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May 23, 2022

Here’s What You Need to Know About Adding a Nominee in Car Insurance

As a car owner, you must have heard about the mandatory requirement to buy a car insurance policy. It follows the Motor Vehicles Act that stipulates a third-party insurance cover as the minimum requirement. Violating the law not just attracts legal penalties by way of fines, it also attracts risk of legal liability in case of an accident injuring a third person or their property. Hence, you must buy third-party four-wheeler insurance to the least. Alternatively, you can also purchase a comprehensive insurance plan that also includes the damages to your car. A car insurance policy also requires all vehicle owners to have personal accident insurance. It is mandatory, irrespective of the type of insurance policy bought, i.e., third-party plan or comprehensive policy. This personal accident cover provides coverage for the owner-driver of the car. So, in case of an accident that results in the death or disability of the insured individual, a personal accident plan provides compensation to the legal heirs. But in many situations, it can be difficult for such an individual to prove about being the successor. Thus, in these kinds of situations, the nomination facility comes handy. A nominee is an individual whom the insured proposes to be the receiver of any proceeds in the event of death.

Who can be a nominee for a car insurance policy?

Section 39 of the Insurance Act of 1938 confers a right by using which the policyholder can nominate an individual to receive any death or disability benefits that the personal accident cover provides. Generally, a person nominates either their spouse, children, sibling, or parents as a nominee. You are free to appoint any individual as a nominee while - buying a new insurance plan, renewing it, or even at the time of a car insurance transfer.

What are the benefits of adding a nominee to your motor insurance policy?

Adding a nominee is a crucial step when buying or renewing your policy. You must not miss it for the following benefits:
  1. Support for your dependents: The primary benefit of making a nomination in your car insurance plan is financial support in case of unfortunate death or disability. While accidents are unpredictable, a car insurance policy is what offers financial protection not just for the repairs, but also for any injuries inflicted upon you. The personal accident cover offers compensation of up to ₹15 lakhs for various injuries, which include death and disability.
  2. Settlement of claim in your absence: Another benefit of making a nomination is that your dependents, even in your absence, can receive the compensation amount without any hassles. In case no such nominee is mentioned in your vehicle insurance plan, your family members would be required to prove that they are the legal heirs only after which any amount of compensation shall be provided.

Is it compulsory to make a nomination?

The simple answer is no, it isn’t mandatory to make a nomination. However, in the event of an ill-fated demise due to an accident, such a nomination will be helpful, as your immediate successor will not be required to prove the legality of being the heir and can swiftly receive any compensation amount. To summarize, appointing a nominee helps your dependents receive any policy benefits in your absence. Thus, do not overlook this step when buying or renewing your car insurance plan. 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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