Owning a car in India comes with a series of responsibilities, such as financial, legal, and practical. Among these, vehicle insurance is not just a regulatory requirement but a financial safety net that protects both the driver and the vehicle throughout its lifecycle. From the moment a car is purchased until it is sold or scrapped, insurance plays a pivotal role. This article outlines the detailed insurance life cycle of a car in India, covering every key stage from purchase to resale.
Purchase of Car: Beginning of Insurance Lifecycle
Buying car insurance is mandatory in India after you purchase your car. It is the first step you take to legally drive your car on the roads. According to the Motor Vehicles Act of 1988, it is mandatory for all car owners to have at least a third-party insurance policy for their car.
However, most people prefer to get a comprehensive insurance policy to safeguard their car from unforeseen damage as well. Many car owners today opt for digital-first insurers like ACKO Policy for its ease of purchase and claim process. Here are the two main types of car insurance policies.
- Third-party insurance: Covers the insurer from losses they might face for causing a third party’s property damage or injuring them.
- Comprehensive Car Insurance Policy: This car insurance policy covers third-party losses as well as damages to your own car caused due to fire, theft, natural calamities, and man-made disasters.
Considering Add-ons and Policy Management
Managing your car insurance wisely is key to maximising benefits without filing minor claims that can increase your premiums. As you gain experience with your policy during the first year, you will identify which add-ons best suit your needs alongside your comprehensive plan.
Popular add-ons include Zero-Depreciation, which covers the full claim amount without depreciation deductions for up to five years. Return To Invoice (RTI) protects you by covering the entire invoice value, including registration and taxes, if your car is a total loss. Engine Protection Cover safeguards against engine damage caused by water ingress or oil leakage, helping you avoid costly repairs.
Insurance Renewal and Analysis
Except for the third-party cover, you have to renew your insurance policy every year. Renewing your insurance from time to time is very important for your car insurance lifecycle.
Timely renewals help your car to stay road-legal and protect you from legal penalties and financial losses. Here are some things to remember while renewing your car insurance policy.
- Evaluate Add-ons: Reconsider your choice of add-ons at the time of renewal.
- Vehicle Inspection: Get regular servicing on your car. Your insurer might inspect your car before renewing your insurance.
- Transfer of NCB: Make sure that your NCB or No Claim Bonus does not reset with an insurance renewal.
Claim Filing and Settlement Process
There are various cases in which you might need to make an insurance claim. Here are a few steps for you to make an insurance claim online.
- Inform your insurer as soon as possible.
- In case of major accidental damage or theft, file an FIR.
- Take photographs or any other things that can act as proof.
- Provide documents as required by your insurer.
- Wait for the completion of your insurer’s inspection process.
- Repair your car at a network garage or get a claim reimbursement after repairs.
Mid-Life Insurance Adjustments Due to Modifications and NCB Protection
After purchasing your car, if you have done modifications by adding accessories, such a custom lights, alloy wheel or premium sound system, it can affect the Insured Declared Value and insurance coverage of the car. Moreover, during policy renewal, you can upgrade to a better insurance plan without reducing your NCB by providing the necessary documents to insurers.
Car’s Resale: End of Insurance Lifecycle
When a vehicle is sold, scrapped, or in any other way disposed of, this ends the insurance life cycle with regard to the vehicle. For resale, transferring the insurance to the new owner is essential. If scrapping your car, particularly under government scrappage schemes, the insurance must be canceled, and you may claim a refund for the unused premium. Keep deregistration documents like the scrappage certificate, cancellation of RC, or policy cancellation request handy.
Final Thoughts
Once a car is bought, insurance goes one step further till it’s reselling or scrapping. Knowing this lifecycle helps Indian car owners to not just remain compliant with the law but also protect their investment, health, and finances. With evolving policies, digital tools, and flexible plans, for an informed and proactive individual, managing the insurance of a car in India has never been easier.