Motor vehicle insurance for new buyers

If you’re considering buying a new car/bike for the first time, you need to know a few basics about motor vehicle insurance in India.

According to the Motor Vehicle Act (MV Act 1988), motor vehicle insurance is compulsory in India. There are two types of insurance that one needs to understand:

Third-Party Liability Insurance: This insurance is the most basic type and must-have motor insurance. Even if you’re not going ahead with the comprehensive plan, this third-party liability insurance is mandatory in India. In case of an accident, this insurance takes care of the damages and legal liabilities to the third-party vehicle/person but does not cover personal damages either to the car/owner.

Comprehensive Insurance: Comprehensive insurance is the best type of insurance that can protect your own vehicle damages and also can cover third-party liabilities. However, the premium amount that you have to pay will be more than the third-party insurance as the insurer is taking on a wider risk.

The premium amount can depend upon many factors such as:

• Make and model of your bike/car: The premium is affected by the model of the car/bike. Suppose it’s a sports car that is prone to the risk of accidents, the premium is going to be high. If it’s going to be a compact car that has proven itself to be safe enough, then the premium will be comparatively low.
• Insured Declared Value (IDV): IDV determines the current market value of your bike/car. This comes into play when you are faced with theft/total damage to your vehicle. The IDV is the compensation that an insurer provides to a policyholder. This compensation amount depends on the depreciation value of your vehicle.

It is calculated as follows:

IDV= Manufacturer’s registered price – depreciation value

You can also easily find your car/bike IDV online.

• Driving Record: The premium is also calculated based on the owner’s driving record. The premium is less if he/she has a good driving record.
• Safety Features: If your car has an anti-theft system or security alarms are installed, the premium can be reduced.
• Claim Record: Your premium can be reduced/increased based on your previous year’s claim records. If you have raised more claims, then the premium will increase. If you have raised no claims then you can use the No-Claim bonus which will reduce your premium for the upcoming year.

Benefits of Comprehensive plan:

Some of the benefits of selecting comprehensive motor insurance include:

• First, it is the peace of mind & financial security to cover emergencies
• In case of an accident, it covers lawsuits that include legal fees.
• Comprehensive coverage protects policyholders’ vehicles and third-party damages too.
• Damages to the vehicle caused by the policyholder are also covered by this insurance.
• If the policyholder is at fault for an accident then a claim can be made for an incurred loss of a person/damages.
• Damage caused by fire, natural disasters, damages incurred by an animal, or damage caused by riots can also be covered.
• Several Add-ons can be added to the plan based on your needs/requirements for your vehicle.

Each insurance company offers different premiums/services for the same vehicle so make sure to compare insurance companies online before buying them.

You can also check out the most reliable and trusted insurer when it comes to motor vehicle insurance. Visit Chola MS Motor Insurance or call us to know more about what we offer.