A Complete Guide to the

CAR INSURANCE POLICY

Everything you need to know about the car insurance policy to make an informed choice and drive stress-free.

Most of the time, selecting the right coverage for your car can seem to be an intimidating task. We believe buying the right car insurance policy should be easy and hassle-free.

So, if you are not sure what you should know and where to start, here’s a detailed guide on everything you need to know about the car insurance policy to make an intelligent decision.

Here’s what we’ll be covering in this ebook:

What is car insurance?

Do I really need car insurance?

What type of car insurance should I buy?

What is not covered in a car insurance policy?

Can I customise my car insurance policy?

How to buy insurance for my car?

Factors influencing the premium amount (plus, ways to reduce it).

How do I choose the right car insurance provider?

Hope this ebook helps you purchase the right policy for your car.

What is car insurance?Car insurance refers to insuring your car against unfortunate and unpredictable incidents such as third-party liabilities, accidents, fire, natural and man-made calamities, theft or total loss.

When you buy a car insurance policy, you pay the car insurance company (called an insurer) a fee (premium amount). In exchange for this premium amount (generally paid on an annual basis), your insurer promises to offer financial assistance in case of any damages/losses to your car. This assistance depends on the type of insurance you buy and the terms and conditions of the policy. If you incur any damages/losses (as per policy terms) and your claim is accepted, you will receive a payout from your car insurance company as per the policy coverage.

Click here to learn more about ACKO’s car insurance.

Avoid penalties as you comply with the lawBuying Third-party car insurance (covered in the latter part of this ebook) is mandatory in India. Not following this legal requirement can invite hefty penalties and can even lead to imprisonment. Thus, buying car insurance is essential to comply with the law.

No need to worry about damagesIf your car gets damaged due to natural calamities, riots or accidents, repairing a damaged vehicle can prove costly if the entire amount is paid from your pocket. A Comprehensive car insurance policy will cover the repair bill for the damaged vehicle.

Protect your vehicle from theftsAs per the report by National Crime Records Bureau (NCRB) report, approx. 2.4 lakh vehicle thefts were reported in India in 2019, with only 25% of these vehicles getting recovered. A Comprehensive car insurance policy will come to your rescue in case your vehicle gets stolen.

Safegaurd yourself from third-party liabilitiesIn 2018, India witnessed third highest road accident in the world. According to the NCRB report, close to 4.4 of road accidents were reported in 2019. In these accidents, close to 1.54 lakh deaths and ~4.4 lakh injuries were reported. Third-party car insurance will protect you in situations where you damage third-party property or injure them. It also covers the death of a third party.

Do I really need car insurance?Here are a few reasons to buy a car insurance policy.

MeaningThe Third-party liability policy is also referred to as a Third-party plan or Liability-only policy. Third-party car insurance reimburses third parties for losses/damages caused by your insured car. For example, say if you are driving your insured car and you hit another vehicle or damage someone else’s property, Third-party car insurance will compensate the third party for the damages. It also compensates the third party in case of injuries and unfortunate death in an accident.

ImportanceAs per The Motor Vehicles Act, Third-party car insurance is mandatory while driving a car in India. Not owning this basic car insurance plan while driving in India can lead to heavy monetary penalties and/or even imprisonment.

PricingThe price of such policies is regulated by the Insurance Regulatory and Development Authority of India (IRDAI) and is based on the cubic capacity of the car's engine.

LimitationIt is important to note that the Third-party plan does not offer insurance coverage for damages to the insured car.

What type of car insurance should I buy?When it comes to car insurance, there are two popular options for you to choose from: Third-party car insurance and Comprehensive car insurance.

Third-party car insurance policy

MeaningThe Comprehensive car insurance policy includes the benefits of mandatory Third-party car insurance as well as covers damages to your vehicle in case of an accident, fire, riots, man-made and natural calamities. The policy also covers theft and the total loss of a car.

ImportanceBuying this type of policy is not mandatory by law. However, due to its enhanced coverage, it is the preferred choice among many car owners. Buying a Comprehensive car insurance policy also opens up avenues to purchase add-ons (covered in the latter part of this ebook) for extra coverage.

PricingSince the Comprehensive plan offers enhanced coverage, it costs more than the Third-party car insurance policy. Motor insurance companies decide the price of the Comprehensive car insurance policy in India depending on the risk assessment, value-added services, benefits, etc. Hence, prices can vary from insurer to insurer.

Comprehensive car insurance policy

Differences between Comprehensive car insurance andThird-party car insuranceBelow is a quick snapshot of key differences between the two types of car insurance policy to help you decide the right coverage for your car.

Comprehensive carinsurance

Third-party carinsuranceBenefits and coverage

Damages to third party property Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No, but it providesenhanced coverage.

Higher. Also, it variesfrom insurer to insurer.

To be purchasedseparately

Yes

Yes

Yes

No

No

No

No

No

No

No

No

Yes

Yes

Lower. IRDAI determinesthe premium based

on the vehicle’s enginecubic capacity.

To be purchasedseparately

Injury to the third party

Death of the third party in an accident

Damages to own car due to accidents

Shield against natural/man-madecalamities

Damages to own car due to fire

Theft

NCB discount in the case ofclaim-free years

Option to choose InsuredDeclared Value (IDV)

Option to choose add-on covers

Cashless claims at network garages

Personal Accident (PA) cover(Rs. 15 lakh)

Digital transactions

Mandatory

Premium

What is not covered in a car insurance policy?There are situations where you cannot demand the insurer to settle the claim.These are called exclusions.

Exclusions are mentioned in the respective insurance plan’s Policy Wordings. Note that there might be slight variations in the list of exclusions stated by different insurers. Thus, study the exclusions carefully before buying the policy and making a claim application.

As stated before, Third-party car insurance does not cover damages caused to your car. They are covered under a Comprehensive car insurance policy.

Here’s a list of common exclusions for both Third-party and Comprehensive car insurance.

Car insurance will not cover instances if the policy has expired at the time of the occurrence of the damages.

It will not cover instances if you did not follow traffic rules.

Your car insurance will not help you if you were driving your car without a valid Driving Licence.

It will not help you if you are found driving your car under the influence of alcohol or intoxicating drugs.

Car insurance policy will not cover instances in case of fraudulent activities conducted by you.

Your car policy will not compensate you if you use your car for reasons not mentioned while buying the policy.

Unless specified, your car policy will not cover instances where consequential damages are concerned. Consequential damages are damages resulting from actions by you and not an outcome of an uncertain event. The most common example is engine damage due to hydrostatic loss during monsoon.

Accidental damages during war or similar conditions are also not covered.

Car insurance does not cover instances mentioned under add-on coverage if you do not purchase the respective add-ons.

It will not cover any other damages that are not mentioned in the policy document.

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Note:

When you purchase Third-party or Comprehensive car insurance on ACKO, it does not include Personal Accident Cover, which is mandatory by law. Personal Accident cover offers you protection against disability/death due to an accident. This needs to be purchased separately while you buy a Third-party or Comprehensive car insurance policy. If you already own one, you need not purchase it again while buying a second car.

Zero Depreciation CoverYour car parts reduce in value due to natural wear and tear with time. Insurance companies (for example, ACKO) consider this reduction in value (called depreciation) while settling your car insurance claims. With this add-on, your insurance company will not consider the depreciation charges while settling the claim. As a result, your after-claim pay-out will be more than what it would have been if you didn’t have this cover.

Roadside Assistance CoverGetting stranded on the road due to a vehicle breakdown can be pretty frustrating. However, if you have purchased this add-on cover, you can call our support team during such situations. Our professional vehicle mechanic will rush to your location to help you with the vehicle’s issues, including towing services.

Consumables CoverUsually, you have to pay the cost of consumables while repairing the car. ACKO does not cover costs such as usage of oil, nuts and bolts, screws, etc. With this add-on cover, such costs shall be covered by us.

Engine Protection Cover

With the Engine Protection add-on, you can insure your car’s engine against most of the damages such as water ingression due to floods that are otherwise not covered in a Comprehensive car insurance plan.

Can I customise my car insurance policy?The earlier section touched upon the idea of buying add-on covers to customise the car insurance policy as per your requirements. You can buy one or more add-ons while purchasing a Comprehensive car insurance policy. The types of add-on covers can vary from insurer to insurer. In this section, we will help you understand the add-ons offered by ACKO.

Key Replacement CoverCar keys aren’t cheap, and the cost can go upto Rs. 10,000 for some cars. With Key Replacement cover, you can save your money on expenses incurred for replacing a lost, stolen, or damaged key. It also covers the cost of replacing the lock as well, if required.

Return to Invoice CoverIn case your car is stolen or damaged beyond repair, Return to Invoice add-on cover will help you recover the amount mentioned on the car's invoice value, including the car registration cost and road tax.

Outstation Emergency CoverOutstation Emergency cover secures you against accidents/breakdowns outside a 100 kilometers radius of your residence during the policy period. It will also compensate you if the repair takes more than 12 hours.

No Claim Bonus (NCB) CoverWhen you don't raise a claim during the previous policy period, ACKO rewards you in the form of an NCB discount on the premium amount during renewal. This discount can go up to 50% if you don't raise a claim for five consecutive years. However, when you raise a claim, the NCB discount goes back to zero. However, when you buy this add-on cover, you do not have to worry about losing the NCB discount even while you raise a claim.

Personal Accident Coverfor PassengersWhen you buy this add-on cover along with your Comprehensive car insurance policy, you can insure your near and dear ones travelling with you in the car in case of permanent disability/death while driving.

Personal Accident CoverThis is an additional cover to your car insurance policy. Along with a Third-party car insurance plan, it is compulsory to own a Personal Accident Cover in India. This additional cover provides financial protection in the event of permanent disability/death while driving or riding your vehicle.

Just visit the insurer’s website (for example, www.acko.com), provide a few details such as car model, previous policy details and personal information such as location.

Once you share the required information, select the plan and add-ons that suit your needs.

Pay the premium amount and get your car insured. It's that simple and easy to get your car insurance policy.

To renew the policy, you can check if your vehicle insurance policy has expired or not by simply having a look at the policy document. It states the policy start date and the end date. You can also log in to your account to check these details.

If the expiration date is near, you can also renew the policy online without any intervention from the middlemen.

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How to buy insurance for my car?Though you can buy car insurance offline through agents/middlemen, buying and renewing car insurance online is an easier, quicker and more economical way to insure your vehicle. You can buy car insurance online from companies authorised by IRDAI. Here are the steps to follow to buy car insurance online.

Advantages of buying online

Lower premium amount: Online insurers such as ACKO adopt 100% paperless and direct-to-consumer model. This allows us to keep our operating costs low and offer policies with broad coverage at a low premium amount.

Zero paperwork: When you buy online, you don’t need to fill lengthy forms and undergo a tedious documentation process.

Make an informed choice: All the necessary information is available on the insurers’ website/mobile app. Also, since there are no intermediaries involved, you can make an informed decision based on your car insurance needs.

Save time: Purchase and renew the policy anytime from anywhere. Policies can be renewed almost instantly, with the help of just a few clicks.

One-stop solution: Right from researching plans, buying them, renewing them or making claims, online insurance is more convenient, time-saving and effective.

Here are the advantages of buying insurance for your car online.

Car detailsYour car’s age, engine specifications, etc., influence the premium amount. The more expensive the car, the higher the premium amount in most cases.

Policy coverageThe extent of the policy coverage, including the add-ons, if any, directly impacts the premium amount. The more exhaustive the coverage, the higher the premium amount.

Age of the vehicleFor a new car, the cost of replacement of the parts can be higher. Also, the vehicle's value reduces with wear and tear. So the older the car, the lower its value, which reduces the premium amount. However, age also makes a car more susceptible to damages. Hence, insurance companies check your car’s health while deciding the premium.

Location detailsThe PIN code of your locality also impacts the premium amount. Areas where damage possibility is higher (for example, areas more prone to floods and earthquakes) usually demand a higher premium.

Car’s engine cubic capacityThe engine cubic capacity (cc) of your vehicle decides the premium payable on your insurance plan. In simple terms, cc is the volume of the engine’s cylinder. In the case of Third-party car insurance, IRDAI decides the premium amount based on the car’s engine cubic capacity. Higher the engine cc, the higher the premium you need to pay.

Factors influencing the premium amountYou need to pay the premium amount (mostly on a yearly basis) to get your car insured and enjoy the policy's benefits.

Insured Declared ValueIt is the approximate market value of your car. The higher the Insured Declared Value (IDV), the higher the premium amount. If you select a low IDV value, the premium will be lower. But this would also mean lower claim settlement amount. If the IDV is too high, it will increase the premium and also the claim settlement amount. Hence, it is important to set the IDV value wisely.

No Claim Bonus (NCB) discountNo Claim Bonus percentage earned at the time of renewing the policy also impacts the final payable premium. If you haven’t raised a claim during the policy period, the renewal premium amount would be lower as insurance companies reward you for every claim-free year.

Deductibles amountThere are two types of deductibles - compulsory deductible and voluntary deductible. The compulsory deductible is a fixed amount that you need to contribute during claim settlement. On the other hand, the voluntary deductible is an optional contribution from your end during claim settlement. The higher the amount of voluntary deductibles, the lower the premium amount and higher will be your out-of-pocket expenses.

Insurance companyNew-age digital insurers like ACKO eliminate the need for middlemen, which reduces operating costs. This, in turn, results in a lower premium amount.

How can I reduce the car insurance premium?Select only those add-ons that have the potential to add value to your car’s insurance cover.

Purchase a policy from a digital-first insurance company like ACKO to enjoy a lower premium

amount.

Raise claims judiciously and keep the No Claim Bonus discount in mind while raising a claim.

It is recommended to raise a claim if the damage cost exceeds the NCB discount.

Renew your policy before it expires, as not doing so can spike the premium.

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Value-added servicesTo get your car repaired seamlessly, ACKO provides a unique service. Just give us a call, and we will pick up your car in one hour, get it repaired at one of the network garages and deliver it back to you for free within 3 working days. Note that this facility is available only in select cities.

Hassle-free journeyWith ACKO, you can buy insurance for your four-wheeler online in just a few minutes. No paperwork needed, just answer a few questions and it’s done!

Superior claims experienceThe entire claim process is easy, convenient and time-saving with ACKO. To raise a claim via the ACKO app/website, you have to answer a few simple questions, upload relevant documents, and you are all set! Once you raise a claim, our claims team will guide you through the process. In case of minor damages, we will instantly settle your claims.

Incredibly low premiumsWe follow a direct-to-consumer model and bypass agents and brokers. Due to the 100% digitised process, we have low operating costs. We pass these savings to you by offering comprehensive coverage at lower premium rates.

Reasons to choose ACKO’s car insurance policy

We believe car insurance should be easy, seamless, and superfast. We keep everything paperless when it comes to car insurance. With the ACKO app, you don't just buy and renew your car policy from the comfort of your home. You can even raise claims by uploading the relevant documents. With ACKO's car insurance policy, things don't just get easy; you also save time and effort.

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