Motor Insurance is generally a combination of Third Party Liability policy & Owner’s damage Cover (OD). The Motor Vehicles Act was passed in the year 1988 and regulates almost all aspects of road transport vehicles, including having a mandatory Vehicle Insurance cover under section 130 (177) Motor Vehicle act. It means that the vehicle owner should have the mandatory Third Party Liability policy. It is very much recommended to take a comprehensive policy so that you can claim for any expenses incurred on repairs due to any external accident or loss of your vehicle.

At the time of renewal, Car owners might do the mistakes like considering only Cheaper Premium and overlooking the other important features like value of the vehicle (IDV) and the additional covers available (Zero depreciation, Return to Invoice, Road side assistance, Engine Protect Cover etc.) And this is reflected in the casual attitude of the customers while buying a motor vehicle policy. Hence it is critical to create awareness & education in understanding the benefits & their importance while purchasing a Motor vehicle Insurance policy .

Critical points to be remembered while renewing Your Motor Insurance policy.

1) Insured Declared Value (IDV)

IDV is Insurance Value of Your Vehicle after the depreciation (10 to 15%) from the previous year. Higher the IDV, higher will be the coverage and beneficial to the Owner of the vehicle.

2) No Claim Bonus (NCB)

As the name suggests, NCB is the reward offered by the Insurer for driving the vehicle safely and not incurring any claims. Typically the NCB ranges from 20% to 50% depending upon the age and the past claim experience of the vehicle.

NCB is owned by the Policy holder of the vehicle and can be carried forward / transfer to the new vehicle under his/her ownership..

3) Hypothecation

 Hypothecation means offering an asset as collateral security to the lender. Herein, the ownership lies with a lender and the borrower enjoys the possession. In the case of default by the borrower, the lender can exercise his ownership rights to seize the asset. If You have repaid the vehicle loan, It is important for You to remove the hypothecation clause from Your policy document.

4) Zero Depreciation Policy : Zero Dep policies are also called as Bumper to Bumper or Nil Depreciation policies. It is one of the crucial and important Add-on cover offered under Motor Insurance Policy.

In Zero Dep policies, 100% of the claimed amount is payable. Where as under the comprehensive policy, the claim is payable as follows:

Zero depreciation is offered only till 5 years of the vehicle age. Though some Insurers offer it till 7th year.

5) Other Add ons: Usually following Add-on benefits are offered by the insurers:

i) Consumables Cover

Usually consumables like oil, nuts and bolts etc. are not covered under insurance. With this add on, you can claim the consumables however small they might be. It covers expenses towards consumables which are unfit for further use, arising out of damage due to an accident.

ii) Return to Invoice

When the Vehicle is damaged beyond repairs in an accident, Insurance companies will refund the complete value/amount mentioned on the invoice.

iii) Roadside Assistance

This benefit assists you in situations where you need help on the road with your car. The service offers many benefits from getting your set of wheels fixed on the spot to towing or taxi service to help you reach your destination. Roadside Assistance is usually provided to anyone who is stranded anywhere within the radius of 500km from the middle of the city.

iv) Engine Protection Cover

Any damage caused, from leakage of the lubricating oil to water entering the engine due to natural calamities such as floods, that can cause permanent engine damage is covered under this add on benefit.

v) Tyre Protection Cover: This Add On may ideally cover following, though conditions may differ from company to company:

• Cost of replacing the damaged tyre with a new one.

• Labour charges toward removing, refitting and rebalancing of the tyre.

• Accidental loss or damage to tyre and tubes which would in turn make the tyre unfit for use. This includes scenarios such as bulge in tyre, bursting of tyre and damage/cut to the tyre.

vi) Passenger Cover

This cover ensures the protection of your family and loved ones. For, god forbid, you meet with an accident where you and your near and dear are injured, this cover will ensure that, apart from you, your beloved are covered too and will receive all the necessary financial support till they recuperate.

And finally don’t wait till last date of the due date. Because if You miss the due date, then inspection of the vehicle is mandatory. But if due to any unforeseen situation, you were unable to renew your policy on time then make sure to renew it within 90 days of its expiry to take advantage of your accumulated NCB. Beyond 90 days of expiry,NCB will lapse.

Always Pay attention in case of ownership transfer cases: If you have bought a used car/vehicle from someone than make sure to get the insurance policy transferred on the new policy owners name as soon as the RTO formalities are over and new ownership has been created in Registration Certificate. Failing to change the ownership in insurance policy will result in rejection of claims.

Know about compulsory & Voluntary Deductibles: Compulsory Deductible is also known as Compulsory Excess in motor insurance. It is the part of the claim amount which you will have to bear out of your pocket. For cars not exceeding 1500 cc, the amount is fixed as Rs. 1,000. If the engine potential is more than 1500 cc, the compulsory deduction is Rs. 2000

You can also reduce the premium if you opt for an additional voluntary deductible.