & tear or general ageing of the vehicle
  • Depreciation or any consequential loss
  • Mechanical/electrical breakdown
  • Wear and tear of consumables like tires and tubes
  • Insured vehicle being used for purposes other than mentioned in the limitations of usage in the insurance agreement
  • Vehicle being used outside the geographical boundaries of India
  • A person driving any vehicle without a valid license
  • A person driving the vehicle under the influence of drugs or liquor
  • Loss/damage encountered due to war, mutiny or nuclear risk

Claiming Insurance

In case you are involved in an accident or you accidentally bang your car somewhere which causes some damages to your vehicle, you can claim insurance.

To claim insurance, you need to:

  • Note the licence plate number of the other vehicle involved in the accident (if any)
  • Note names and contact numbers of witnesses (if any)
  • Call the insurance company and file a claim.
  • Make a note of the claim reference number given and the list of documents required for claim processing.
  • Check whether the insurance company has a preferred garage list and make a note of the same.
  • File a FIR at the nearest police station in case of property damage, bodily injury, theft, or major damages.
  • Submit the documents to the insurance company’s representative and verify it with the originals.
  • Make any additional payments required to the garage if the insurance company does not cover the complete repair expenses.

Additional Reading: When NOT To Claim That Car Insurance

Cashless Claims and Reimbursement Claims

With the changing features of insurance, it is possible now to get your vehicle repaired and claim for the insurance. The first is to go through the insurance company’s preferred garage list, choose one and get the repairs done there. The insurance company pays for the repairs minus the items not covered under the policy which is paid by the owner of the vehicle. This is known as a cashless claim.

Additional Reading: 7 Tips For A Better Car Insurance Claim-Settlement Process

The second way is to get the vehicle serviced or repaired at a garage of your choice and ask for reimbursement of the expenses from the insurance company. This is called a reimbursement claim.

Advantages Of Cashless Claims

  • Responsibility lies with the insurance company
  • The surveyor would take the car to the garage, get it repaired and return it back to the owner
  • The company’ garage network is generally reliable
  • The service provided by them is much better than any other local garage

Disadvantages Of Cashless Claims

  • A lot of formalities need to be followed before any action is taken
  • Often, the preparations are delayed since the surveyor may do the complete inspection before taking any decisions
  • The garage, which the insurance company chooses might be expensive and since the owner has to pay some percentage of the expenses, he may end up shelling out more money than estimated.

Advantages Of Reimbursement Claims

  • You can get your car repaired at your preferred garage by your trustworthy mechanic
  • Immediate action can be taken just after the inspection
  • The expenses may be within your budget
  • You may also get to repair other parts of the vehicle which were not damaged at the time of accident, if required

Disadvantages Of Reimbursement Claims

  • Responsibility is entirely yours
  • Repairs done by local garages may not be dependable

Now that you know all the necessary details about Car Insurance plans, it’s time to secure the car of your dreams using the cover it deserves.

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Category: Car Insurance

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20 thoughts on “How Does Car Insurance Work In India?

  1. Ashok Dhingra

    We keep paying the whole life for the insurance right from the date of purchase of the vehicle so how do you justify the deductions because of aging of components.There should be some portion of the insurance premeium set aside for small problems as and when they arise.The insurance companies have been allowed to make huge profits and they share them with the garrages and by appointing the sub agents etc and not with the customer. Who should look at this ?

    Reply
  2. dr zahoor

    Whatever said is right. What happens if the accident happens in some other state other than where the car is insured and you do not find a garage approved or authorised by te insurance company. There theproblem arises as there is no approved surveyor to certify your damage. What is to be done in this situation.

    Reply
    1. Binu Varkey

      If you car is a Maruti then just call the maruti toll free number and they will assist you. In case if you car is not a maruti then try to contact any public sector insurance companies office and they will arrange a surveyor for you.

      Reply
  3. Roshan Thomas

    I reside in Chennai. Last month an anonymous vehicle car hit my car parked outside my residence, almost damaging the entire left front door and the fender.
    I was insured under Bajaj Allianz, under the comprehensive insurance plan. I registered the complaint at around 11.45 p.m. on the toll free no., which was promptly noted down and a complaint registration no. given immediately. I was directed the next day by the personnel to approach My TVS or Cars India at Chennai for cashless claims. I choose My TVS being close to my residence.

    The nest day the inspection was completed and clearance given to the workshop to go ahead with replacement of the door and other works.

    I would say the entire process was absolutely hassle free and the staff at both Bajaj Allianz and My TVS were really warm and co-operative.

    I got the car back on the promised date.

    I would strongly recommend Bajaj Allianz Auto Insurance, their claim settlement is almost instantaneous and their staff courteous. My TVS job was excellent, absolutely looked like I was picking up a brand new car out of the showroom.

    Regards;

    RT

    Reply
    1. Binu Varkey

      You were really lucky that the accident has happened in the location where you live and where a representative of Bajaj Allianz Insurer exist. But when you are out of Chennai in some remote location the same is not the case. The claims in remote locations are attended only after lot of intimation and arguments with the insurer. You need not even make a call if the insurer is a public sector company. Just go the the workshop you like and the same day the insurer takes action.

      Reply
  4. Dakshinamurthy

    A nice and useful article indeed. It would help even better if a comparision chart is given showing the quotes from different insurers with their credibility in settling claims highlighted as otherwise you would be in utter confusion when it comes to going for a car insurance. Thanks & Regards – Murthy

    Reply
  5. Ajoy Kumar

    Sir,
    It was true that the insurance companies awere making huge profits on vehicle insurance, now the scenario has changed when competition has risen and co's ready to pump out 20 to 30% of the premium as commissions. The authorised repairer has also increased their say by pressurising their principals to allow to fix the repair rate on a on a very higher level so that they have a good say in the whole cycle of insurance claims procedure. Now the repairers are in a comfortable positions as they are the main parties negotiating with the insurance companies as they collect the premium from the clients and not the insurance co's as previously. The previous relation between the insurance co's and insured(client or vehicle owner) has stopped and is wholly represented by the repairer. The situation is going in a dangerous level where the insurance companies are loosing their foot hold and have to be very cautious on every thing ore else they loose the prenemium along with market standing & reputation, hence the authorised repairers and automobile manufacturers have to be tunes & controlled som thatthewy do not make the whole motor insurance portfolio collapse.

    Reply
  6. santosh

    Nice article, please write some more about how to go for the claim for general service and maintain a car without paying anything extra for life, there must be a way.

    secondly my battery died after i left the car with the dealer for a service, anyone can guess what might have ahappened, and by that time the car was only 1 year old. Then i had to pay for the battery, was there anyway i could have not paid for the battery?

    Then again recently i got a call from an insurance company asking me to go for the premium of 5.000 /- instead of the 7,000/- that i was paying, do you think there is a catch in that?

    Reply
    1. Binu Varkey

      The Battery that comes with the car or the newly purchased battery has 24 months warranty and should be replaced by the manufacturer. If you car is just one year oild then approach the Dealer from where the car has been purchased or any nBattery manufacturer authorised dealership.

      Reply
  7. k.a.pillai

    K.A.Pillai,Adyar, Chennai,12-5-2009
    We keep paying higher and higher premiums to copeup with theincreasing expenses of claims due to malpractices by few customers, insurance companys and their
    agents and garage owners. The insurance agents and garage owners of even reputed companies cheat us by hiking the cost of spare parts and repairs.They even
    refuse to accept certain clims and make huge money out of the whole affair.In case of third party insurance the Lawyers and police make money.No gwenuin owner
    is ever benefited. It is a farce to have any such systems in India without accountability, first to the goverment/political parties.

    Reply
    1. Binu Varkey

      The Private Insurers in order to gain more profits have adopted various malpractices and this is what has happened and can be stopped only if insured sues the insurer for such malpractices.

      Reply
  8. AK V

    Pl advise : Is it mandatory to file an FIR for affecting a claim?

    Reply
  9. Binu Varkey

    The entry of Private Insurance Company has brought in all sorts of malpractices and the same is ignored by IRDA which actually should monitor all irregularities. It is the duty of the Insured to identify a proper insurer and then get the vehicle or any other items insured. The Agent of a Private insurer is mostly not an IRDA authorised agent. He does his job and some time takes away the premium. In any Public Sector Insurance Companies such things never happen because if the premium does not get accounted the insurer immediately(within 3 days) intimates the customer, but none of the private insurers do this. Private sector insurers never pay the actual liable amount to the insured in any claim, they do a lot of malpractice and take advantage of the customers ignorance to reduce their liability. While any Public Sector Insurer cannot and will not do the same, because all the claim settlement, loss assessment process is done in the proper way using well experienced IRDA approved and licenced Insurance Surveyors. All the personals involved in any public sector insurance companies claims have a clear identity starting from issuing of the policy. While in case of the private insurer this not the fact, they sell policy through some partime executives and claim assessement is done by unidentified and non technical workshop personals. If the insured needs to get a proper insurance it is always better to approach any public sector insurer. None of the Public sector insurers have any hidden and misguiding conditions.

    Reply
    1. Team BankBazaar

      Hi Varun, Glad you liked our article. Currently, we have 6500+ articles on our blog. Feel free to read them. Also, if you’d like to learn more about any topics that we haven’t covered, kindly let us know. Cheers, Team BankBazaar

      Reply
    1. Team BankBazaar

      Hi Varun, Glad you liked our article. Cheers, Team BankBazaar

      Reply
    1. Team BankBazaar

      Hi Vikas Poonia,

      Appreciate the feedback. Have a nice day!

      Cheers,
      Team BankBazaar

      Reply

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