Unravelling the Essentials of Your Car Insurance Policy Document

Understanding Your Car Insurance Policy Document

Your car insurance policy document is a legal contract between you and the insurer. It outlines what your policy covers, its terms, and the claim process. Reading this document carefully ensures you know your rights and responsibilities. Many people overlook the details and face issues later, especially during claim settlements.

Details in Car Insurance Policy Documents

Your car insurance policy document includes the following details:

1. Policyholder’s Information

This section includes your name, contact details, and address. Ensure this information is correct, as errors may cause issues during claims or renewals. If you change any detail, update it with your insurer immediately.

2. Vehicle Details

Your policy document specifies details about your car, such as:

• Make and model
• Registration number
• Year of manufacture
• Chassis and engine number

3. Policy Number & Validity Period

Every insurance policy has a unique number. This helps in tracking claims and renewals. The validity period of the policy is also mentioned, indicating the start and end date of your coverage. Never let your policy lapse, as driving without insurance can lead to penalties.

4. Type of Coverage

Your policy document clearly states whether you have third-party orcomprehensive car insurance. While the former is mandatory and basic, the latter provides extensive protection.

5. Premium Amount & Payment Terms

This section mentions how much you are paying for your insurance. It includes:

• Base premium
• Taxes
• Add-on costs

Some policies allow monthly, quarterly, or annual payments. Always keep a record of your payments to avoid policy lapses.

6. Deductibles

These are costs that policyholders must pay before the insurance covers the remaining claim amount. Deductibles are of two types:

• Compulsory Deductible – A fixed amount that the policyholder must pay before the insurer processes a claim.
• Voluntary Deductible – An optional amount chosen by the policyholder to lower premiums in exchange for bearing a portion of the claim cost.

7. NCB (No Claim Bonus)

It is the discount provided on the premium during policy renewal for completing a year without filing a claim. This can reduce the insurance premium by up to 50%.

8. Exclusions of the Policy

Understanding what your car insurance policy does not cover is as important as knowing its benefits. Most policies exclude consequential damages, meaning losses caused by wear and tear or mechanical failure. Additionally, claims may be denied if the driver is found guilty of contributory negligence, such as driving under the influence or without a valid licence. Knowing these exclusions helps prevent claim rejections and ensures you follow the necessary precautions while driving.

9. Your Car’s IDV

Your car’s Insured Declared Value (IDV) represents its current market value and determines the maximum payout in case of total loss or theft. It is calculated by adjusting the manufacturer’s price for depreciation over time. Ensuring the correct IDV is crucial, as it directly affects your insurance premium and the sum insured. If your insurer allows you to choose the IDV, ensure it is accurately noted to avoid underinsurance or overpaying premiums.

10. Terms and Conditions

The most important thing to read and understand in your car insurance policy is its terms and conditions. For example, while making claims, you might have to pay a deductible amount out of pocket, or in the case of a third-party policy, damages to your own vehicle won’t be covered. Knowing the terms and conditions can be very helpful at the time of making a claim.

11. Claim Process and Documentation

Understanding your insurer’s claim process can save valuable time during an emergency. Instead of searching through policy documents later, familiarise yourself with the claim eligibility, required documents, and the time limits for filing. Additionally, check the list of network garages where you can get cashless repairs, ensuring a hassle-free experience. Being prepared with this information helps streamline the claim process and reduces stress in case of an accident or vehicle damage.

Endorsement in Car Insurance

An endorsement in car insurance refers to changing or amending any details in the insurance policy document. It can be initiated by either the policyholder or the insurance provider and are typically categorised into two types:

• Basic Endorsements: These involve straightforward modifications such as updating personal details, adding or removing drivers, or correcting vehicle information. These changes usually do not significantly impact premiums.
• Advanced Endorsements:These involve more complex changes that can affect premiums and coverage, such as increasing policy coverage limits, adding new accessories (e.g., anti-theft devices), or including add-ons.

Endorsements are crucial for maintaining accurate policy details, ensuring legal compliance, and adjusting coverage based on personal or vehicle changes. They are documented in writing and become part of the original policy contract.

Conclusion

Understanding the information in your car insurance policy document helps you avoid unexpected issues during claims. Whether you purchasecar insurance online or offline, keep the policy document you receive safely for future references or claim processing.

Disclaimer:The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

Note to the reader: This article is part of HT Auto’s paid consumer connect initiative and is independently created by the brand. HT Auto assumes no editorial responsibility for the content, including its accuracy, completeness, or any errors or omissions. Readers are advised to verify all information independently.

First Published Date: 18 Mar 2025, 10:11 AM IST