India has over 22 cars per 1000 people. This number is expected to grow to over 175 cars per 1000 people. Total vehicles stand at 297 million as of FY-19. This is one of the largest markets for the insurance sector in India. Further, having a motor insurance policy has been made mandatory for Indians wanting to drive or ride on Indian roads.
Further, There have been over 1.5 lakh fatalities where Indians have lost their lives due to motor accidents in 2019. This makes it imperative that vehicle owners get insured without exception. This content piece will discuss the most important aspects of motor insurance and everyone intending to purchase or renew a motor insurance policy should read this page.
The following important topics will be discussed:
What is Motor Insurance?
Importance of Motor Insurance
Benefits of Motor Insurance
Types of Motor Insurance
Motor Insurance Companies
Motor Insurance add-ons
Motor Insurance claims process
Motor insurance is a contract between a vehicle owner and the insurance company. The insurance company will indemnify the vehicle owner against damages in exchange for a premium. This concept is similar to that of health or life insurance. That being said, let us understand the concept of motor insurance with the help of a simple example.
Example: Let us assume that Mr. Verma has bought a comprehensive motor insurance policy from HDFC ERGO. The company provides him a coverage (IDV) of Rs 5 lakhs on his new car. Mr. Verma now, unfortunately, crashes his car against a tree and totals the vehicle. As he is covered by vehicle insurance, the insurance company will bear the total loss of the car and pay Mr. Verma his sum assured. Had Mr. Verma not been insured, he would have to bear the entire loss himself.
There are two primary types of motor insurance policies. They are comprehensive motor insurance policies and Third-party motor insurance policies. Let us understand both types and point out the differences between the both.
Comprehensive Motor Insurance | Third-party Motor Insurance | |
Coverage | Coverage extends to owner, owners vehicle and the third-party. | Coverage only extends to third-party. |
Cost | Generally more expensive than third-party insurance. | Cheaper than comprehensive insurance as the coverage is limited. |
Is it mandatory? | Not mandatory | Mandatory |
Does it protect against natural disasters? | Yes | No |
Is it customizable? | Yes | No |
There are a variety of motor insurance add-ons that you can purchase while purchasing a comprehensive motor insurance policy. These add-ons provide more customization and flexibility. Let us look at some of the popular addons that one may consider opting for while purchasing a motor insurance policy.
There are two primary types of claims, owner damage claims, and third-party claims. Let us understand both of these claims processes.
This is where your own car is damaged due to an accident and you want a reimbursement for the same from the insurance company.
Step 1: Intimate your motor insurance company
First, you will need to intimate your insurance company about the accident. If possible kindly take pictures of the accident and keep them handy.
Step 2: Fill the claim form
You can download the claim form from your insurance provider’s website. You will have to duly fill this form accurately and without error. Once filled, kindly submit this form to the agent or insurance company. Remember, all fields must be filled truthfully, any falsification can cause your claim to be rejected as it goes against the principles of insurance.
Step 3: The insurance company sends a surveyor
The insurance company will now send their surveyor to assess the damage caused. It is the surveyor’s job to make a report on the cause of the accident along with the extent of the damage. The surveyor will then present this report to the insurance company. You will also get a copy of the same.
Step 4: Repair your vehicle
You can now submit your vehicle to a garage for repairs. Ensure that you submit your car to a networked garage if you wish to avail of cashless service.
Step 5: Submission of bills and reimbursement
Remember to collect all bills and receipts by the garage. You will have to submit these documents to the insurance company to get reimbursement. Once submitted, the insurance company should reimburse you the amount within 15 working days.
A third-party claim is where someone other than the policyholder is impacted by the accident. The third-party claims process is slightly different from owner damage claims. Let us understand its steps.
Step 1: Help the affected person wherever possible
We understand that this could be a stressful situation, but you should ensure that you make available any medical help that the opposite person requires.
Step 2: Intimation of accident
You will have to intimate your insurance company about the accident. Claim intimation should be done as soon as possible.
Step 3: Send FIR copy and other documents to the insurer
You will have to send the FIR copy along with the RC book copy, insurance policy copy, Photo ID, and address proof to the insurance company.
Step 4: The third party sends legal notice
If the third party wants to file for damages, he will send a legal notice to you. Ensure that you do not respond to their legal notice directly, kindly send the notice to your insurance company. They will do the needful.
Step 5: The insurance company appoints a lawyer
The insurance company will vet your submitted documents and then appoint a lawyer on your behalf that will represent you in court.
Step 6: The insurance company will pay the third party
The insurance company is bound to pay the court-ordered financial compensation to the third party. It will do so, thereby closing the matter.
Name | Claims Settlement Ratio |
---|---|
HDFC ERGO | 99.8% |
Kotak Mahinda Insurance | 98.6% |
Bajaj Allianz | 98.6% |
Liberty Insurance | 97.8% |
ICICI Lombard | 96% |
Magma HDI | 95.4% |
Acko General | 93.4% |
Future Generali | 93.3% |
Tata AIG | 92.8% |
Bharti AXA | 92.2%% |
Read this article about Motor Insurance in Hindi
AUTHOR BIO
This article is written by Team InsuranceLiya.com, an independent website that writes about insurance, finance, health, and more. Our writers have a wealth of knowledge, experience, and degrees in the fields of insurance, finance, economics, and beyond.