The Importance of Auto Insurance

In India, it is mandatory for all new vehicles to be insured, whether they are personal or commercial. The leading automobile manufacturers in the country have tie-ups with auto insurance companies. This enables their customers to easily avail insurance for their vehicles. The premiums to be paid to depend on various factors and they increase with an increase in the vehicle’s price.

Here, auto insurance generally covers loss or damage done to a vehicle or its parts due to natural or made-made causes. These causes include fire or explosion, theft, riots, strikes, natural disasters, malicious acts, accidental damage and terrorist activity. Accident coverage applies to the owner or driver, passengers, and even third party legal liabilities.

The Different Types of Automobile Insurance in India

Private Car Insurance - This is India’s fastest growing auto insurance section. This is mainly because private car insurance is mandatory for all new cars. The premium sum here depends on the brand and value of the car, the year of manufacture and the state where it is registered.

Two Wheeler Insurance - This insurance provides accident coverage for the driver. The premium here is calculated as the current showroom price, multiplied by depreciation rate. This rate is determined at the start of the policy tenure by the Tariff Advisory Committee.

Commercial Vehicle Insurance - All vehicles other than personal vehicles such as trucks and heavy motor vehicles (HMVs) are covered under this insurance. It covers loss or damage caused by natural or man-made factors, third party liability, and loss or damage to electric accessories upon payment of additional premium. It does not, however, cover depreciation, failure or breakdown, and driving under the influence. Showroom price at the beginning of the insurance period, brand and state of registration determine the premium amount.

Why Commercial Auto Insurance is Essential for Business Vehicles

Recent reviews of the Road Transport and Safety Bill proposed to increase the fine for driving non-insured vehicles from Rs10,000 to Rs75,000. However, this is not the only reason you should get your vehicle insured. Since commercial vehicles help bring in a source of income, any accidental damage or loss to such vehicles could simply great financial loss for you, your family or your business. In severe cases, it could also mean the loss of the business. Thus commercial auto insurance is an indispensable tool in managing risk.

Read why its necessary to go green with commercial vehicles

Delhi Case Study

In June of 2009, when Mohd Ibrahim’s Honda City was stolen from a hospital parking lot, the Delhi State Consumer Commission instructed his insurance agency to pay him Rs 6.09 lakh, the total value of his car. The Commission stated that the company cannot reduce the claim sum citing depreciation in the event of theft because the loss incurred by the owner is on the total value of the vehicle. It also refuted the agency’s argument that the hospital should be held liable to pay the compensation.

What can you learn from Mohd’s experience?

In case your car is ever stolen, don’t settle for less than the entire value of the vehicle. Ask your insurer for complete compensation and remember that no third party should be expected to compensate you for your loss, even if the theft occurred on its premises.

Be sure to read your policy document carefully and make sure you understand the complete process of auto insurance and making claims.

Accidents and Auto Insurance

In event of an accident, an auto insurance policy will provide the victims or legal representatives of deceased victims with substantial compensation. Thus, vehicle insurance benefits both the victims of the accident and the vehicle owner as they are spared from having to pay hefty compensations.

Keep in mind that when it comes to commercial vehicles, it is necessary that the driver has a valid driving permit and fitness certificate to make an insurance claim.

Making Insurance Claims after an Accident

The documents required for filing an insurance claim after an accident will be available with the investigating officers and police machinery. These include spot panchanama, charge sheet, and documents of the vehicle involved.

Compensation amounts depend on factors like age and income. In the event of an injury, medical papers and employment or salary proof must be provided. Age and income proof of victims are required to make fatality claims.

We have seen that motor vehicle insurance is not only mandatory by law but also essential to safeguard yourself, your business and assets. With the plethora of insurance options available in the market, it’s easy to be overwhelmed. Take your time and consider your options before choosing the policy that best suits your business needs.

India Infoline Finance Ltd. (IIFL Finance), a non-banking finance company, is a subsidiary of IIFL Holdings Limited. At IIFL, we provide finance solutions for your business, whether you are purchasing your first truck or expanding your fleet. We provide loans for a wide range of vehicles such as buses, trucks, tankers, trailers and commercial vehicles, all at competitive interest rates starting from 12% p.a. onwards. And to help your business on its way, we offer up to 100% financing on your commercial vehicles.

Our application and documentation processes are simple and the minimum disbursal period is just 7 days, while your repayment tenure can extend up to 60 months. We also offer customized repayment options to suit your business requirements.

To find out if you are eligible for an IIFL Commercial Vehicle Loan, or to calculate your EMI, click here.