Today, owning a car has become more of a need than a luxury. It is a significant investment for families and involves detailed research and large financial resources. While most of us may take that extra step to maintain our vehicles or drive safe, there are forces beyond our control that can damage our vehicles - from normal wear and tear, to accidents and acts of gods.
Concept of Car Insurance
Your car is a crucial financial asset that has the potential to extend plethora of benefits to you. In order to safeguard these benefits, it is important you insure your vehicle. Troubles with your vehicle can not only lead to financial losses, but also endanger third parties.
In India, car insurance has been mandatory under the Motor Vehicle Act to protect such third parties.
How Does It Work?
Car insurance works on a 'use it, lose it' concept. You can avail car insurance by paying a yearly premium. In case there are no claims in a given year, the premium is also lost.
The value of your insurance policy is determined through the Insured Declared Value (IDV) of your vehicle.
The IDV is the maximum sum assured fixed by the insurer. Basically, it is the current market value of your vehicle.
So, when you buy insurance for a new car, the IDV is calculated based on the showroom's listed price. However, the IDV of your car is not constant.
When you renew your motor policy after a year, your IDV will decrease because of the rate of depreciation that is applied on vehicles between one and two years old.
IDV = (Manufacturers listing price - Depreciation)
(Accessories not included in the listed price - Depreciation)
Therefore, the lower the IDV, lesser is the premium payable. Consequently, the amount that you can claim for damages also reduces.
What Does Car Insurance Cover?
A comprehensive car insurance covers:
Loss or Damage Due to Natural Calamities:
Your car insurance will cover loss or any damage to your vehicles due to fire, explosion, lightning, earthquake, flood, typhoon, hurricane, storm, cyclone, and landslide.
Loss or Damage Due to Man-Made Calamities:
Protect your car against burglary, theft, riot, strike, terrorist activity, and any damage caused in transit by road, rail, inland, waterway, lift, or elevator.
Personal Accident Cover:
Get coverage of Rs. 2 lakh for any damage caused to the driver while travelling, mounting, or dismounting from the car. Car insurance policies even offer optional accidental covers for co-passengers.
Third Party Legal Liability:
Protect yourself against the legal liability of accidental damages that have resulted in permanent injury or death of the third party. It also covers damage caused to the surrounding property.
Some insurance policies offer riders like:
- Zero Depreciation
- Road Side Assistance
- Engine Cover
- No Claim Bonus (NCB) Retention
- Daily Cash Allowance
Avail Car Insurance
At ICICI Lombard, you can shop for your car insurance or avail your claim online. Moreover, you can avail cashless facility for the repair of your vehicle at our cashless garage network. In case your vehicle is serviced in a garage outside our network, you can claim reimbursement for the same.
Word of Caution
The subject of car insurance doesn't end at claims. It is important to note that the validity of your insurance is up to a certain period. Failure to renew your policy could lead to heavy penalties. Moreover, you may have to purchase a new policy altogether to comply with the law. In case of an accident, you would have to pay the entire damage amount without any reprieve.
Visit us to know more about our car insurance services.