Car Insurance

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Frequently Asked Questions

How is premium calculated?

The premium of the insurance depends on various reasons. The factors include the value of the vehicle, the power of engine, seating capacity, vehicle type, age of the car, city of registration, period of coverage, and the value of accessories like air-conditioner and music system.  [Close]

How is the value of accessories calculated?

The value of the accessories is calculated on the basis of original cost of the accessory at the time of purchase less depreciation for the usage.  [Close]

Why do you need to buy motor insurance?

Accidents on roads are not unusual. To keep you and your car safe from the accidents the Indian Government has made it mandatory to have motor insurance. It is useful as it helps you in protecting your car and helps you in coping with the expense of accidents or damage, or even theft. A car insurance is between a car owner and an insurance company where the insurance company agrees to pay a sum of money to compensate loss due to accidents, etc.  [Close]

What is the duration of insurance cover?

You need to cover your car with insurance all the time. The insurance plans are normally issued for the period of one year. However, in rare cases car insurance extension for less that one year can be issued after approval from authorities.  [Close]

What are the types of motor insurance policies?

Two types of auto insurance are in practice in the market--Motor Policy A, commonly known as third party insurance and Motor Policy B, which is more widely known as comprehensive insurance policy. You are legally required to go for the third party insurance though going for comprehensive insurance policy would be better.  [Close]

What is a third party risk policy?

It is mandatory for every auto owner to get third party insurance cover. It covers the car owners against Act Risks under Section 146 of Motor Vehicles Act 1988. The scope of cover of the third party insurance is to pay compensation for death of bodily injuries to third parties and also damage done to the property of the third party. For cars the 'Act Only Policy' covers third party property damages upto Rs. 6000. For theft or fire risk covering you need to pay more.  [Close]

What is a 'comprehensive insurance' policy?

A comprehensive insurance policy is more than a normal third party insurance. It includes third party cover, any damage or loss caused to the vehicle due to reasons like fire, accident, theft, flood, earthquake, riots, etc. You can also get insurance for car accessories like music system and air-conditioner. However, you will have to pay additionally for the additional insurance cover.  [Close]

How are the rates of insurance decided?

When you go for any insurance cover the company offering you insurance considers several factors in deciding the rates to cover your car. The factors may include your age, the make and model of the car, your driving record, where your drive your vehicle and the location of the garage of your car.  [Close]

Can an insurance policy be renewed with some other company?

It is possible for you to transfer the insurance policy to some other company. It requires you to submit a new proposal form. In this case the new insurance company may make a physical inspection of your vehicle. A notable thing is that your bonus can also be transferred to the new policy.  [Close]

How Insured Declared Value (IDV) of the car gets determined?

The IDV of the vehicle is to be fixed on the basis of various factors like the manufacturer?s listed selling price of the model, the vehicle proposed for insurance at the commencement of insurance renewal and less depreciation for usage. [Close]

Can the insurance premium be reduced?

If you maintain a claims-free record, you accumulate bonus points, which translate into discounts on policy renewal. When a policy holder doesn't not make a claim the insurance company provides a discount on the Own Damage part of the premium. In the case you have installed an anti-theft device in your vehicle, which is approved by the Automotive Research Association of India then a discount of up to Rs. 500 could be availed of. Another way for reducing the cost of premium is to opting for voluntary excess, which means opting to bear a certain amount of loss from each claim. [Close]

When you are buying a motor insurance policy, should you list your family members on it and can their driving record impact the insurance policy?

You should list your immediate family or your extended family members on your automotive insurance policy. It heps you later on in some emergency situation. The family members' driving history certainly has impact on the the insurance company's decision to provide the insurance cover for your vehicle and also influences the rates of premium.  [Close]

Why do insurance rate quotes vary depending on the insurer?

Usually the rate of insurance quote varies depending on the insurance company. The company's claim experience, the types of people they insure and cost for doing business vary from company to company and may cause rates to differ. Another factor that affects the insurance premium is the city, where the car has been registered.  [Close]

What is a deductible?

A deductible is the amount of money that you have to pay when you file a claim with a motor insurance company. For example if you file a claim of Rs 2000 and as per your plan, the deductible is 20%, i.e Rs 400. In this case you pay Rs 200 and the balance Rs 800 will be paid by the motor insurance company. You may opt for an insurance plan that is high on deductible and low on premium, in the case you are not going to file claims too often.  [Close]

What is a 'no-claim' discount?

You get a 'no-claim' discount when you become eligible for a discount in the premium of a comprehensive insurance policy at 20% for the 1st year, 35% for the 2nd year, 50% for the 3rd year, 65% for the 4th year and afterwards. The value of the discount is decided upon the insurance claims you have made in that particular year. The amount of discount is adjusted against renewal premium. At the time of renewing the policy the ?no claim? bonus can be availed of. At the time of buying a new car you can transfer the no claim bonus to a new car from the last one.  [Close]

Are you eligible for a 'no-claim' discount?

In the case you do not claim for one year, you can avail of a no-claim discount, if you renew your policy with the same or a new insurance company. In the case your policy has expired, you can still avail the no claim bonus if you renew the policy within 90 days of its expiry date. When applying for ?no claim? you can show as proof the documents related to the number of years no claim discount earned, the expiry date of your last insurance policy and any claims that have been made.  [Close]

Do I get some discount on premium if I have installed anti-lock system and anti-theft alarm?

Yes, you get additional discount in the case your vehicle is fitted with anti theft devices, approved by the Automobile Research Association of India (ARAI). The amount of discount is usually the premium of 2.5% to a maximum of Rs 500.  [Close]

Can a personally imported car be insured?

Yes, but only in the case the car is available as a standard production model in India and has an Indian registration number.  [Close]

Can the insurance policy of a second hand car be transferred in my name?

Yes. If you have purchased a used car, you can transfer the insurance policy to your name by informing the insurance company within 14 days from the date of purchase of the vehicle.  [Close]

What if at the time of accident my car is being driven by some one else?

Liability follows the vehicle. So, the insurance on the car will apply even in the case it is being driven by some other person with your permission. Usually, the liability insurance of the person driving the car will have to pay in the case the amount of the loss exhausts your policy's limits.  [Close]

Does the policy apply if I rent my car for a holiday?

Many insurers extend the liability to a non-owned vehicle when rented for personal use. Some companies have some restrictions on this use. Even some car rental companies have some restrictions. It is better to contact the insurance company to know about the restrictions and conditions applied by the company.  [Close]

What are the costs that you have to bear, in case of a claim?

The costs that you have to bear include salvage value, cost of depreciation and compulsory deductibles. [Close]

What is the difference between auto repair insurance and auto insurance?

Auto repair insurance policy covers the breakdown and the wear and tear of the car. However breakdown and wear and tear may not be always mutually inclusive. Some companies also may offer only breakdown coverage, and thus are liable to pay only for the repairs of the breakable parts of the car. If you opt for a wear and tear policy it will cover parts that wear out over time. Like auto insurance, an auto repair insurance policy is a contract between a vehicle owner and the car insurance company, which binds the company to pay for all repairs done on the vehicle for a fixed length of time.  [Close]

What are the exclusions under car insurance policy?

The exclusions include wear and tear, depreciation, deliberate accidental loss, intoxicated driving, consequential loss, mechanical break down and some contractual liability.  [Close]

What should be done in case of an insurance claim procedure?

The documents needed in the case of claim include proof of insurance policy, original and a copy of registration book, original and a copy of motor driving licence of the person driving the vehicle at the accident time, FIR in case of accident involving third party injury or damage, claim form along with the original estimate of repairs obtained from the workshop. After you submit the documents the insurance company appoints a surveyor, who inspects the damaged car and verifies the authenticity of the estimate of repairs. The car can be repaired only after the insurance surveyor has inspected it. You have to submit the final bill for damaged parts that have been replaced and the stamped receipt for payment made to the workshop. After the car has been repaired you have to make the payment as per the final estimate and submit the final estimate and stamped receipt to the insurance company for settlement of the claim. The surveyor surveys the car again and only then you can take delivery of your car. If your car has been stolen, you need to report the case to the nearest police station as well as your insurance company. You also need to register the case to the authority where your car was first registered. You need to obtain a duplicate RC Book from the RTO office in the case of theft. In the case of theft the procedure for the insurance claim takes longer as the RTO and the police need a certain time period to try to recover the stolen car.  [Close]

Insurance Terminology
Agent
An agent is either an insurance salesperson or an independent agent who sells policies of one or more insurance companies.
ARAI
Automobile Research Association of India (ARAI) is an industrial research organization formed by the Indian automotive industry. It is affiliated to the Ministry of Industry of the Indian government. ARAI helps the Government in formulating the automotive standards and providing technical support. It also carries out sponsored research for the automotive industry in different areas like engine, emission, structural dynamics and electronics.
Claim
A claim is a person's request for payment to an insurance company for a loss covered under a policy. When a person claims to his insurance company for a loss it is known as a first-party claim. On the other hand when one person makes claim against another person's insurance company then it is known as a third-party claim.
Collision Coverage
It is an optional insurance that pays for damage to your car caused by any accident involving any other car or object. It also pays in the case the damage is done to the car by rolling over. It may be required in the case you have opted for a car loan.
Comprehensive physical damage coverage
It is yet another optional insurance. It pays for damages to your vehicle caused by anything other than an accident. It may cover damages done due to fire, theft, vandalism or flood.
Conditions
Conditions are the part of an insurance policy that describe your obligations and those of your insurance company in order for the policy to be in effect. You need to fulfill those conditions if you want to make a claim in future.
Deductible
Deductible is the amount of money that you agree to pay in the case of a claim. It is subtracted from the total amount paid by the insurance company. For example if your total claim is $500 and the deductible is $100, then you have to pay $100 and the insurance company will pay the rest $400. Normally when the deductible is higher you may need to pay lower premium. On the other hand if your premium is higher than you may need to pay lower deductible when you file for a claim
Insured's Declared Value
Insured's Declared Value (IDV) is a manufacturer's listed selling price less depreciation. It is basically the depreciated value of the vehicle agreed upon by both the insurer and the policy holder. IDV of a car reduces with age. The premium of insurance is calculated on the basis of IDV of the vehicle.
Insurance company
A insurance company is an organization that agrees to pay for the damages or loss to your vehicle in case of any accident or other reasons in exchange for a fee known as a premium. The insurance policy is signed after mutual agreement between the the insurance company and the vehicle owner.
Liability
A liability is a legally enforceable financial obligation.
Liability coverage
Liability overage is an insurance that pays when you have caused loss to other person unintentionally. It includes physical injury coverage that pays for the cost of medical treatment and legal defense costs in the case your car has caused some physical damage to the person. It also includes property damage liability coverage under which your insurance company pays to a person you have caused any property damage of
No Claim Bonus
You are offered a No Claim Bonus (NCB) on insurance policy renewals in the case you do not make a claim during the policy period. Insurance companies reward policyholders by giving them a discount on the Own Damage premium up to a maximum of 50% in the case of no claim during the policy. NCB is offered to a policy holder only if the policy is renewed within 90 days of the expiry date of the policy
Negligence
Your failure to exercise a generally acceptable level of care and caution with regard to your vehicle and driving is considered negligence in terms of insurance policy.
Own Damage Premium
Own Damage (OD) premium is the amount of premium that you pay to the insurance company to cover above the mandatory third-party cover. If you have paid OD premium you are entitled to claim compensation in the case of damage to your vehicle due to flood, fire, earthquake, etc.
Personal Accident Cover
It is insurance coverage for the unnamed person (not the driver) sitting in the car. Under this cover the maximum amount of coverage is Rs 2 lakh for each passenger. It is useful in the case you want to cover anyone traveling in your vehicle at any time.
Policy Period
Policy period is the duration of time any insurance policy covers you. It can vary depending on the policy you opt for.
Policyholder
The person who buys insurance policy from any company is a policy holder. Policyholder
Premium
Premium is the amount you pay for insurance coverage. It can vary depending on the nature and terms & conditions of the policy. Proof of loss
Proof of loss is the documents that you present to an insurance company when you make a request for compensation of loss done to the car. It includes documents like police reports and estimate of repair cost from the auto mechanic. The insurance company decides on how much to pay for the damages done based on the proof of loss.
Uninsured motorist coverage
The coverage that insures you against an accident with vehicle, whose driver is not insured, is uninsured motorist coverage. Under this coverage the insurance company also pays for the loss resulting from an accident in which a hit-and-run driver is involved.
Zone
The Government has divided the whole country in two zones Zone A and Zone B-- on the base of the location of offices of registration for vehicles. It helps in rating vehicles. Zone A includes cities like New Delhi, Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad , Kolkata and Pune, and Zone B includes the rest of India.
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