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Factors that Affect Motor Insurance in India
Jan 31, 2022

04 Factors that Make Motor Insurance in India Stronger

Whether you own a car or a two-wheeler you would consider buying a motor insurance policy. In India, third party insurance is a mandate. Believe it or not, driving any vehicle on Indian roads is risky. We all know, that any unfortunate event such as an accident does not come with prior notice. Therefore, it is important to understand that you are adequately covered and not underinsured. Before, you sign below the dotted lines of the motor insurance policy consider every important aspect related to it.

What is Motor Insurance Policy?

A motor insurance policy is related to all the types of motor vehicles playing on Indian roads. These motor vehicles include cars, motorcycles, commercial vehicles, and so forth. Third-party liability insurance is a mandate by the government for the safety of you and others.

What are the 03 Types of Motor Insurance in India?

Based on the type of vehicle you own, the following are the 3 types of motor insurance in India:
  • Car Insurance: A car is one of the biggest assets that one owns in their life. Anyone who has a car should consider choosing a comprehensive car insurance policy. It will provide a cover in case the car incurs damage due to any of the covered reasons such as manmade or natural calamity, etc. Opting for such a policy is also beneficial as it covers any injury or damage incurred to a third party.
  • Two Wheeler Insurance: Your bike gives you a sense of liberty. A two wheeler insurance policy offers cover against the damages incurred due to an accident, theft, etc. The bike insurance also covers the owner and provides compensation in case of an injury due to an accident.
  • Commercial Vehicle Insurance: Commercial vehicle insurance is meant for those vehicles that are not meant for personal use. It implies any goods carrying vehicle, passenger-carrying vehicle, multi-utility vehicle, cabs/taxis, etc. comes under the commercial vehicle. It offers unlimited liability coverage for both injury and death claims, personal accident cover, etc.
Standard T&C apply* Now that you have an understanding of the motor insurance policy and its types. Let us move ahead and briefly contemplate key factors that make motor insurance in India stronger.

Important Factors to be Considered- Motor Insurance in India

Here is a rundown of the important factors that should be considered when it comes to buying or renewing motor insurance in India:

Understanding Insured Declared Value (IDV) Impact

It is one of the most important aspects of a motor insurance policy be it a car or bike insurance policy. The IDV is the maximum value that will be reimbursed in case the motor vehicle gets extensively damaged or stolen. There are cases when the vehicle owner chooses a low IDV just to lessen the premium for the policy term. Often what is not realized is that anything like this increases the liability for the owner. And in case of total loss or theft, the reimbursement will also be less. Mostly, the IDV is fixed on the premise of the listed manufacturers selling price. The assessment is done for any vehicle older than 05 years by the insurer. Mutually agreed insured declared Value has arrived upon the vehicle's condition.

No Claim Bonus

In case no insurance claims are made in the past year, the insurer offers a No Claim Bonus. It is a discount of up to 50% on the OD premium, which can be accessed. Not many know, but NCB also becomes transferable in case the policyholder wishes to switch between the insurers. It is advised to opt for NCB during claim-free years. Ensure that the vehicle has no external deformation as the old damages remain uncovered in the coming times.

Review the Existing Coverage

It is a good habit to review the existing insurance policy from time to time. Moreover, as the motor vehicle ages, the Insured Declared Value also reduces, and repair expense increases when compared to the residual value of the vehicle. Being completely insured gives you peace of mind and not worry about the financial implications. An emergency can occur at in point in time. It’s important to be aptly insured and not remain underinsured.

Timely Renewal of the Insurance Policy

As per Motor Vehicles Act, 1988 third party insurance is a mandate. If anyone is found without this insurance may lead to penalties and other legal implications. So, ensure that third party insurance is also renewed timely before the end of the policy term. Also, see that OD cover is also renewed timely. Standard T&C apply*

The Bottom Line

It is better to go forward with a comprehensive motor insurance plan for the reason that the benefits are worth the premium you pay. Let us try to be penny-wise and not pound foolish. Now that you are aware of the important factors, make sure that your vehicle is adequately insured. It's high time to understand that insurance is a necessity and not some other expense. Choose the cover wisely. The financial security of the vehicle is now in your hands.   Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale. ‘  

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