Insurance & your Car

1. WHICH POLICY - PACKAGE OR LIABILITY?
There are two types of insurance Package (Comprehensive) and Liability (Third Party). Though dealers usually make out a Package policy, you can opt for a Liability policy, which is compulsory by law. The Liability policy covers:

1. Third party bodily injury or property. While the liability on bodily harm or death is unlimited as awarded by the judge, the liability towards property is limited to Rs 7.5 lakh for four-wheelers.
2.  Personal accident cover upto Rs 2 lakh on death risk for the owner or the driver.
3.  Besides this, a third party policy also provides a cover for employees of the owner of the vehicle injured or killed while travelling in or using the vehicle.
4. The extent of this cover is as required under the Workmen's Compensation Act.

 

A Package policy covers all the above and also the damage caused by accident and other unfortunate incidents (see panel) in the unfortunate event that your car is a total loss in an accident, the insurance company is liable to pay you the car's insured Declared Value (IDV) at thetime of the loss.

 

A Package policy that will cover only fire and theft or only fire or only theft can be obtained too. But all Package policies include the third party liability cover.

Obviously the costs vary, with a complete Package policy demanding the maximum annual premium while a Liability policy demanding the maximum premium while a Liability policy is way cheaper. But it still makes sense to go in for a Package Policy if you're going to use your car daily.

Liability insurance is usually opted for by dealers who've bought a car and have had to renew the insurance. Since they aren't going to use the car or keep it for long, they take the cheaper way out.

While insurance is your safeguard against accidents, there are certain things that insurance will not cover, such as consequential loss, depreciation. Wear and tear, mechanical, electrical breakdown and failure or breakage, war and nuclear perils and drunken driving. Also, any accident caused by a driver holding an invalid license.

2. WHAT DOES A PACKAGE POLICY COVER?

1. Accident
2. Fire, explosion, self0ignition, lightning
3. Burglary, house breaking theft
4. Riots and strikes
5. Earthquakes
6. Flood, typhoon, hurricane, storm, cyclones
7. Malicious acts
8. Terrorism
9. Inland transit by rail/road, air, waterways.

The cost of repairing a car can run into large and hurtful figures. It is when you hold the estimate of damage in your hand that you will feel positively disposed towards your insurance agent. From the time that the accident happens to when you finally hold the compensatory cheque, there are procedures to be followed and forms to be filled. Giving below are five steps that explain how you should go about claiming insurance 

3.WHEN THE ACCIDENT HAPPENS

Note down the date, time and place of the incident. Also make a note of the speed that the car was travelling at that time. All this comes in handy because there are sections asking about this information in the claim form.

4.STARTING THE PAPERWORK.

Once you've decided you want to claim insurance, you need to submit a letter (stating your policy number and vehicle number) requesting a claim form to the divisional office through which you policy has been registered. It also helps if you go to the divisional office and ask for a claim form - chances are you'll get one without any questions asked.

Fill out the claim form carefully giving precise information about the circumstances of the accident and the damage to your car. Along with the form, you also have to attach a full set of car paper copies (which will be verified by the surveyor), the police complaint copy (if any), the damage estimate (explained below) and a copy of the license of the person driving.

The authorised dealer or the garage where your car is going to be repaired will make out an estimate of damage, which will include cost of parts as well as labour and painting. A copy of this estimate is to be attached along with the clain form and submitted to the insurance office. Be warned that repairs on the car cannot be started yet.

5. THE SURVEYOR 

Once your insurance company receives the duly filled claim form, they will issue a Claim number, which correspondence regarding the claim. The company will also depute a surveyor to survey the damage that has been claimed. Once the surveyor has done that and made change (if any) to the estimate, the repairs can start.

6. BILL AND PAYMENT

Once the repairs are through, you will have to pay the garage out of your own pocket. The garage will give you bills (separate bills for labour and parts) and a stamped receipt for the total amount. You have to submit these to the insurance company starting your Claim number.

The bills are then sent to the surveyor for a bill check, where he checks the bills against the estimate that he had passed, anything extra has to be paid by you. Plus, if there are salvageable parts, 3 to 5 percent will be cut for those. Rubber, fibre or other fast-wearing parts carry a depreciation of 50 percent from day one. What thus means is that if someone rams into your brand-new car and cracks your bumper, what you get for it under insurance is only half the price for a new one. 

7. SEEING THE MONEY

Ideally you should get the cheque within 10 to 14 days of your submitting the biils; but in reality it takes anywhere from 20 days to a month.

8. COMPULSORY DEPRECIATION ON METAL PARTS FOR ANY ACCIDENT CLAIM

Parts of Vehicle	% of Depreciation
0 - 6 months	Nil
6 - 12 months	5%
12 - 24 months	10%
48 - 60 months	35%
60 - 120 months	40%
120 months or older	50%

9.ACCIDENT INVOLVING A THIRD PARTY
If a third party injured or killed in an accident involving your car, notify the police immediately. Try to remove the injured to hospital immediately but if your personal safety is at risk from a mob, get the police right away. Notify the insurance company about the facts of the case.
In the event of any notice from the third party motor vehicle claims tribunal or a court of low, send the same to the company for further action. Also send all notices, summons etc you receive to the company for attention. The insurance company is liable to pay to damage to the third party. 

10.IN CASE YOUR CAR IS STOLEN

Lodge a police complaint immediately. If the registration book and the insurance policy are stolen along with the car, apply for duplicates as soon as possible. Keep a liaison with the police in regard to the progress of the investigation.
If the vehicle is not traced after a reasonable period, get a report from the police to that effect. If the vehicle is traced, inform the insurers as well as the police immediately.

11. WHY DRIVING CAREFULLY HELPS
Starting July '03, motor insurance companies are likely to present car owners with a bad accident record with upto 100 percent claim penalty - this means they can load the adverse claim ratio into the premium renewal if there are large claims in the previous year..

12. READING THE FINE PRINT
All plastic, fibre and rubber parts attract a 50 percent depreciation as soon as the vehicle starts plying on the road. These parts include the bumper, bumper absorbers, tyres, tubes, bulbs, headlights, tail-lights, parking lights, all mouldings, beadings, channels, trims, radiator, hose pipes, plastic door handles, coolant and sprinkler bottles.
Salvage is usually applicable only on metal parts (usually 3-7 percent of the value of the parts). Towing charges are payable if the car is in no conditions to move after the accident (maximum payable is Rs 1500 for private vehicles). There is no depreciation on windscreen and window glass.
The insurance company is not liable to pay for coolant and oil, even if have they leaked out during an accident. Not is the company liable to pay for bearings or air-con gas charging. Non-company-fitted accessories like stereo, speakers, amplifiers, woofers, crash-guard, luggage carrier, side protectors etc have .

12. INSURED DECLARED VALUE OF A CAR 
The Insured Declared Value (IDV) for a new car is taken at 95 percent of the ex-showroom price. The value depreciates by 5 percent within six months, going up to 50 percent for cars aged four years and more.

The premium on cars is calculated on the following lines:

1. Upto 1000cc with age of car not exceeding 5 years.
   3.127% (Zone A), 3.039% (Zone B)
   
2. Between 1000cc - 1500cc
   3.283% (Zone A), 3.141% (Zone B)
   
3. Above 1500cc
   3.440% (Zone A), 3.343% (Zone B).

The percentage increases as the car gets older. Zone A includes metros like Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Pune, Chennai and Kolkata while Zone B accounts for the rest of the country.

14.HOW TO GET THE MOST OUT OF YOUR CAR INSURANCE

Drive carefully No accident, no claim!
This is simply the best way to avoid washing any money and time. License please Never let a non-license or non-valid license holder drive your car. The insurance company is not liable to pay damages caused by such a driver to your car or to a third party.

The fine print Check if extra fittings or accessories affect the insurance in any way. No cliam bonus This is a super saver. If you don't make any claims during the year, a certain percentage is deducated from your next year's premium.

The percentage increases every year as long as you make no claims and soon you might have enough to warrant a 50 percent deduction in your premium. But be warned that one claim and it is all forfeited - so work out how much the repairs will cost you and whether it would make more economic sense to pay for them on your own and save a substantial amount on your premium.

Time it right In case you want to claim for an accident that has no police complaint and your policy complaint that has no police complaint and your policy is up for renewal, it makes better sense to claim after you've renewed and claim the No Claim Bonus. Choice galore Even the private sector insures cars now. So you can spend some time shopping around for the best deal.

Understand what is on offer, compare premiums and go with the insurer that suits you best. Premium reducers Certain fittings to a car can actually reduce premium. For example fitting of a security system approved by the Automotive Research Association of India (ARAI) can get you a discount of 2.5 percent (not exceeding Rs 500) on your premium. Being a member of a recognised automobile association like the WIAA can get you a discount of 5 percent (not exceeding Rs 200).

Crossing borders If you intend driving across to Nepal, Bhutan the Maldirves, Sri Lanka, Pakistan, or Bangladesh, you need to inform your insurance company and buy additional covers as your policy liability is limited within India. Keep them informed If you've got your car converted to LPG or CNG, inform the insurance company if you don't, it will create problems during claim time.

Renew on time Don't let the renewal date lapse. It is a headache to go about getting the car valued and assessed to make a few policy, it is also punishable by law to drive without a valid insurance.