Cashless Car Insurance Policy
A cashless insurance policy, first introduced in the health insurance domain, allows a policyholder to avail services covered under the policy without having to pay for them out of pocket. The insurance provider has
a tie-up with the service provider and pays for the approved services directly to the service provider.
Cashless insurance has grown in popularity over the years, and has been introduced in asset insurance domain as well. It has emerged as the preferred mode of settlement for motor insurance. Cashless settlement needs a quick turnaround as the claim has to be approved before the service is delivered. If it takes too long to approve, the claim may be converted to a reimbursement claim.
What Is Cashless Car Insurance Policy
A cashless car insurance policy allows the policyholder to get their car repaired at any of the network garages without paying anything out of their pocket. The bill for the repairs is sent directly to the insurer
and the monies paid out to the garage. A cashless reimbursement is fast, easy and hassle-free for the policyholder.
That said, the deductibles apply to cashless settlement as well. You will have to pay the compulsory deductible of Rs 1,000 or Rs 2,000 based on the cubic capacity of your car. If you have opted for any voluntary deductible, that would also be paid by you. The insurance policy will only pay the remainder.
Further, if any of the damage is not covered by your car insurance policy – you will have to pay for them out of your pocket. For example, many basic car insurance policies do not cover water damage to the engine.
How Cashless Motor Insurance Policy Work?
Most insurers in India have tied up with garages around the country to provide cashless car repair services. The insurer would provide you with a list of such authorised garages – called network garages – along with
the policy documents. You would be able to locate the garage closest to you by either checking with your insurance agent, or calling up the toll free number provided by your insurer.
If the car sustains any damages in an accident, you can choose to get the repairs done in a network garage. Inform the insurer about the damage as soon as possible. At the garage, along with your car also handover
the details of your car insurance policy so that the garage can initiate the process of cashless claim settlement. The insurer may inspect the car before approving the cashless settlement. Once the claim is approved,
the repairs would be carried out and the bill is sent to the insurer directly.
While the most of the bill will be paid for by the insurer, you would have to bear the cost of any deductible, and the depreciation cost of any parts replaced. You could avoid paying the depreciation charges if you have the zero depreciation add-on cover as well.
What Is Depreciation In Car Insurance?
Depreciation is defined as the reduction in value of an asset over time. This reduction is in particular due to wear and tear. With respect to car insurance, two kinds of depreciation come into play – the
depreciation of the car itself and the depreciation of various car parts and car accessories.
When you file a claim against your car insurance policy, the insurer typically deducts the depreciation cost before making the payment. The Insurance Regulatory and Development Authority of India (IRDAI) has set
rules for how the depreciation should be calculated. These rules are applicable regardless of how you use your vehicle. The same are listed below:
While the most of the bill will be paid for by the insurer, you would have to bear the cost of any deductible, and the depreciation cost of any parts replaced. You could avoid paying the depreciation charges if you have the zero depreciation add-on cover as well.
- 50% Depreciation on Nylon, Plastic Parts, Rubber Tyres and Tubes, Air Bags and Batteries
- For Car paint, 50% Depreciation on the Material Cost of the paint
- 30% Depreciation for Fibreglass
- For other parts including wooden parts, depreciation depends upon the age of the car as per the table below
| Vehicle Age |
% Depreciation |
| Less than 6 months |
NIL |
| 6 months – 1 year |
5% |
| 1-2 years |
10% |
| 2-3 years |
15% |
| 3-4 years |
25% |
| 4-5 years |
35% |
| 5-10 years |
40% |
| Greater than 10 years |
50% |
The depreciation in the overall value of the car is calculated based on the below schedule. If the car is older than 5 years, the insured declared value in car insurance is arrived at by mutual agreement between the policyholder and
the insurer.
| Vehicle Age |
% Depreciation for adjusting IDV |
| Up to 6 months |
5% |
| 6 months – 1 year |
5% |
| More than 6 months but under 1 year |
15% |
| More than 1 year but under 2 years |
20% |
| More than 2 years but under 3 years |
30% |
| More than 3 years but under 4 years |
40% |
| More than 4 years but under 5 years |
50% |
| Greater than 10 years |
50% |
What Is A Deductible In Car Insurance?
A deductible is the part of the insured expense that you have to pay out of your pocket before the insurer pays for the rest. In case of car insurance, deductibles are usually applied on a per claim basis. For
instance, if you file a claim for damages worth ₹15,000 and the deductible is ₹1,000 – the insurer would only provide for ₹14,000.
Higher the voluntary deductible you opt for, lower will be the car insurance premium charged. But remember that a higher voluntary deductible results in a larger amount to be paid out of your pocket during a loss
event. Therefore, you should carefully choose a deductible that you are comfortable paying out of pocket.
When deciding the amount of voluntary deductible, consider how much would you be able to pay without it having an impact on your other expenses. Your household budget, your income, your saving plan and also your
access to credit, all play a role in this decision.
Compulsory Deductible
With this kind of deductible, the policyholder has no choice but to pay a part of the motor insurance claim. IRDAI regulations have fixed the value of compulsory deductible in car insurance based on the cubic
capacity of the car engine. At present, it is set at ₹1,000 for cars with a cubic capacity up to 1500cc, and at Rs 2,000 for greater cubic capacity. The compulsory deductible does not have any impact on the car
insurance premium. Compulsory deductible is only applicable for comprehensive car insurance, and not to third-party car insurance policies.
Voluntary Deductible
A voluntary deductible is the amount that would have been paid by the insurer under usual conditions, but you selected to pay it out of your pocket. Choosing to have a voluntary deductible added to your insurance
cover brings down your car insurance premium significantly. This is because the risk that the insurer is exposed to is lowered when the insured opts for voluntary deductible.
You will have to decide on how much you are willing to pay out of your pocket at the time of policy proposal itself. The deductible would be applied to every claim you file in the policy period. The insurer will only
pay the part of the claim amount that is above the total voluntary and compulsory deductible.
Exclusions Of Cashless Car Insurance Policy
A voluntary deductible is the amount that would have been paid by the insurer under usual conditions, but you selected to pay it out of your pocket. Choosing to have a voluntary deductible added to your insurance
cover brings down your car insurance premium significantly. This is because the risk that the insurer is exposed to is lowered when the insured opts for voluntary deductible.
- 50% Depreciation on Nylon, Plastic Parts, Rubber Tyres and Tubes, Air Bags and Batteries
- For Car paint, 50% Depreciation on the Material Cost of the paint
- 30% Depreciation for Fibreglass
- For other parts including wooden parts, depreciation depends upon the age of the car as per the table below
What Is A Network Garage?
The general exclusions of a cashless car insurance policy include:
- Honest and fair service
- Transparent pricing
- Car wear and tear and ageing
- Damages suffered while driving under the influence of drugs and alcohol
- Electrical and mechanical breakdown
- Damages incurred while driving without a valid licence
- Losses or damages incurred due to war, nuclear risk or mutiny
How To Get Cashless Garage Facility?
To get access to a cashless garage facility, all you need is to get a comprehensive insurance policy from a reputed insurance company in India. Before purchasing the insurance policy check the list of the network
garages provided by the insurer to check that you have garages near where you may need servicing.
Benefits Of Cashless Claim Facility
If you are still not convinced, here are a few more benefits of buying a comprehensive car insurance policy for your second had car:
-
Stress free The greatest benefit from having access to a cashless claim facility is that you do not have to worry about how to get your car repaired. Just take it to the nearest network garage,
and everything will be taken care of. You only have to pay the compulsory and voluntary deductibles.
-
Quick and hassle-free Most insurers have a large number of garages and service centres in their network, allowing you to find one near you. The process of filing the claim is simple and takes
just a few minutes.
-
No need for cash If your car sustains damage in an accident, the repairs can cost quite a bit. With a cashless garage facility, you don’t have dip into your emergency cash reserve for the
repairs. Just find the closest authorized garage and you can get your car repaired at a minimal expense out of your pocket.
Steps To Be Followed To Make A Cashless Claim
Follow the below steps to make a cashless claim:
- Inform the insurer about the accident as soon as practical. Call the claim intimation number provided by the insurer and get the details of the authorized garage near you.
- In case you need a towing service, the insurer would arrange for the same.
- Submit the duly-filled claim form along with any requisite documents to the insurance company. You should be able to do this at the network garage as well.
- The insurer would appoint a surveyor to inspect the car and assess the damage.
- In case of a major accident, the surveyor may want to inspect the site of the accident as well.
- Post the inspection, your insurer would inform the garage once the claim approved.
- The garage would make the repairs and submit the invoice directly to the insurer.
- The insurer would make the requisite payments after deducting the depreciation costs of any car parts/accessories replaced.
- If the insurance company finds that the cost of repair is significantly high compared to the insured declared value, they may choose to write it off as a total loss and pay out the IDV to you instead.
Documents Required For Registering Your Car Insurance Claim/h2>
You need to submit the following documents to register your insurance claim:
- Complete claim form
- Registration certificate copy
- Aadhaar / PAN card
- Policy copy
- NEFT and cancelled cheque
- FIR or police report
- Copy of driving licence
Your insurer will inform you if you need to submit any additional documents.
Why ICICI Lombard For Cashless Car Insurance?
When you buy an insurance cover from ICICI Lombard General Insurance, you join a family of over a millions satisfied customers. You can reach out to our team any time of the day, from anywhere in the country for
assistance with your car insurance policy. You just make a call to our numbers and we would guide you through the simplified claims process to ensure that the settlement happens as soon as possible.
You also get access to our vast network of cashless garages, allowing you to get your car repaired without having to shell even a single rupee from your pocket. The claims are settled in a completely hassle-free
manner and the payment made directly to the garage. Our strong online presence allows you to not just buy and renew policies online, but you can also file claims completely online making the process much simpler than
ever before.
ICICI Lombard General Insurance also offers a large bouquet of add-on covers through which you can customize your coverage to your specific requirements.