Types of Car Insurance Policies in India

The government of India mandates that auto insurance is a necessity for all vehicles on the road. Car insurance can protect the car owner against financial liabilities caused by an unfortunate vehicular accident or theft. New cars come with a standard insurance policy which has to be renewed after one year. A premium amount has to be paid every year to keep the policy active. There are 2 types of car insurance policies in India; third party insurance and comprehensive insurance package. A car owner should choose the one that best serves his or her needs. The cost of car insurance is determined based on the make and model of the car, the year of manufacture, and the geographical location.

Third-Party Insurance: This type of insurance policy covers the damages to a third party in the event of a vehicular accident. As per the law, all vehicles have to have a third-party insurance policy. The insurance premium is calculated based on the cubic capacity of the car engine. The premium is usually lower compared to a full coverage policy.

Comprehensive Insurance Package: This type of insurance policy covers third party liability and damages to the car in the event of a vehicular accident, natural calamity or theft. The premium is calculated based on the insured declared value of the car. The premium amount for this type of policy is usually high.

The premium of a third party insurance will remain the same but in a comprehensive package, the premium amount may reduce over the years due to the depreciation of a particular model of car. For used cars that are over 5 years old, the insurance premium is determined by a mutual agreement between the car owner and the insurance provider.




Choose the Right Car Insurance Policy

At the time of car insurance policy renewal, car owners get the opportunity to change or update their existing insurance policy. Car owners should determine whether they want a full insurance coverage or minimum coverage for their automobile. There are several websites dedicated to compare car insurance quotes. Listed below are some reputable insurance providers in the industry:

TATA AIG offers many add-on covers, has a Green Channel Settlement facility for making easy claims, and comes with an auto-restore warranty. Other features of a TATA AIG car insurance includes cashless claim settlements at TATA garages and free car pick-ups. The policy claims can be settled in 7 days.

ICICI Lombard offers cashless claim settlements in its network garages across the country, a 24/7 roadside assistance cover, and a daily allowance of Rs.500 when the car is in its garage. ICICI Lombard car insurance can be purchased online via EMIs.

L&T offers coverage for alloy wheels, seat covers, air conditioner, music system and other car accessories. It offers Rs.2 lakhs coverage for 5 passengers in the case of a personal accident. The insured will get Rs.500 discount on installation of anti-theft devices. Another feature of L&T’s comprehensive car insurance includes coverage extending beyond the geographical boundary of India.

BAJAJ Allianz has an app called the Insurance Wallet for customers to view and manage their policy documents, locating a nearby network hospital or garage, and initiating a motor claim from anywhere at any time. Another innovative app called the MobiFuel can be used to manage service records and mileage of the car, and receive alerts for refuel and insurance renewal. Bajaj Allianz also offers towing facility and cashless claim settlements in its network garages.

Future Generali offers several add-on covers with its car insurance policies like the lock and key replacement cover and inconvenience allowance cover for when the car is in its network garage.

Car owners should always compare a list of car insurance quotes before choosing a suitable one. You can purchase customized car insurance policies to better suit your needs.

What is the process of interstate car transfer?

You might have to shift from one state to another for the sake of your job, for looking after your parents, for your kids’ studies, or due to some other reasons. Whatever the purpose is, under such circumstances, you would not want to sell or leave your valuable car behind unless it is unmanageable. However, do you know if you are relocating to another state for more than a year, then the transfer of your car calls for some very important official formalities? Yes, it is not just about transferring the car physically from one state to another, but there is some vital paperwork that needs to be done to be compliant with the law. If you are wondering how the interstate car transfer process works, here you will get to know all about it.

Get Your Car Re-registered

Car owners are mandated by the Indian Law to register their car with the concerned Government Authority in order to establish their ownership. This also helps the government in the proper implementation of the car taxes. Hence, when you are shifting from one state to another it is obligatory to re-register your car with the new state authority that too within one month of making the transfer. Delay in the process might result in unwanted penalties. During the process, all the official formalities will be conducted by the Regional Transport Office (RTO) at the district level. At the end of the procedure, you will get a new registration number to display on the number plate of your car.

Steps for car registration

When you are moving your car from one state to another, the license of the previous state wouldn't be valid anymore. The vehicle needs to be registered once again under the RTO of the state to which you are relocating. Besides registration, you also need to pay the road tax or lifetime tax based on the depreciated value of your car. However, the already paid road tax can be reimbursed by submitting the relevant documents to the RTO of the new state. After re-registration of the vehicle, the rules and regulations of the new state need to be followed.
To understand the process better, go through the car transfer and re-registration steps elaborated below:

• Obtain NOC from the previous Traffic Department

For acquiring the No Objection Certificate (NOC) from the Regional Transport Office (RTO) of your previous state, you have to submit the following NOCs:

• NOC from the traffic police certifying that there is no pending fines or dues for traffic violation.
• NCRB (National Crime Records Bureau) report clarifying that the car has no past instance of car accident or been stolen (not applicable for all Indian states).

In order to acquire the NOC and the NCRB report from the concerned authority, the listed documents need to be provided:

• The Registration Certificate of the car
• Letter addressing the Deputy Commissioner of Traffic
• Pollution Under Control Certificate
• Road Tax Clearance Certificate
• Driving License/Passport/Ration Card/Bank Passbook as address proof
• NOC from the financing bank if the car is mortgaged for a loan

While submitting the NOCs to the Traffic Police Office, carry all the original documents along with you for successful and quick completion of the verification process. After the verification, within a few days, you will receive the NOC.

• Acquire NOC from the RTO of the previous state

In the next step, you have to apply for the No Objection Certificate and the Grant of Certificate from the RTO where your car is registered through Form 28. Make sure to fill the form with accurate details and duly sign it before submission. If any of the fields is not filled or is not applicable to you, write 'NA' (Not-Applicable) in the non-relevant fields. You are required to submit the following documents along with the form:

• Attested copy of the Registration Certificate
• PUC Certificate of the car
• Insurance documents of your car
• NOC obtained from the Traffic Police
• Emission Test Certificate
• Road tax payment related documents
• NCRB clearance (if applicable to your state)
• NOC from the financing bank (if the car is hypothecated)

Once the formalities are done you need to pay the fees applicable to your car. Wait for a few days to get the NOC from the RTO of your previous state. After getting the NOC at hand, you can transfer the car to the new state either with the help of the car transporters or by driving it on your own.

• Conduct the Re-registration formalities

As soon as your vehicle is relocated, place the request for the re-registration number with the RTO of the new state by filing Form 20 (application form for the registration of your car), Form 27 (application form for providing new registration certificate), and Form 33 (form for intimating the change of address). The other mandatory documents are:

• Original registration certificate from the previous state
• The NOC provided by the RTO of the other state
• Copy of your address proof attested by an authority
• Attested copy of your driving license
• Copy of the PUC Certificate with proper attestation
• PAN Card, Form 60, or Form 61, whichever is relevant
• NOC from the lending bank (if the vehicle is under a loan)

After the successful completion of the registration process, you will get the new registration number within a few weeks.

• Pay and reimburse the road tax

After you transfer your car to a different state, you need to pay the road tax once again as calculated by the RTO on the basis of your car’s invoice. The applicable road tax can be paid through a Demand Draft (DD). If you are concerned about making the payment twice, there is nothing to worry about as you can claim for a reimbursement of the previously paid tax by submitting the relevant documents to the RTO of the new state. The refund can be expected within 6 months from the date of application.
The re-registration formalities of an interstate car transfer are often considered to be tedious and time-consuming by the car owners. However, with good communication between the RTOs in the states, the process is quick, hassle-free, and can be completed in three simple steps by the car owner without taking the help of any agent or broker. The new registration certificate with the number will reach you within a few weeks of submitting the application with the concerned authority. So, shrug off all your worries if you are planning for an interstate car transfer anytime soon and get started with the re-registration process.

All You Need To Know About The PUC Certificate

A valid driving license, an insurance certificate, and a Pollution Under Control (PUC) certificate are the necessary documents one must carry at all the times while driving a vehicle in India. While most people in India know the significance of a driving license and insurance certificate, they are not fully aware of the importance of a Pollution Under Control certificate and its legal implications. The Motor Vehicles Act of 1988 makes it mandatory for all vehicle owners to get their vehicles PUC certified.

What Is A PUC Certificate?

A PUC certificate is granted to those vehicles that pass the emissions test. The certificate implies that your vehicle emissions are in accordance with the pollution norms. The smoke released  by motor vehicles can potentially harm the environment. Keeping with this, the Motor Vehicles Act lays out a well-defined process for PUC certification. It focuses on keeping the vehicle emission levels in check to ensure its effects on the environment remain minimal.

Which Vehicles Require PUC Certification?

All motor vehicles in India are required to get PUC certificates. There are authorised emission testing centres across India that issue PUC certificates for the vehicles after due examination. The PUC certificate must be carried at all times while driving as per Rule 115 of the CMV Act. The driver of a vehicle must be able to produce the PUC certificate when asked to do so by any officer not below the ranks of an Inspector of Motor Vehicles or a Sub-Inspector of Police.
The PUC certificate for a new vehicle remains valid for a year, post which it must be renewed every 6 months through a PUC testing centre. The fee for getting the certification ranges from Rs.60 to Rs.100. If the emissions from your vehicle exceed the prescribed standards, the PUC testing incharge may intimate the same to the concerned RTO.

Details Mentioned In A PUC Certificate

A PUC certificate is valid throughout India. It contains the following details:

• Serial number of the PUC certificate
• Vehicle registration number
• Expiry date of PUC Certificate
• Date of the PUC test
• PUC test readings

Penalties In Absence of A PUC Certificate

Under section 190 (2) of the Indian Motor Vehicles Act, if a person driving the vehicle fails to show a valid Pollution Under Control Certificate, they are liable to be prosecuted. The act prescribes a penalty of Rs.1,000 for the first time offenders and a penalty of Rs.2,000 for each consequent violation.

Prescribed Emission Standards In India

In a PUC test, a vehicle must meet the pollution emission standards which are as follows:

Type of Vehicle	Hydrocarbons	Carbon Monoxides
2/3-wheeler vehicles (2/4 - stroke engine) produced on or before 31 March 2000	9,000 PPM	4.5%
2/3-wheeler vehicles (2 stroke) produced after 31 March, 2000	6,000 PPM	3.5%
2/3-wheeler vehicles (4 stroke) produced after March 31st, 2000	4,500 PPM	3.5%
4-wheeler vehicles produced as per the Pre-Bharat Stage II Norms	1,500 PPM	3%
4-wheeler vehicles produced as per the Pre-Bharat Stage II, Stage III, or norms prescribed thereafter	750 PPM	0.5%

How To Obtain A PUC Certificate

• There are government authorised independent emission testing centres that you may find at petrol pumps. A PUC certificate can be obtained from any such centre.
• You may find PUC Vans on highways that conduct emissions tests and issue PUC certificates.
• You may approach licensed emission centres that have computerised systems to check a vehicle’s emission levels.

Insurance Premiums to Cost a Policyholder under New GST Proposal

With the new GST rolling in from the Centre, there are going to be a number of changes where products and services will either cost more or lesser than what it’s priced at now. For the middle class family, an immediate impact which can be observed with the new GST is that insurance premiums will have a policyholder shell out more money due to the increase in the tax rate that has been imposed on insurance. For families who own a car and who pay for term and health insurance, the annual increase would come up to a total of Rs.1,000 a year on average. The impact that GST will have will show an increase from 15% to 18% in the tax that’s paid.

Non-life insurance companies have been looking to gain the advantage of tax credit. According to the service tax regime, insurance companies have been in the list of businesses which are exempt from benefits that come under the input tax credit. Life insurance companies have said that the input tax credit will vary from one company to another depending on the maturity level of the company.

Any regulations or revisions in taxes will have to acquire approval from the insurance regulator. It is known fact that most families end up paying Rs.20,000-Rs.25,000 to come under the umbrella of benefits of a health insurance cover. This amount is set to increase by around 3% and a similar situation will be seen in the premiums paid for auto insurance. Banking will also see marginal increase in the charges which have to be paid by a customer. But, as most earnings are sought by interest spreads, the main impact of the revision will be limited to the loan processing fees, card fees, penalties, and remittance categories.

Life insurance is taxed differently when compared to term insurance as the latter is categorised as a risk premium while the former come with a health component and is taxed differently.

Partner and Leader-Insurance of PwC India, Joydeep K. Roy, stated that ULIP and Endowment products come with a large component of consumer savings apart from risk premium. The service tax, without cess, was levied at 14.5% on various pure risk products, 3.5% on the first year followed by subsequent 1.75% on other endowment plans.

Roy also stated that the GST was meant to be implemented sensitively on various categories of products. Micro insurance or any other certain insurance products which fall below a threshold needs to be exempt from changes due to the GST.

9 Ways to Reduce Your Motor Insurance Premium

As important it is to choose the best of the deals on the car loan that you settle for, it is equally or maybe more important for you to choose and select the best or ideal car insurance for your vehicle. This is due to the fact that the motor insurance you take can help you in staying away from legal woes in the long run.

Thus, here are some of the ways to reduce your motor insurance premium.

1.    Cater the right information

Whenever you are presenting the right amount of information to the insurer, you are in turn decreasing the premiums by 10 to 30 percent.

2.    The gender and the profession of the driver

Even though still a farfetched idea in terms of the norms in India, many western countries consider the premium amounts based on the profession as well as on the gender of the driver. Usually in there in case the driver is a female, she is entitled to more discounts. Factors such as whether the person works at an office or is a salesperson and has to travel across cities are also taken into consideration here.

3.    Manufacturer and car model

Discounts are also applicable in motor insurance premium rates depending on the manufacturer and the model of the car. If the car model or the company has a past record of being accident prone, chances are that you would get higher discounts when compared to others with better history.

4.    Place where the car will be used

It is extremely important to inform where the car will be driven the most along with the fact that the place of registration and pile will also be considered. The claims are calculated depending on the locale by the insurance companies and it is seen that the scratch and dent claims are more in congested cities than in the rest.

5.    Pay heed to the safety features

This might sound interesting but inform your insurance company of the safety features your car and get the features like anti-theft as this would be an easy path to getting 2 to 5% discount without doubt.

6.    The facts of no-claim bonus

The no-claims bonus is nothing but the percentage which is allowed as discount on the damage premium. If the facilities are not availed, the percentage can increase with each passing year (even to up-to 50%) and you can choose whether you want to transfer this to another vehicle or no.

7.    Stay-in concessions

In case your vehicle is in the garage without use for more than 2 months, you are eligible to avail concessions after that you inform the insurance company. These concessions can be easily availed when you go about renewing the insurance policy or extending the expiry or credit period.

8.    The voluntary deductible perks

The premium discounts can go up-to more than 35% while the voluntary deductibles are applied. If the insured chooses to opt out of the minor damage claims, he or she gets eligible for higher discounts.

9.    Become an automobile association member

If you are a part of the Automobile Association, you are eligible to get discounts on damage premiums for both your private car and two wheeler policies. Due to the ever changing policies and the range of discounts, it is always better to stay updated with your insurance company to know how much you are eligible for at a given point of time.

Top Reasons to Cancel Your Car Insurance

Car insurance is absolutely required to drive your car legally on the road. There are only certain instances where people need to cancel their car insurance policy. Cancelling your car policy comes with a few conditions. Let’s take a look at the top reasons why people cancel their car insurance policies:

•   Unhappy with the insurer
•   Free Look Period
•   Theft of car
•   Sale of car
•   Car has crossed the age limit
•   Traveling out of the country

Unhappy with the insurer

If you are unhappy with your current insurer, you have the option to switch over to another insurer you may feel is better. You can also cancel your policy and buy a new one from a different insurance provider. The choice is yours. If you have not made a claim, it would be more advisable to switch your policy to another provider because your no-claim bonus is portable. You will be able to retain the benefits of having an existing policy.

Free Look Period

Every insurance policy offers a free look period of generally 15 days or 30 days. Within this period, you can view your policy and review the details. If you are unhappy with it, you can return the policy and get a refund of your premium. The time stipulated begins from the time you receive the policy document. The insurance company will, however, deduct any stamp duties and other charges before refunding the money.

Theft of Car

If your car has been stolen, then you will have no choice but to cancel your policy on the car. If you have paid premiums recently, then you can claim for a refund. This is applicable to third party liability policies. If you have a comprehensive plan, then the policy will cover the loss incurred and pay you the insured’s declared value. Once the claim is paid out, then the policy will automatically terminate.

Sale of Car

At the time of selling the car, you have the choice to either transfer the existing insurance policy to the buyer. You can also cancel your policy and let the buyer take out a new policy. If you opt to cancel your policy, you might be eligible for refunds if the policy is valid.

Car has crossed the age limit

If your car has become too old, some insurance companies will refuse to provide an insurance policy. If the car’s condition has also deteriorated, then insurers will be reluctant to protect it. In this case, you might have to cancel your policy.

Traveling out of the country

In the event that you have to relocate on a long term basis abroad, if you are not going to be using your car for a while, you may not want to pay the premiums to protect it. But remember, you will not be protected in case of theft and other damages that might be cause even if your car is parked.

To cancel your car policy, you will most likely need to submit a request in writing via email or mail. The insurance company will provide you with all the information about the process and documents required. You can then submit your request, your documents and sign the declaration which will authorize the insurer to cancel your plan.

Once cancelled, you should also receive a confirmation letter about the same. This letter will also contain information about the premium paid, the charges deducted and the refund amount.

What you need to know about car insurance inclusions and exclusions

Many people pick up a third party liability car insurance policy and forget about the rest of their insurance. If you own a car in India, it’s mandatory to take out a third party plan if you want to drive the car on the road. But just getting one of these policies doesn’t mean you’re sorted. You should know the benefits of taking out a comprehensive policy. And more importantly, you should know what your insurance plan will cover and what it will not.

Top reasons for insurance claim rejections

• Accidents caused due to breaking the law
• Regular wear and tear of the vehicle
• Gross negligence on the part of the vehicle owner/driver
• Driver has no valid licence
• The damaged vehicle was moved without authorisation from the insurance company causing further damage to the car

Third party Policies

Inclusions

If you’ve opted to take out only a third party liability policy, then your plan will cover the following:

• Damages to any person caused by an accident involving your car. If you are liable to pay compensation for injuries to anyone, the insurance policy will cover it.
• Damages to a person’s property or vehicle. If you are liable to pay someone for damages you’ve caused to their property, then the insurance plan will pay for it.

Exclusions

• The following are the exclusions of these plans:
  If you incur any injuries to yourself, the insurance plan will not cover this. You will have to pay for medical costs on your own.
• If your own vehicle is damaged or stolen, the insurance company will not be liable to pay any compensation.

Comprehensive Policies

Inclusions

• Damages and injuries caused to a third party will be covered.
• Damages to a third party’s vehicle or property will also be covered.
• Any damages incurred on your own vehicle will be covered.
• Any injuries to self sustained in the accident will also be compensated.
• In the event of any natural calamities such as earthquakes, floods and landslides, your insurance policy will provide financial aid.
• If your vehicle is stolen, the insurer will pay out an amount equal to the insured declared value (IDV) as per the details of your policy.
• In case of any other man-made disasters such as terrorism, strikes and fire, the insurance plan will cover your losses.

Exclusions

• Expired/Lapsed policies will not be eligible to make claims.
• In case of war, rebellion, hostilities, terror attacks or invasion, the insurance policy will not be valid.
• Insurance plans will also not cover nuclear risks.
• If you are involved in an accident while under the influence of alcohol or drugs, the insurance plan will not pay out.
• Consequential damage such as driving with a failed gearbox or engine oil leakage causing further damage.
• Any staged accidents amounting to fraud.
• Driving without a valid licence or if the driver is under age.
• Driving on the wrong side of the road.
• Using a car for any other purpose than intended in the policy, such as commercial car for private purposes and vice versa.

In some cases, insurance companies offer add-on covers or riders that will provide protection against some of the exclusions. Opting for these riders will cost you an additional premium but will also provide extra coverage such as covering injuries to the co-passenger of the vehicle.