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Probable add-on covers for your Car Insurance Policy

Mentioned here are some of the few add-on covers that you can get along with your car insurance policy that can make it more effective:

Personal Accident Cover


This cover offers coverage to the car owner in case of car collisions. If the owner of the car is driving the car and meets with an accident, the complete claim amount will be provided to him/her in case the damage to limbs is irreplaceable or leads to death.

No-Claim Bonus

A no-claim bonus is a reward for policyholders who do not make any claims for their insurance over the course of a policy year. In such a scenario, this cover gifts them by providing discounts of up to 50% on the premium payment for the following year.

Engine and Electronic Circuit Cover

Engine and Electronic Circuit Cover provides protection to the electronic circuit and the engine of the car. In case there is a flood, the engine can fail if you continue trying to run it, and this sort of damage is not covered by regular car insurances.

Zero Depreciation Cover

Purchasing this type of cover will make sure that you receive a complete claim on the cost of the parts of the car replaced after the accident. This cover is usually provided only for the first 3 years, starting the date on which the car was bought. The more the vehicle ages, the steeper the premium for this cover gets.

Roadside Assistance Cover

In case you get into an emergency situation while driving in a deserted or remote area, the roadside assistance cover will offer you with access to services that can fix your problems at the earliest possible.

Loss of Belongings

This add-on cover allows you to report claims that occurred due to theft or loss of your personal belongings. In case you leave your mobile phone, laptop or some other expensive stuff in your locked car and it gets stolen, this cover will reimburse you for the loss at least partly if not the full amount.

Daily Cash Allowance

In case your vehicle remains with the mechanic in the garage for about four to five days, the daily cash allowance cover will pay for your transportation expenses.

Key Replacement

In case you have lost or misplaced your car keys, having a key replacement cover will make sure that you are reimbursed for the cost of replacing the key. However, insurance companies do not reimburse the entire amount required to replace the key.

What are the different ways to purchase a car insurance policy?

In general, there are three different ways of choosing a car insurance policy. This can be broadly classified as via:

  1. Agents
  2. Dealers
  3. Brokers

Agents


There are a lot of insurance agents working with several insurance companies all over the world. These people are paid by the company to be able to sell their products to customers. Besides, these agents are considered to be experts as far as insurance products offered by their employers are concerned. These people are also believed to have the ability to convince and have the amply required knowledge to guide you in choosing the right policy that best suits your requirements. If you wish to change your insurance company, you should look for another insurance agent who works with the same company from which you wish to get the new insurance policy.

Brokers

Brokers can either be individuals or even companies having a valid license from the government to be able to sell their insurance policies and other products. The products sold by brokers can be from any insurance company as they often have the required knowledge and expertise to help you make an informed choice. They also offer help and guidance in after-sales needs. In fact, brokers can also help you in comparing several policies in an effort to help you find the best one for yourself. Brokers can also help you in making the claim settlement when needed.

Dealers

Automobile dealers sell vehicles to customers, and these vehicles are sold with third-party liability insurance. Normally, a lot of these dealers have tie-ups with insurance companies and may not be highly informed about these insurance policies. But they do look after the paperwork needed with getting a third-party liability insurance policy sold by the dealership. As said earlier, these dealers might or might not have adequate knowledge to guide you in finding the policy that best suits your requirements.

What are the Inclusions and Exclusions in Car Insurance?

The cover offered by all car insurance policies are different for different insurance companies, but the most common inclusions and exclusions in car insurance are as follows:

What is Covered (Inclusions)

Cover for damages happened to your vehicle

Cover for damages happened because of man-made disasters

Damages to property

Theft

Personal accident cover

Cover for damages caused by natural calamities

What is Not Covered (Exclusions)

Damages caused by the vehicle when it was being driven by someone who was under the influence of alcohol, drugs or any other form of intoxicants

Damages caused to the vehicle while being used for illegal purposes

Accidents that are considered fraudulent by the insurer

Damages incurred by the vehicle when it was being driven by someone who does not have a valid driving license and who has not attained the legal driving age.

Damages incurred by the vehicle when the driver was breaking traffic rules

Damages happened to the vehicle when the car’s insurance policy had expired

Important tips to consider before renewing your car insurance policy

Credits to the advanced technology, the internet has made it just a matter of few minutes to complete many tasks, which otherwise used to take a long time. From payment of bills to household chores, everything has become super easy with internet. With this, the banking and insurance sectors have also taken new leaps and with that you can renew your car insurance policy in a hassle-free manner online.


In today’s time, all car insurance companies have their official websites that allow customers to renew as well as purchase their car insurance policies.


With this facility you can visit their website, compare policies, calculate the premiums, and even purchase or renew your plan and so on.


Here are some important tips to consider while renewing car insurance policy:

Date of Renewal

Insurance companies often send you reminders via text messages or email, letting their customers know that their car insurance policy is about to expire and simultaneously prompting them to renew the same. However, it is common to miss an email or message, so it is advised that you keep a track of the renewal date and also set a reminder to ensure that you renew your policy on time.


Details of the Policy

Instead of personally going to the branch office of the insurance company, you can very conveniently go to the website of the insurer, click on the option of ‘Policy Renewal’ or similar. A lot of companies also give you the option of choosing whether you are an ‘Existing Customer’ or a ‘New Customer’ and enter the details required to renew your car insurance policy online.


Follow the steps

While filling in your details of the policy online, the insurer also gives a set of instructions that you should follow properly. Once you have filled in your details, the insurance company will process all the information as entered by you to be processed and you can go to the next and final step, which is normally making the payment.

Payment

Paying for your car insurance policy renewal online is an easy process. Almost all insurance companies accept every other credit and debit cards, so you can just enter your payment information correctly and the amount will be debited from your bank account.

Acknowledgment

Once you have made the payment for renewing your car insurance policy online, the insurance policy company will closely process and verify all your details. Once it is done you will receive an acknowledgment claiming that you have paid the amount to renew your car insurance policy.


Driving without a valid car insurance policy can have legal repercussions, which means you are adding on to your risk factors. In case you meet with an accident on the road in an uninsured car, you will be held responsible for the damages to yours as well as third parties’ damages, irrespective of the fact if it is your fault or not. Considering how simple it is to renew your car insurance policy online, all you have to do is remember the date on which your policy is due for renewal and complete the task in a matter of minutes.

History Of Car Insurance in USA

With the advent of cars and other automobiles in the late 19th century, the inevitable after-effect – car collisions and road accidents also came into the picture. The rise of automotive collisions made it clear that, unlike other infringements, which depend on personal responsibility, there were high chances that automobiles will have to be governed by laws. This was because there was no way of making sure that even though the mistake was scrutinized the victim of any road accident would be able to collect from the person who commits the infringement.


Following this, Massachusetts and Connecticut came with the first financial responsibility and compulsory insurance laws. Connecticut’s 1925 financial responsibility law made it a mandate that any vehicle owner involved in a collision with damages of more than 100 Dollars to prove “financial responsibility to satisfy any claim for damages, by reason of personal injury, to, or death of, any person, of at least 10,000 Dollars.” This initial financial responsibility need only made vehicle owners present their financial responsibility after their first collision. Massachusetts also came up with a law to address the problem of accidents, but theirs was a compulsory insurance policy and not a financial responsibility law. This needed automotive liability insurance as a prerequisite while going for vehicle registration.


Until 1956, after the New York legislature passed their insurance law, Massachusetts was the only state in the entire United States that required drivers to have insurance before registration. North Carolina followed this suit in 1957 and later in the 1960s and 1970s several other states passed the same compulsory insurance laws. Since the starting of automotive insurance schemes in 1925 almost all state has adopted a mandatory insurance scheme.

How Much Car Insurance Do I Need?




The total amount you spend on a car insurance you need depends on how much coverage you are allowed to get, along with the coverage you need at the time of crisis. Each state has a fixed set of legal requirements for vehicle car insurance, and not meeting them can even land you in jail.


Among others here are the things you should look out for while getting a car insurance:


• Liability coverage – A car insurance policy helps you to cover liability and expenses when you’re at fault in an accident. This cover money will go to the affected person, but it won’t cover the people in your car.

• Bodily Injury Liability (BIL) – This policy pays for the medical charges of the person who has had a collision with you in the accident. Often, you will see BIL policies described as a “20/50” policy or a “100/300” policy. These numbers indicate the maximum amount the policy will pay for one person’s injuries and the maximum for all physical injuries sustained by all the travellers of the other car.

The following policies cover all the things required in an accident:

• Personal Injury Protection (PIP) – This covers yours’ and your passengers’ medical expenses after the accident. If you are not able to work during that time because of your injuries, this policy may or may not cover lost wages as well.

• Uninsured/Underinsured Motorist Coverage – This offers to cover costs in case you are hit by someone who does not have insurance or has minimal coverage.

• Collision – This policy covers all the repairs you car needs after an accident.

• Comprehensive – This policy covers costs in case your car is stolen or damaged, apart from an accident.

Almost all states require car owners to have auto insurance policy, and most states also have required minimum values for different policies. If you do not have the insurance, the state can seize or take your vehicle into legal custody.

Minimum coverage is not necessarily all you should have. For example: New Jersey requires all car owners to have a 15/30/5 liability package. If you’re involved in a serious accident, there are also chances that an individual’s medical expenses could exceed 15,000 Dollars, or a group’s expenses could total more than 30,000 Dollars. In addition, 5,000 DOllars for car repairs isn’t a lot, considering that the average car now costs a little more than 20,000 Dollars.

You can be caught in a bad situation or owe money when costs exceed your coverage limits. That’s why many people prefer to go for policies that cover more than required minimum amount, particularly if they have assets that can be seized to pay for repairs and medical care.


A Wise Advise To All: Make sure you are covered for an amount that is equivalent to the total value of your assets (Take a sum of the values of your house, your car, savings and investments).

UK Car Insurance Premiums Drop 1% In Third Quarter: Survey




As noted in October 2019, the cost of a comprehensive motor insurance policy in Britain fell 1% in the third quarter, pushed down by uncertainty from the personal injury discount rate change in July and the market watchdog’s interim report on general insurance pricing practices, a survey showed.


The average premium for a comprehensive policy is now 783 pounds, according to the latest index from price comparison site Confused.com, compiled by insurance advisory company Willis Towers Watson Plc (WLTW.O).

Britain’s market watchdog said last week car and home insurers could avoid mandatory pricing restrictions if they voluntarily stop penalizing loyal customers.

Firms use complex pricing practices that allow them to raise prices for consumers that renew with them year-on-year, known as “price walking”, the Financial Conduct Authority (FCA) said.
Prices in 2018 were also pushed down by changes in the Ogden rate used to calculate compensation for personal injuries and the Civil Liability Bill, which includes reforms likely to reduce claims for whiplash injuries.

Whiplash is a form of neck injury caused by a sudden jolt that snaps the head backwards but insurers argue that many claims in such cases are fraudulent.

Quarterly data by price comparison website MoneySuperMarket (MONY.L) showed that an average fully comprehensive premium now stands at 459 pounds, 5% lower than last year.

Companies such as Admiral, RSA Insurance Group Plc (RSA.L), Direct Line Insurance Group Plc (DLGD.L) and Hastings Group Holdings Plc (HSTG.L) provide motor insurance for Britain’s highly competitive insurance sector.

“We still consider the UK motor insurance market to be efficient in the medium-term, and expect a faster price pick-up in the coming months. Regulatory scrutiny with respect to profitable back-books may act as a catalyst for new business pricing,” Barclays analysts said.

“The FCA has discussed measures to encourage fairer pricing for new and returning customers, so we expect to see insurers adjusting their prices. This could see prices for new customers increasing as they offset fairer premiums for renewing customers,” Wright said.

Source: Reuters.com

Effect of U.S. Auto Insurance Practices on Hurt Low-Income Earners




Several large U.S. auto insurance companies use education levels and occupation to set rates, effectively pricing some low- and moderate-income earners out of the market, according to a report by the Consumer Federation of America.


The report, released on Monday, looked at premiums set by the 10 largest auto insurance companies in 10 urban areas across the United States.


The CFA plugged information about a fictional person into each company’s website to get a quote, changing only education level and occupation to see the effect on rates. Five of the insurance companies were found to collect such information.


In some cases, premiums for minimum-liability coverage exceeded Dollars2000 and in one instance, in Baltimore, it was more than Dollars4000, from Travelers Insurance.

“The quoted prices, especially the nine exceeding Dollars2000, show that insurers either are overcharging lower-income consumers or are not interested in serving them,” Bob Hunter, the CFA’s director of insurance, said in a statement.

The report found that Geico, part of the Berkshire Hathaway group of companies, charges more in six of the analyzed markets for a factory worker with a high school diploma than for a factory supervisor with a college degree. The rate could be as much as 45 percent more in Seattle or as low as 20 percent more in Baltimore.

Progressive Corp., which had the second-highest difference in premiums, was found to charge the factory worker 33 percent more in Baltimore and 8 percent more in Oakland, California.

Since education and occupation have been found to correlate with race, the CFA said the practice of using such factors is discriminatory.

However, Robert Hartwig, an economist and president of the Insurance Information Institute, an industry group representing insurance companies, said dozens of factors go into determining insurance rates, each correlating with risk.

“Why would an insurer collect data that is not useful?” Hartwig asked. “These factors are used for one reason and one reason only, and that’s to ascertain risk.”

Common practices that the CFA agreed should be used for setting rates include a person’s past driving record and miles driven. Location and type of car are also often used because they can increase the cost of a claim.

Factors such as age, gender and credit ratings are also used because they have been found to correlate with the frequency or size of claims, according to the III’s website.

But the CFA said that while such factors may indicate correlation, they do not necessarily indicate causation.

Hartwig defended the use of correlation, saying it was what insurers and actuaries typically use because causation might never be known.

Hartwig also said the use of so many different models was a sign of a competitive market. A market in which all companies used the same variables would result in uniform pricing, he said.

Using a survey conducted by market research firm ORC International, the CFA said about two-thirds of Americans think the use of education and occupation to set insurance rates is unfair.

The organization said the Federal Insurance Office, an agency born out of the 2010 Dodd-Frank financial regulatory reform law, might be able to change how insurers determine rates.

Insurance regulation is usually at the state level. But Stephen Brobeck, executive director at the CFA, suggested it is not a big enough concern for state officials and said he hoped attention from consumer advocacy groups would change that.

“Many of the insurance commissioners and the departments are not sensitive enough to the needs of the insured, particularly for low- and moderate-income drivers in their states,” Brobeck said on a conference call.

He added that the CFA also opposes the use of credit ratings because it discriminates against low-income earners.

Auto insurance is required to own and operate a vehicle in all U.S. states except New Hampshire.

Car Insurance – Basics you must know




If you have a car, chances are you have car insurance for it. But how much do you understand about what kind of policy you have and what policy is best for you, given the risks that you want to protect against?


Here we share with you basics that you must know if you want to make smart decisions about your car insurance policy.


Why do you need car insurance?

You need car insurance because it is mandatory – it is the law. For any vehicle to drive on Indian roads, it must have a valid insurance policy that at a minimum covers the cost of damage that you might cause to other people or vehicles.

Rather than have to pay from your own pocket, if you have a valid car insurance policy, the insurer will assume the liability, as long as the damage is covered under the terms of the insurance contract and there is no case of fraud.
Situations where a car insurance policy can cover costs, are damages arising from an accident, theft, fire and any natural calamities like flood, earthquake, or cyclone.


Car insurance policies are valid only for a year and need to be renewed annually.

Even though the law requires every car to have a valid policy, the reality is that there are still lakhs of vehicles in India that are not insured.

This is because people want to save money by not paying the insurance and the policing system to check if every car is insured is not perfect. Nevertheless, it is worth spending a few thousand rupees to get car insurance, so that you don’t put yourself under any out of pocket risk if you are in the unfortunate situation of an accident or injury.


What are the different types of insurance?

There are two types of car insurance policies: third party and comprehensive.

1) Third-party insurance: If someone else is injured or their vehicle is damaged as a result of your driving, then this “third party” needs to be compensated for it. So, the law requires that at a minimum you have third party insurance to protect against the risk of damage you might cause to others, so that they are not financially worse off.

For instance, if you meet with an accident while driving, a third party insurance policy will meet any claims for damage to the other car and take care of any medical expenses for the individuals in that car.

The premium for this type of policy is calculated on the basis of the engine capacity of your own vehicle. Since the cover only includes third party damage, the premium is less compared to a complete coverage policy.

A third party policy will not cover any damage that you or your car suffers.

2) Comprehensive insurance: Unlike a third party policy which covers damage that you cause to “third parties”, a comprehensive policy as the name suggests offers complete coverage for both third party and own damage liability.

Comprehensive insurance can include damage to your own vehicle and the other party’s vehicle in case of an accident, medical expenses for the other party, you, and passengers in your vehicle.

In addition to this, the policy also covers any damage to your vehicle due to any natural calamity, loss or damage to your vehicle due to reasons like theft, burglary, terrorist activity, and any repair in transit.

You can even opt for a cover for your car accessories like music system and air conditioner under this policy.

The premium in comprehensive insurance is calculated on the basis of the insurable value of your vehicle. Since the cover in this policy is wide, the premium is also higher compared to a third party policy.

How should you decide what coverage to get?

When deciding the policy you should get, you must have two things in mind:

1) Your capacity to pay the premium: In case you have existing loans, and any other monetary obligations to meet, you should analyze if you have the capacity to meet the premium due for your car insurance.
Also, keep in mind that third party insurance is the legal minimum cover that you need. Anything you want above that depends upon what kind of risk you can afford to protect.

2) Additional scope of coverage: You might want an all-inclusive policy for your car for a wider protection. This can be done by getting an additional coverage. Depending upon the kind of situations you want to cover, the premium amount will vary as you keep extending the range of coverage and damages. The types of coverage that you can get include the following:


a) Personal injury protection: This covers you and any passengers in your car against any harm at the time of an accident. If you want to get coverage for a driver then that is another feature.
b) Uninsured/Underinsured coverage: This covers any expense if you are hit by someone whose vehicle is either not insured or underinsured.
c) Collision: This covers repairs to your car in case of an accident by another vehicle, or object. It will take care of expenses on the repair of your vehicle excluding the voluntary amount that you want to pay on your own.
d) Car accessories: You can have an additional cover against damage to your car accessories like music system and air conditioner.
With every successive year, as the car ages, the value of the car will also go down. This will get reflected in a lower premium for your car insurance if you get a comprehensive policy.


If, however, you have only a third party cover, the premium amount will generally not vary by age, as the engine size of your car will stay the same. In the third party premium amount shown above, the premium comprises the minimum amount you pay for third party cover and then some add ons on top of that.

Source: Reuters.com

Importance of car insurance cover note




From the time you pay the car insurance premium, to the time you get the original certificate from the insurer, you could be waiting for up to two weeks.


Does this mean that your car is uninsured during this period? No! And the reason is because of a Cover Note that the insurance company is obliged to give you once they approve the insurance and once you have paid the policy premium.

What is a Cover Note?

When you get a car insurance policy, it takes a few days to get the original policy document to you because administrative activities like printing and posting the originals can take time.

However, during this interim period, your car is still insured and you are fully protected. Once you have paid the premium to the company, the company will almost immediately give you a Cover Note.

This is a temporary certificate of insurance that denotes that your car is covered by insurance, and that you are awaiting arrival of the original certificate.

Today in the digital age it is possible to apply for insurance through the online medium whereby one can get a policy document instantaneously.

Nevertheless, most Indians are still buying policies in the offline world, and for the time being a cover note is still valid as evidence that shows that your car is insured.

A Cover Note is valid for a period of 60 days from the date of its issue. Typically insurance companies deliver the original certificate to you within two weeks of the start of the coverage, and in any case are required to issue the original before the expiry date of the cover note.

If you have not received your cover not even after a few weeks of the Cover Note being issued, call the insurance company and remind them that you are still waiting for the original insurance certificate to be mailed to you. Do this while your Cover Note is still valid.

What should you do when you get a Cover Note?

Verify the following details when you get the Cover Note:

• Make and registration number of the vehicle
• Year of manufacture
• Engine and chassis number
• Cubic capacity of your vehicle
• Seating capacity in your vehicle
• Insured declared value (IDV) of your car
• IDV of the accessories in your car (car stereo, speakers, CNG kit etc.)

How does a Cover Note help you?

For all practical purposes, a Cover Note fulfils the role of your car insurance policy, while you are waiting for the originals to arrive.

• Can show it at the time of checking: Any time that a regular checking by traffic policemen or police officials is taking place, you can show your Cover Note as proof that you have a valid insurance policy. You will not be liable to pay any fine if you have a valid Cover Note.

• Can make the claim in case of accident or theft: You can use the Cover Note if you want to make any claim at the time of an accident or theft.

What should you do if the cover note is lost or destroyed?

If your Cover Note gets lost or destroyed (torn or damaged), you should do the following:
a) Give a written declaration to the insurer mentioning that the Cover Note is lost or destroyed. You should also mention the circumstances under which this has happened
b) Return the insurer the Cover Note issued to you irrespective of its condition
c) Pay the insurer Rs. 50 for issuing a new cover note. If the insurer is satisfied that all efforts have been made to find a lost cover note, or is satisfied that it’s a genuine case of the cover note having been damaged, then the insurer will issue a duplicate cover note with the same details as the original.

In case the original cover note is found by you later, you must surrender it to the insurer.

Source:Reuters.com