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What should you do in case of a car accident; motor insurance explained

 Increasing proliferation of vehicles and stagnant capacity of roads have made driving on Indian roads, a nightmare, not to speak of the poor condition of roads and pathetic levels of discipline in driving.

Easwara Narayanan        Last Updated: September 21, 2018  | 17:56 IST
What should you do in case of a car accident; motor insurance explained

A motor car was a luxury in India some time back.  It is not so anymore. But, driving a car certainly is.  Increasing proliferation of vehicles and stagnant capacity of roads have made driving on Indian roads, a nightmare, not to speak of the poor condition of roads and pathetic levels of discipline in driving. 

Motor Insurance constitutes nearly 45 per cent of the Gross Non-Life Insurance premium in the country. The term motor includes private cars, two wheelers and commercial vehicles of all kinds which are registered with the Road Transport Authority.

Most dealers make insurance available at the point of purchase of vehicles. There are 25 non-life insurance companies in India which have a large network of offices across the country, all of which sell motor insurance.  Non-life insurance companies have nearly 3,50,000 agents who market motor insurance among other products. Online purchase, either from the direct website of companies or that of the web aggregators, is the digital addition to the distribution channels. As for rural areas, motor policies are available with common service centres.

For those planning to buy a new car/bike or those who are just planning to renew their vehicle's insurance, here are the different options one can consider:  

Third-Party Insurance

Third Party insurance is mandatory for any vehicle before it is put on the road for use.  The intent behind this social welfare legislation is that an innocent third party who is injured in an accident should not go without compensation, merely because a vehicle owner does not have the wherewithal to compensate the injured.  While Motor Vehicles Act makes it mandatory to insure Third Party Injury and Damage caused by a vehicle in an accident, insurance cover for damage to the vehicle is a matter of choice which rests with the customer.

Comprehensive insurance cover

A comprehensive insurance policy covers both the damage to the vehicle and the liability of the vehicle owner to the third party, arising out of death, injury and damage in an accident.

A comprehensive policy, in addition to liability to Third Parties for injury and damage, covers the vehicle against external accidents, fire, theft and a host of other events including natural and social calamities and even acts of terrorism. While, this would appear to be good enough, the industry has introduced a number of add on covers which plug the gaps, making the cover under the comprehensive policy near total.

Zero depreciation insurance cover

Zero Depreciation cover means that there would be no deduction for depreciation of parts replaced in the event of repairable losses. A claim for a vehicle covered under a Comprehensive Insurance policy is subject to deduction for depreciation as provided in the policy. Once the add-on cover of 'Zero Depreciation' is taken, this deduction does not apply.  This Zero Depreciation cover is available only for claims where the vehicle is repaired. It cannot be availed in the event of Total Loss claims.  

In other words, when the vehicle is a Total Loss due to extensive damage and is beyond repairs, the Insured Declared Value of the vehicle, depreciated suitably for the number of years of use would only be paid.  

It is for such cases that 'Return to Invoice' add on cover becomes relevant.  'Return to Invoice' cover entitles the customer to the full value of a brand new vehicle without any deduction for depreciation in the event of a Total Loss claim. Each of these is a different add on cover and has to be purchased separately.

'Engine Protection Cover' is another add on which pays for the repair or replacement of engine due to damage caused by ingress of water due to flooding.

These add on covers are generally available for private cars but some companies provide these for two wheelers and commercial vehicles too.

How to claim insurance?

An Insurer provides the customer with multiple channels to intimate a claim - telephonic intimation to the Office of the Insurers or their customer Contact Centre, SMS intimation to notified numbers, on line intimation through the Insurers' website.  

For major repairs, the loss is assessed by the surveyor deputed by the insurer based on the estimates prepared by the workshop. Smaller losses can be examined by the officials of the insurance company.  

Insurers have tie up arrangements with almost all leading workshops that provide cashless services.  In other words, the customer can drive away from an approved workshop once the repairs are completed, as the insurer would pay for the repairs entirely, particularly where the cover includes zero depreciation.  Else, all that he has to do is bear the depreciation and minor disallowances, if any.

Even here, some companies have simplified the process further.  On intimation of the claim the customer receives a link.  The link, on activation, becomes an audio visual platform through which the customer can show the losses to the insurer's representative and engage in a conversation to arrive at the final compensation.  

Once agreed, the claim proceeds are credited to the customer's account and he is at liberty to have his vehicle repaired at the workshop of his choice and at his convenience.  On completion of repairs, the cover in respect of damaged parts is restored.

Article by Easwara Narayanan, Chief Operating Officer, Future Generali India Insurance Company Limited.

Edited by Danny D'Cruze

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