Renewing a car insurance policy is an essential responsibility for every vehicle owner in India. It ensures continued financial protection against accidents, damages, and liabilities. However, before renewing your policy, it is crucial to review specific clauses and conditions that can significantly impact your coverage and benefits. Overlooking these details might lead to inadequate protection or unexpected expenses in the future.

This article highlights the must-check clauses in a car insurance policy for Indian readers, ensuring informed decisions and hassle-free renewals.

Coverage type and scope

One of the most important aspects to review in a car insurance policy is the type of coverage it offers. There are two primary types of car insurance policies in India:

1. Third-party insurance: This is mandatory as per Indian law and provides coverage for damages caused to third parties, including property and bodily injuries. It does not cover damages to your own vehicle.
2. Comprehensive insurance: This policy covers both third-party liabilities and damages to your vehicle due to accidents, theft, natural disasters, or man-made calamities. If you are renewing a comprehensive policy, check if all aspects of coverage are retained or if there have been any changes.

Ensure that the policy you are renewing meets your current requirements, and consider upgrading to a comprehensive policy if your existing coverage is limited to third-party insurance.

Insured declared value (IDV)

The insured declared value (IDV) is the maximum amount the insurer will pay if your car is stolen or completely damaged beyond repair. The IDV is calculated based on the car’s current market value, factoring in depreciation. When renewing your car insurance policy, confirm that the IDV is appropriate.

While a higher IDV ensures better compensation, it also increases your premium. Conversely, a lower IDV might reduce your premium but could lead to inadequate payouts during claims. Striking the right balance between IDV and premium is essential for optimal coverage.

No-claim bonus (NCB)

The no-claim bonus (NCB) is a discount offered on the renewal premium if you have not made any claims during the previous policy term. Before renewing your policy, verify if your NCB is accurately reflected. Depending on the number of claim-free years, you can save up to 50% on your premium.

Ensure that your insurer has transferred the NCB from your previous policy, especially if you are switching providers. Remember, minor claims during the policy period can nullify your NCB, so evaluate the necessity of filing claims for small damages.

Add-on covers and riders

Add-on covers enhance the scope of a car insurance policy, providing additional protection for specific situations. Popular add-ons include:

• Zero depreciation cover: Covers the full cost of replaced parts without accounting for depreciation.
• Roadside assistance: Offers support in case of vehicle breakdowns.
• Engine protection cover: Provides coverage for engine damage due to waterlogging or oil leaks.
• Return to invoice cover: Reimburses the full invoice value of the car in case of theft or total damage.

While renewing your policy, review the add-ons included in your current plan and assess their relevance to your driving habits and geographical conditions. Add or remove riders as needed to customise your coverage.

Claim settlement process and ratio

Before renewing your car insurance policy, examine the insurer’s claim settlement process and their claim settlement ratio. A high claim settlement ratio indicates that the insurer has a good track record of honouring claims. Additionally, check the time taken for claim approval and disbursement.

Ensure that the insurer has a straightforward and transparent process, with minimal documentation requirements. Look for digital claim settlement options for quicker resolutions.

Exclusions in the policy

Exclusions are situations or conditions not covered by your car insurance policy. Common exclusions include:

• Damages caused while driving without a valid driving licence.
• Damages resulting from drunk driving.
• General wear and tear of the vehicle.
• Mechanical or electrical breakdowns.
• Consequential damages not directly related to the insured event.

Understanding these exclusions is crucial to avoid claim rejections. Ensure that you are aware of all scenarios where the insurer might deny coverage.

Voluntary deductibles

Deductibles are the out-of-pocket expenses you agree to pay before the insurer covers the remaining cost. A voluntary deductible can help reduce your premium but increases your financial responsibility during claims. Review the deductible amount in your policy to ensure it aligns with your budget and risk tolerance.

Policy lapses and grace periods

If your car insurance policy has lapsed, check the grace period provided by the insurer for renewal without penalties. Renewing within this period ensures continuity in coverage and avoids inspections or additional charges. Delaying beyond the grace period may lead to policy cancellation, requiring you to purchase a new policy altogether.

Renewal premium and discounts

Compare the renewal premium with your previous policy to understand any changes in cost. Factors like NCB, IDV adjustments, and add-ons influence premium calculations. Additionally, check for loyalty discounts or promotional offers that could reduce your renewal costs.

Legal compliance and driving licence validation

Ensure that your car insurance policy complies with Indian legal requirements, including mandatory third-party coverage. Also, confirm that the policy reflects accurate details, such as your name, vehicle information, and driving licence number. Any discrepancies could lead to complications during claims.

Tips for a smooth policy renewal

1. Renew on time: Avoid policy lapses by renewing your insurance before the expiry date. Set reminders to ensure timely action.
2. Compare policies online: Use online tools to compare premiums, features, and customer reviews before finalising your renewal.
3. Choose the right add-ons: Evaluate your driving habits, vehicle age, and geographical risks to select relevant add-ons.
4. Check insurer reviews: Opt for an insurer with positive customer feedback and high claim settlement efficiency.
5. Verify details: Double-check all policy details for accuracy to avoid disputes during claims.

Conclusion

Renewing a car insurance policy is not just a routine task but an opportunity to ensure comprehensive coverage and financial security. By reviewing clauses such as coverage type, IDV, NCB, add-ons, and exclusions, you can tailor your policy to meet your current needs. Pay close attention to legal compliance, including the validation of your driving licence, to avoid potential claim issues.

A well-informed renewal process not only provides peace of mind but also helps you optimise the cost-benefit balance of your car insurance. With careful evaluation and timely action, you can secure your vehicle and finances effectively for the year ahead.