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Posted by Royal Sundaram on 15 Mar 2010
Car Insurance is the only insurance which is legally mandatory and therefore every individual who owns a car makes sure that his car is insured. However, most people are not aware of the nuances of a Car/Motor Insurance Policy. There are many interesting facets to Motor Insurance, which can benefit the customer once he becomes aware of it.
For instance, our motor insurance team came across a very high net worth individual who was accustomed to regularly upgrading his very high end cars. They were amazed to discover that this customer was completely unaware about the “No claim bonus” benefit which comes with Car Insurance.
As a customer, it is important to know your car insurance policy and understand all the benefits that come with it. Do not simply take motor insurance as a necessary hassle which needs to be gotten over with.
Here are a few things you might want to keep in mind, before you choose a Car/Auto Insurance Policy…
No claim Bonus (discount)
If no claim is made during the period of the exisiting policy, which is about to expire, you can get a discount on your renewal premium. This discount is a percentage on the Own Damage Premium, and will be upgraded to the next slab each year, if there is no claim.This discount is known as ‘no claim bonus(discount)’and it can go up to 50%. The good news is, this discount once earned stays with policy holder even if the vehicle is sold or transported. The policy holder will be allowed to carry over this discount while purchasing insurance for any new car he buys.
Each policy has a compulsory excess and such an amount is deducted in any claim paid. In addition to the above, the customer can opt for ‘voluntary deductibles’ based on the self confidence level towards safe motoring and not envisaging a situation for making a claim.
Under voluntary deductibles, the amount opted also gets deducted for any claim amount. For this selection, the customer gets a discount in his “Own Damage” (OD) premium.
Voluntary deductibles for private cars
Customer may opt for higher deductible over and above the compulsory deductible in which case discount will be allowed as per the following:-
VOLUNTARY DEDUCTIBLE DISCOUNT
- Rs 2,500 20% on OD premium of vehicle, max Rs 750
- Rs 5,000 25% on OD premium of vehicle, max Rs 1,500
- Rs 7,500 30% on OD premium of vehicle, max Rs 2,000
- Rs 15,000 35% on OD premium of vehicle, max Rs 2,500
Anti Theft device
Installing an anti – theft device reduces the risk perception of the vehicle in the eyes of the insurer and therefore attracts a discount. It is essential to fit an approved make to claim the discount.
Automobile Association member
If the customer is an automobile association member, then he would be able to avail a discount on his “Own Damage” premium (applicable for Private car and Motorized two wheeler policies)
Concession for laid-up vehicles
If the vehicle is garaged or out of use for some period ( minimum of two months), the existing policy scope can be restricted for parking risks and the customer can avail a concession during renewal of the policy either by way of extending the period after expiry or a credit to the renewal premium. However, intimation to the insurance company is essential.
Physically / mentally handicapped customers
Concession can be availed for specially designed / modified vehicles for use of physically / mentally challenged persons.
Vehicle value for insurance
Year on year insurance value of the vehicle need not be for the original purchase price. The vehicle value for insurance known as “Insured declared value”(IDV) must be arrived at as per the table given in the policy.
SCHEDULE OF DEPRECIATION FOR ARRIVING AT IDV (Insured’s declared value)
AGE OF THE VEHICLE % OF DEPRECIATION FOR FIXING IDV
- Not exceeding 6 months 5%
- Exceeding 6 months but not exceeding 1 year 15%
- Exceeding 1 year but not exceeding 2 years 20%
- Exceeding 2 years but not exceeding 3 years 30%
- Exceeding 3 years but not exceeding 4 years 40%
- Exceeding 4 years but not exceeding 5 years 50%
NOTE: IDV of vehicles beyond 5 years of age and of obsolete models of the vehicles ( i.e. models which the manufacturers have discontinued to manufacture) is to be determined on the basis of an understanding between the insurer and the insured
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