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FAQs on Car Insurance

Car Insurance

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Questions about Car Insurance? Get your answers here

Why do I need a Car Insurance Policy?
Car is your prized possession! Availing a comprehensive insurance policy is prudent, which not only covers your car, but also your family members or passengers in your car.

A Car Insurance Policy is mandatory under the Motor Vehicle Act. Every car owner must have an insurance which covers third party injury, death or property damage.
With Car Insurance, you can cover-
  • Car against theft, accidents, disasters such as floods, earthquake, fire, etc.
  • Family members (including self) with Personal Accident Policy
  • Paid driver, employees or any unnamed passenger
  • Damage to someone else's car or property
  • Injury/Death of another person due to accident caused by you
What is third party?
Third party refers to people who are not your family members or property you don't own.
What are the different types of Motor or Car Insurance Policies and what does it cover?
There are 2 types of Car Insurance.

(i) Third Party Policy - This is a Liability Only Policy and covers all third party liabilities such as -
  • Bodily injury or death of third party
  • Property Damage of third party
Personal Accident cover for Owner-Driver is also included in Third Party Insurance.

(ii) Package Policy - This covers Loss or Damage to the vehicle insured (Own Damage) in addition to the Third party cover. It is also known as comprehensive cover.  You can cover your car against damage due to -
  • Road accidents
  • Theft
  • Fire accidents
  • Natural disasters such as flood inundation, lightning, cyclone, etc
  • Riot or strike
Covering your car with at least Third Party Insurance is mandatory, as per the Motor Vehicles Act.
What is meant by Private Car?
The Private Car is the one that is used for social, domestic and pleasure purposes and also for business purposes excluding the carriage of goods other than samples by the insured or his employees.

What is break-in-insurance? What should I do if I have a break-in-insurance?
Break-in-insurance is when the Policy lapses due to non-renewal of the Policy on time. As per the law, an owner should cover his/her car with at least third party insurance at all times.
If you have a break in your car insurance, you can-

  • Approach another insurance company to renew policy-if it has been less than 90 days since the Policy lapsed. In this case, you may be able to retain your No Claim Bonus.
  • Obtain a new Insurance Policy-if it has been more than 90 days since the Policy lapsed.
  • In either case, you have to get your car re-inspected
What is deduction for depreciation?
In every car, the metal, rubber, nylon and plastic parts are subject to deduction for depreciation. During a Claim, if there is any damage to these parts, it will not be fully covered. The coverage will be as per the percent of depreciation.

Not exceeding 6 months
Exceeding 6 months but not exceeding 1 year
Exceeding 1 year but not exceeding 2 years 10%
Exceeding 2 years but not exceeding 3 years 15%
Exceeding 3 years but not exceeding 4 years 25%
Exceeding 4 years but not exceeding 5 years 35%
Exceeding 5 years but not exceeding 10 years 40%
Exceeding 10 years 50%

Why should one have a comprehensive car insurance policy, when the law mandates insurance only for 3rd party injury, death, property loss?
Accidents can occur at any time, any place, even if it is not your fault. But with Insurance you can recover from it financially. With comprehensive car insurance, the Insurer will protect you against any loss or damage to the Private Car and its accessories during following unforeseen events:
  • Fire, explosion, self ignition or lightning
  • Burglary, housebreaking or theft
  • Riot or strike
  • Earthquake (fire and shock damage)
  • Flood typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost
  • Accidental external means
  • Malicious act
  • Terrorist activity
  • Whilst in transit by road, rail, inland- waterway, lift, elevator or air
  • Land slide, rock slide                                                                               
I plan to add an LPG/CNG kit in my car. Will it be covered by the Insurance?
Yes, it will be covered, provided-
  • You have a comprehensive car insurance policy
  • LPG/CNG kit is endorsed in your RC (Registration Certificate) book by the RTO (Road Transport Office)
What is 'compulsory deduction/deductible' under Car Insurance?
During a Claim, certain minimum amount is deducted from the Insured. The amount deductible is given below:
  • For Private Cars up to 1500 CC, it is Rs 1000
  • For Private Cars above 1500 CC, it is Rs 2000
When is an endorsement required?
An endorsement is a written evidence of an agreed change to a policy. It is a document that incorporates changes in the terms of the policy. If there are any alterations to be done in the policy the customer needs to approach the Insurance Company to effect the change in the policy. This is done by way of an endorsement.

An endorsement may be issued at the time of issuing the policy to provide additional benefits and cover (e.g., legal liability to driver) or to impose restrictions (e.g., accidental damage deductible). The wordings of those endorsements are provided in the tariff. An endorsement may also be issued subsequently to record changes such as change of address, change of name, change of vehicle etc.          
What are the factors that determine the premium rating for Private Cars?
  • Insured's Declared Value (IDV)
  • Cubic Capacity of the vehicle
  • Geographical Zones
  • Age of the vehicle                                                                                           

The geographical zones are-

Zone A - Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, New Delhi and Pune.
Zone B - Rest of India
What is Insured Declared Value (IDV)? And how is it calculated?
IDV means Insured's Declared Value. It is the value of the vehicle, which is arrived at by adjusting the current manufacturer's listed selling price of the vehicle with depreciation percentage as prescribed in the Tariff.

Manufacture's listed Selling Price will include Local Duties/Taxes, excluding Registration and Insurance.
For the vehicles that are obsolete or aged over 5 years, the IDV will be the value agreed between the Insurer and the Insured.

The value of the obsolete vehicles and the vehicles aged over 5 years are arrived by our Assessment Team with the help of various resources like IMAs, Panel of Surveyors, Car Dealers, Second Hand Car dealers, etc.
Depreciation slabs for arriving at IDV are below:

Not exceeding 6 months
Exceeding 6 Months but not exceeding 1 Year
Exceeding 1 Year but not exceeding 2 Years
Exceeding 2 Years but not exceeding 3 Years
Exceeding 3 Years but not exceeding 4 Years
Exceeding 4 Years but not exceeding 5 Years

What are electrical/electronic and non-electrical/non electronic accessories in a private car?
Electrical/electronic items which are not supplied by the vehicle manufacturer along with the vehicle are called electrical/electronic accessories. E.g., Music system, LCD mini TV, Fog lights, etc do not come along with the vehicle.                                                                                               

Non-electrical fittings include CNG-kit, interior fittings, alloy wheels, etc.
What are the discounts that can be allowed under Private Car policies?
The discounts that can be allowed under the Private Car policies are:
  • Voluntary Deductible discount
  • No Claim Bonus
  • Automobile Association Discount
  • Discount on Vintage Cars
What is No Claim Bonus? Under what circumstances No Claim Bonus (NCB) can be allowed?
No Claim Bonus is a reward for filing no claim in the previous year. It can be accumulated over a period of insurance. NCB starts with 20% and goes up to 50%
  • NCB becomes nil in case of a Claim
  • NCB follows the fortunes of the customer and not the vehicle
  • The validity period to reclaim NCB is 90 days from the date of Expiry of the policy
  • NCB can be utilized within 3 years (in case if the existing vehicle is sold and a new car is purchased)
  • NCB recovery to be done in case of a Name Transfer
  • NCB gets transferred to the legal heir in case of Death of customer
  • NCB can be transferred to a new vehicle in case of Substitution of vehicle of the same class
  • NCB earned abroad can be given in India                                                      
What is Voluntary Deductible? How does it help me?
During a Claim, if you wish to bear part of the Claim amount, you can do so under Voluntary Deductible. By bearing a part of the Claim amount, you can earn discount of 15 % to 35% in the Premium of Own Damage or Policy.

Can a customer cancel his policy during the tenure of his policy?
Yes, the policy can be cancelled by the customer with 7 days notice to the Insurer and the company will cancel the policy on Short period basis and refund of premium if any, will be made. The refund will be subject to no claim under the policy and retention of minimum premium of Rs.100/-. But cancellation would be made only after ensuring that the vehicle is insured elsewhere at least for Liability Only policy.

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