Motor Insurance is known as Car Insurance. A car Insurance policy covers you from financial loss if your car got damaged or stolen. Now a day it is mandatory to have car insurance as per IRDA (Insurance Regulatory and Development Authority).
Types of Car Insurance Policies in India
Every Car Insurance Policy has a validity of one year. You have to renew it every year. There are two types of Car Insurance Policies-
- Third-party Liability Insurance- As its name suggested these policies offer limited coverage. These cover the damage or injury of the third party’s property. These policies do not cover for the vehicle or owner. IRDA makes the third party liability mandatory for all motors in India.
- Comprehensive Car Insurance- This insurance plan offers a lump sum amount of coverage for the vehicle. This policy covers the damage of the third party’s property and also your own vehicle.
Documents required for car insurance policies in India
- The current policy document, in case of renewal.
- Copy of driving license.
- Registration document of that vehicle, and also a copy of Registration Copy.
- Address proof.
- A cancel checks in case you want to set up EFT (Electronic Funds Transfer) for premium payment.
What is IDV and why this is important?
Insured Declared Value (IDV) means the present market value of your car. It also means the highest amount you can get from your insurance.
Now we are giving a view about it-
- All the registration details of the vehicle.
- The city where the car registration is.
- Date of registration or the first purchase date.
- The present registration type, i.e., company or individual owner.
- Name of the manufacturer and also make and model name.
- The car engine’s cubic capacity.
- The description of the vehicle.
- The car’s ex-showroom price, the main cost of that car plus tax.
The IDV of a car after 5 years is a mutual settlement between the insurance company and policyholder. You should remember the less premium you pay you to get less coverage for your vehicle. From the first year to every year, the premium of your car become low that means the IDV of your car is going low.
|New Car(1st year)||The insurance company considered 5% of depreciation. So the car insurance is offered of 95% of the price of ex-showroom.|
|2nd year of renewal||The insurance company considered 20%of depreciation. So the car insurance is offered of 85% of the price of ex-showroom.|
|3rd year of renewal||The insurance company considered 30%of depreciation. So the car insurance is offered of 70% of the price of ex-showroom.|
|4th year of renewal||The insurance company considered 40%of depreciation. So the car insurance is offered of 60% of the price of ex-showroom.|
|5th year of renewal||The insurance company considered 50%of depreciation. So the car insurance is offered of 50% of the price of ex-showroom.|
How Car Insurance Premium is calculated?
- Car Manufacturer and Model Name
- CC (Cubic Capacity)
- Age of that car.
- IDV (Insured Declared Value)
- NCB (No Claim Bonus)