1 Model/Make/Variant
Imported, expensive, lavish cars will attract higher insurance premiums.
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What is Car Insurance?
After home, buying that dream car is the next big investment that you can make. Thus, creating a shield for that investment against unforeseen events is crucial. Considering the risks involved in driving and the hike in car repair charges can put a big hole in your pocket. Car insurance policy helps you to cover against losses/damages that may happen to both you and to your car due to events like accidents, thefts, or natural disasters.
The yearly premiums that you need to pay for your car insurance policy is a small amount as compared to the overall financial gain that you can avail from the policy in case of any mishap.
India, being the economy with the largest youth population in the world, has millions of people applying for driving licenses. Higher disposable income is allowing a lot of people to own private cars, increasing the risk of road accidents and traffic rule violation. Considering poor road conditions in India, it is necessary to buy a car insurance policy to safeguard not only the car and the owner/driver, but also the third-party property damages/bodily injuries.
Let’s look at the major reasons to have a car insurance policy:
Commercial vehicle insurance is of two types.
| Third Party Insurance Policy | Comprehensive Insurance Policy |
| This is the fundamental two wheeler insurance coverage that includes financial liabilities arising from third party damages. | This type of coverage protects you, your vehicle along with third party person/property from the financial damages caused due to an accident. |
| It’s mandated under the Motor Vehicles Act | Not a mandatory requirement under the Motor Vehicles Act of 1988 |
| Third party insurance is cheaper than comprehensive two wheeler insurance, due to narrow fixed coverage. | Due to the wide coverage, this type of insurance is more expensive as compared to third party two wheeler insurance. |
| Does not cover own damage to the vehicle or Personal Accident cover to the owner-driver. | Does not cover any kind of deliberate damage like damage caused by driving under the influence of drugs/intoxicants, damage caused by illegal racing, etc. |
| Add-ons are not available | Coverage can be enhanced with two wheeler insurance add-ons. |
Model/Make/Variant: Imported, expensive, lavish cars will attract higher insurance premiums.
Imported, expensive, lavish cars will attract higher insurance premiums.
IDV is the market value of your car. This is directly proportional to the premiums of your car insurance. As your car ages, the IDV tends to go down because of depreciation. Higher the IDV, higher is your premium.
Diesel cars cost you higher premiums than petrol cars. Also, the engine size, measured in cubic capacity (cc) determines your premium amount. Higher the cubic capacity, higher is the premium. Cars running on gas/CNG will have higher insurance premiums.
Car insurance premiums are heavily influenced by where you stay. For premium calculation India is divided into two zones – Zone A and Zone B. While Zone A comprises metro cities including Kolkata, Chennai, New Delhi, Mumbai, Bengaluru, Hyderabad, Pune and Ahmedabad, Zone B covers the rest of India. Premiums for metro cities are higher as compared to rest of the cities due to substantial risk of road accidents. Also places which are prone to more natural calamities like landslides, flood, etc., will attract higher premiums.
Depending on the type of coverage you choose; your premiums portion will vary. Comprehensive insurance will attract a higher premium compared to third-party insurance. While TP insurance is mandatory and Comprehensive is important.
Depending on how many claims have been made and how many No Claim Bonus (NCB) have been accumulated, insurance premium amount will vary. More NCB you accumulate, the more discounts you are offered on your car insurance premium.
These are interesting ways to enhance your car protection. More add-ons you choose, the more premiums you must pay, as add-ons come with extra price.
If you opt for higher voluntary deductibles in your insurance policy, your premium portion will be lower. This is because the onus of risk is now distributed among the insurer as well as insured.
If your car is fitted with safety amenities like ARAI approved anti-theft device, gear lock, GPS, and airbags, etc., the risk of getting it stolen goes down drastically. This instill confidence in the insurance provider about lesser insurance claims and thus reduces the premium rates.
If your car is used for commercial purposes, then your premium amount will be higher than normal. This is because commercial cars have a higher risk of damage than private cars.
Personal factors are also a big reason that decides the premium rate. Comparatively, women are considered safer drivers than men. And hence, women must pay a lesser premium than men. Similarly, age is another factor that has an impact on costs. People aged under 25 years need to pay a higher premium than those aged between 50 years to 65 years who are required to pay the least.
| Age of the vehicle | % of Depreciation for fixing IDV |
| Not exceeding 6 months | 5% |
| Exceeding 6 months but not exceeding 1 year | 15% |
| Exceeding 1 year but not exceeding 2 years | 20% |
| Exceeding 2 years but not exceeding 3 years | 30% |
| Exceeding 3 years but not exceeding 4 years | 40% |
| Exceeding 4 years but not exceeding 5 years | 50% |
The following rate of Depreciation applies during replacement of parts for partial loss claims for all categories of vehicles/accessories.
| Age of the vehicle | % of Depreciation |
| Not exceeding 6 months | NIL |
| Exceeding 6 months but not exceeding 1 year | 10% |
| Exceeding 1 year but not exceeding 2 years | 20% |
| Exceeding 2 years but not exceeding 3 years | 30% |
| Exceeding 3 years but not exceeding 4 years | 40% |
| Exceeding 4 years but not exceeding 5 years | 50% |
| Exceeding 5 years but not exceeding 6 years | 60% |
| Exceeding 6 years but not exceeding 7 years | 65% |
| Exceeding 7 years but not exceeding 8 years | 70% |
| Exceeding 8 years but not exceeding 9 years | 75% |
| Exceeding 9 years but not exceeding 10 years | 80% |
| Exceeding 10 years | 85% |
Different companies follow different criteria and use a standard calculator to determine the amount of premium for the selected coverage.
For a new car, you need to provide the following information to calculate the car insurance premiums:
For a used car, the car insurance calculator needs slightly variable information given below:
Here is a list of inclusion in a car insurance policy
| Nature of injury | Scale of compensation |
| Death | 100% |
| Loss of both limbs or sight of both eyes or one limb and sight of one eye | 100% |
| Loss of one limb or sight of one eye | 50% |
| Permanent total disablement from injuries other than named above | 100% |
Add-ons are a saviour when your car is exposed to risks which are not covered in a standard car insurance. They simply enhance your car protection by providing you extra financial aid during any mishap. You need to go through the policy wordings to get the clarity on the value-added services provided by your car insurer.
The moment a car is sold and leaves the showroom, its value depreciates. The value of the car further reduces with each passing year due to natural wear n tear. When your car faces an unimaginable mishap and is destroyed beyond repairs, insurance companies will refund the complete value/amount mentioned on the invoice if you opt for RTI add-on. However, Return-to-Invoice cover is available only for new cars that are between 3-5 years old.
Zero depreciation or Nil Depreciation or Bumper-to-Bumper Cover is a car insurance add-on for new cars which are not more than 5 years old. Every year due to natural wear n tear, the value of a car depreciates. That is where a zero-depreciation cover helps, as there are no depreciation costs charged when you make a claim, and you get the entire claim amount. Nil Depreciation or Zero Dep plan covers repair and replacement costs of rubber, plastic, and fibre components of the car. Some insurers may allow up to two zero depreciation claims while some may allow unlimited claims.
NCB enables car owners to save at least 20% to a maximum of 50% in a span of five years. But once made a claim, NCB goes back to 0%. This add-on protects your accumulated No Claim Bonus, also ensures the next NCB slab so that you can earn a significant discount on your renewal premium. Please note that the NCB cover is available only on Own Damage cover premium and not on Third Party Liability Cover premium which is decided by IRDA and cannot be altered.
There are several ways through which you can save on your car insurance premium without compromising on your policy coverage. Check them out below:
No Claim Bonus is rewarded for every claim-free year. You can reserve your NCB to avail discounts on your renewal premium by not making small claims.
It is important to be aware of the year of manufacture of your car. This is because older cars attract lower premium rates due to having a lower Insured Declared Value (IDV).
You should consider safety devices that can enhance the safety of your car. Insurers will offer your premium at a discounted rate.
Deductibles decrease the insurer’s liability towards the claim amount as you need to pay a certain share of the amount from your own pocket. Therefore, if you opt for a high voluntary deductible, your insurer will acknowledge it by offering lower premium rates.
The following factors are important to be considered while buying a vehicle insurance to get the best rates on your comprehensive coverage:
In a world of digitization, customers can now avail the benefits of buying car insurance online. It is way better than the traditional method of getting insurance where customers need not waste time visiting insurance offices. Online is very handy in comparing products from various insurers and then finalising your decision.
Here are some key benefits of getting car insurance online.
Processes and documents required to file a car insurance claim will depend on the type of car and nature of loss.
There are two types of claims:
| Cashless Claim | Reimbursement Claim |
| If the concerned damage is covered under the car insurance policy, you can get it serviced at the network garage of the insurance company. You don’t have to pay a single penny here as the entire amount will be settled by the insurance provider to the workshop. | In this type of car insurance claim, an insured does not need to get his/her car repaired at a network garage of the insurance provider. For claim reimbursement, an insured must pay for the repairs of the damage first and then he/she needs to submit the bills and repair receipts with the policy provider. |
| Claim Settlement Process for Cashless Claims | Claim Settlement Process for Reimbursement Claims |
| After the surveyor receives all the relevant documents, he instructs the garage to work on the damaged car. | It is mandatory to report the incident or damage to the insurance provider and get the inspection done by the appointed surveyor within 48 hours of the incident. |
| The surveyor can conduct another survey after the completion of the repair process at the garage. | Once the insured car is repaired in the preferred garage of the insured, he/she can claim for reimbursement. |
| The Delivery Order (DO) is issued by the insurer after receiving the repairs invoice from the garage. | Submit all the original invoice of repairs provided by the garage and receipt of payment to the insurance provider. |
| The garage is allowed to release the repaired car after collecting the duly signed ‘Satisfaction Voucher’ from the policyholder | As soon as all the required documents are approved, the claim amount is reimbursed. |
Accident Claims
Theft Claims
Third Party Claims
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply CIBPL/Car/WebBanner/English/Jan-22/011
No, your car insurance policy is attached to your car registration number and hence your current insurance policy cannot be used for your new vehicle. You will need to get a new car insurance policy for the same. In case you are selling your old vehicle, you can just transfer your old insurance policy to the new owner.
In case there is a mistake in your car policy document, you should immediately notify your insurer about it. Provide evidence of the correct information and request your insurer to rectify the mistake. Once the insurer receives the evidence, they will pass an endorsement or issue a new policy document with the correct information.
Yes. A four-wheeler insurance policy document issued online is legally valid under the motor laws of India. However, make sure that the policy has been purchased from an IRDAI registered insurance company or broker website.
Under certain types of claims, your motor insurer may need you to file a First Information Report or FIR with the Police as part of the claim process. For instance, claims arising out of car theft or third party liabilities will require a Police FIR. On the other hand, claims arising out of car damages due to natural calamities may not need a Police FIR.
To transfer a vehicle insurance policy to your name, you need to follow the steps given below:
Every car insurance comes with a validity period, post which you need to renew it to continue to enjoy its benefits. However, even if you miss to get your car insurance plan renewed by the expiry date, you can still get it renewed till the next 90 days from the date of expiry. After the expiry of this 90-day period, car insurance cannot be renewed. In such a case, you need to purchase a new car insurance policy.
As per the Indian Motor Tariff, every car owner in the country is compulsorily required to own at least a third party car insurance cover. Absence of a valid third party car insurance plan is a punishable offence which attracts a fine of Rs. 2,000 and/or imprisonment of up to 3 months for the first offence.
The premium price of third-party car insurance plans is determined by the IRDAI, whereas the premium for standalone own-damage and comprehensive plans vary from insurance company to insurance company. Factors which affect the premium for own-damage four wheeler insurance cover are Insured Declared Value, Engine capacity, Age of the car, Make model & variant, RTO location.
Yes, the four wheeler insurance can be transferred from the old owner to the new owner in case of the sale of a second-hand car. As per the Indian Motor Tariff, the policy transfer should be completed within 14 days from the car’s purchase date.
You can insure the accessories that you purchased for your car at the time of car insurance policy renewal time and not in the middle of the insurance policy term.
An insurance company declares the insured car to be a constructive total loss when it gets damaged to an extent where repair cost would equal or exceed its cost or its insurance coverage limit. It states that the insurance company will have to pay out the insured value of the car rather than pay for it to be restored to its previous condition.
A voluntary deductible is the share of the insurance claim that the policyholders agree to pay from their own pocket. If you choose this deductible, the premium of your policy will decrease.
Comprehensive car insurance gives coverage to your third-party liabilities in addition to the damage sustained by your car due to an accident, theft, fire, natural calamities like earthquake, flood, etc, and man-made disasters such as riots, strikes, and so on.
The renewal of the car insurance policy ensures the continuation of policy coverage for the next policy year. Apart from fulfilling legal requirements and policy cover, the on-time policy renewal brings several other benefits such as save your NCB, allow self-inspection and help in hassle-free renewal.
Yes, your NCB can be migrated and you can avail of it even if you change your insurance company during the policy renewal. However, you will have to submit evidence of the earned NCB through a renewal notice from your current insurance company.
If you are renewing the car insurance policy with your own insurance company then only your policy document will be required to avail No Claim Bonus. But, if you are renewing your plan with a new insurance company for your current car, you will be required to have your previous year’s car insurance policy document or renewal notice which states the NCB you are eligible for.
You must inform your insurance company about the change in your car's fuel type to CNG as soon as you get the kit installed in your car. You should not wait for car insurance policy renewal to inform your insurance company about the modification so that the kit can be covered under the plan.
Driving a car without holding at least a third party car insurance plan is an illegal and punishable offence. According to the Motor Vehicle Act, the punishment of driving a car without holding the basic car insurance policy is ₹2,000 and/or imprisonment of up to 3 months.
Generally, there are no such restrictions applicable on the number of claims that you can make in a policy year under your car insurance policy. However, one should keep in mind that the car insurance claim impacts your No Claim Bonus (NCB) as well. Also, repeated claims in a policy year and termination of NCB can enhance the amount of premium during the renewal of the policy.
