Zero Depreciation Add on for Car Insurance– Best Way to Gain Complete Benefit

Depreciation is the decrement in the value of asset after its usability. Now-a-days Zero Depreciation or Nil-Depreciation has become popular with increasing awareness among vehicle in India.

In Zero Depreciation (or Zero Depth) policy, the total amount is returned by the car insurer without considering any depreciation on the value of the vehicle. This policy offers full claim without any deduction for depreciation on the value of parts replaced.

In order to opt this policy, customers have to pay little bit more in terms of premium. However, zero depreciation policy is decidedly recommended because it removes the possibility of any out-of-the-pocket expense of the vehicle owner. This best feature of car insurance policy extends to the repairing costs of plastic, fibre, glass, and rubber parts.

There is a difference between standard and zero depreciation car policy. Standard policy provides depreciation rate of 0%-40% depending on the time of vehicle and type of material, customers have to spend some money from their pocket. While Zero depreciation policy, customers need not to spend any extra money from their pocket. In this case no depreciation is taken, thus leading 100% reimbursement on changing or depreciating parts.

In market, insurers such as ICICI Lombard General, TATA AIG General, HDFC ERGO General, Bharti AXA General are Reliance General are offering zero depreciation insurance policy. Customers can check them online also.

Usually, this coverage is offered on new car only and mostly it does not give coverage on vehicle more than three years old. Under this policy, Customers can only make a certain number of claims.

What is not covered in Zero Depreciation Insurance Policy?

Following are some terms, which are not covered under this policy:

1)    Wear and Tear
2)    Damage by mechanical breakdown
3)    Damage due to uninsured liability
4)    Damage due to uninsured items such as accessories, gas kit, tyres, bi-fuel

The tenure of this policy is for one year. After one year completion, policy has to be renewed. Customers can by Zero depreciation coverage online while purchasing car policy.

Also read

All You Need to Know about Motor Insurance?

Guideline That Can Help You Save Money on Car and Two Wheeler Insurance

Topmost Car Insurance Myths – Busted

Risk Factors in Going for a Tour and Benefits of Travel Insurance

When we want change, more fun, entertainment, we go for tours. We also go for business tours. For tour preparation, the things that occupy in mind are packing, bags, tickets, hotel booking, music player, handy cam and more.

What will you do if you have to miss your flight due to an unforeseen accident? Or if the flight landing off leaving your baggage behind, what do you do after taking off with few clothes?

However, most of the people don’t give attention buying Travel Insurance policy prior to go out for a new place. The insurance is not even considered essential until something unwanted terms happen. However, some incidents such as loss of baggage, delay or cancellation of flights, medical complications are some of the common possibilities while travelling. So, it is very important to realize that even a small tragedy can ruin beautiful holidays.

To secure from such risks, it is important to be
covered during risks. Travel insurance can secure from unwanted tragedy. Therefore, it is advisable to insured yourself and your family covering the risk of a financial loss and health complication while travelling.

Travel Insurance can be taken momentarily for one-time tour or throughout the year who are frequent travellers. The most common tours for which travel insurance has become important are business travel, leisure travel, adventure travel, cruise travel, international travel and overseas student travel.

Travel Insurance generally covers:

1)    Medical expenses

2)    Missed connecting flight

3)    Tour cancellation expense due to bad weather condition

4)    Delay in Tour

5)    Loss of passport

6)    Accidental injury/death

7)    Loss, theft or harm of documents, money or personal possessions

Travel Insurance also has lots of benefits. Let’s come to know these benefits here:

Benefits of Travel Insurance

Travel Insurance is the solution, which insures safety from many unwanted risks include:

1)  Medical Care and Evacuation:

If the person gets sick or suffer an injury, a proper medical treatment, tests and medical cost are covered by travel insurance. Just in case, person requires better medical facilities, he/she is referred to better treatment, which is also included in the travel insurance.

2)  Baggage Loss:

Losing/misplacing passenger luggage in airlines is a very common incidence. Travel insurance covers that expense of lost belongings.

3)  PA (Personal Accident) coverage:

While travelling, sometimes life has the propensity of happening unwanted circumstances like accident, which potentially upsetting one’s life and causing financial hardship.

With travel insurance, these circumstances can be safeguard and in control the person and family.

4)  Child Responsibility coverage:

Due to some uncertainties, if the person is not in the condition to handle oneself and the child, Travel insurance gives expense to the other family member to handle the situation.

5)  Repatriation of Remains:

If unfortunate happens, the person will get expenses coverage for repatriation of the remains.

Therefore, insuring everyone with Travel Insurance is highly recommended to everyone so that travellers can make their trip journey enjoyable. Click IRDA Guideline for Travel Insurance FAQ.

FAQ About “No Claim Bonus”

Though getting Insurance policy for safety purpose has been grown-up, but there is lots of important factors in which people are still confused. This topic is all about the term “No Claim Bonus”. Let’s have a look:

What is “No Claim Bonus”?

No Claim Bonus (NCB) is the benefit added as a profit to the insurance owner for making NIL claims (claim-less year) by the end of the year. This benefit is offered by insurance companies if a policy holder has not made any claim during the term of Insurance Policy.

How do I build a claim? 

If you don’t make any claim during the policy year, you will able to gain No Claim Bonus. For every year, you are insured without making any claim; you will earn this NCB. Owner can use this bonus either for paying the less premium or getting more coverage from next year or can adjust the same at the time of new purchases. Customer should confirm this at the time of purchasing policy.

How will NCB work, if I make a claim?

If you make any claim on your insurance policy for which your insurer pays out, you will lose your No Claim Bonus. However, in case, if you are hit by another person’s car and there is no fault from your side, your insurer may be able to reclaim the pay-out from other owner car insurer and your NCB may not be affected.

Can NCB apply to Work Vehicles?

Generally, NCB is not applicable for commercial policies, but some insurers will take your experience driving a company car into account when calculating your premium. If vehicle is insured for you to use for “Social, Domestic and Pleasure Purpose” as well as for “Work”, you can apply for NCB, but make sure with the insurer at the time of policy purchasing.

When will I get benefit of NCB in Motor insurance?

In motor insurance, if you want to take a benefit of NCB, you have to maintain a claim-free record in the previous year. So you will get discount on policy from next year or on renewal of policy. This discount ranges from 20%-50% on premium paid every year (or as per the insurer policy plan). You can claim NCB of 20% on the first renewal of the completion of policy year. The discount increases steadily with every claim-less year up to a maximum 50% at the end of five claim-less years.
For example, you have taken coverage of Rs. 5, 00,000 Lakhs and your premium is of Rs. 27,000 thousands. If insurer provides 20% discount on first no-claim year, you have to pay Rs. 21,600 (=Rs. 27,000*20%) premium at the time of renewal of policy in next year.

When will I get benefit of NCB in Health insurance?

In Health Insurance, if you don’t make any claim in the insured year, you will get additional NCB discount coverage (than previous coverage in insured year) on renewal of policy in the next year at the same premium. The coverage increases steadily within every claim-less year at the same premium plan.

For example, you have taken coverage of Rs. 5, 00,000 Lakhs and your premium plan is Rs. 27,000 thousands. If insurer provides 20% discount on first no-claim year, you have coverage of Rs. 6, 00,000 (=Rs. 5, 00,000 + (Rs. 5, 00,000*20%)) at the time of renewal of policy in next year at the same premium.

Does NCB belong to me or to my vehicle? Is this NCB bonus transferrable when I replace my old vehicle with new one?

The NCB is the reward given to the policy holder by insurer. In motor insurance, this NCB belongs to policyholder, not to the vehicle. So, it will retain if you replace your existing car with new car or if you switch to another insurer at the time of renewal of the policy. But customer should make sure that NCB belongs to the same type of vehicle, means NCB is beneficiary if you replace car to car or two wheeler to two wheeler.

NCB is not allowed from person-to-person until and unless the other person inherits the car on the policy owner’s death.  Inheritor can decide to go with any insurer. It depends on the Insurer service.

Transferring NCB is very simple process. Customers can easily get NCB transfer. For example, any person owned a car in 2003 and sold it in 2008 after 5 year of claim-less policy completion. So the person has been rewarded by 50% NCB bonus. He has purchased his new car in 2010 with premium Rs. 20,000 (excluding service tax), out of which Rs. 18,000 is the premium for own loss/damage. So the person can transfer the NCB earned on the previous car policy to the new car policy and can claim the NCB bonus on the first premium payable on the new policy. Now the NCB discount is 50% so benefit on premium is Rs. 9,000(=Rs. 18,000*50%). So the customer will pay premium Rs. 11,000 (Rs. 20,000- Rs.9, 000).

How can I transfer my NCB benefit?

 Transfer NCB is a very fair and simple process when you sell your old vehicle and buy new one (replacement of same type vehicle such as car to car or two wheeler to two wheeler). You have to submit the buyer-seller form (forms 29 and 30) along with a requesting letter for NCB transfer to your existing insurer. The insurer will issue an NCB certificate, which is valid for three years, and that will also submit to the new insurer.

In case of changing insurer at the time of policy renewal for your existing vehicle, you only need last year’s policy document/ renewal notice mentioning the eligibility for NCB bonus.

If you buy a policy online, there is no need of NCB certificate. NCB will be transferred based on your declaration. New insurer will cross-verify online with your previous insurer.

Read IRDA Guideline for NCB here.

Guideline That Can Help You Save Money on Car and Two Wheeler Insurance

To get Motor Insurance for safety of own vehicle from a trusted insurer is definitely a complex task, but if taken carefully, it will give other additional benefits. Policy buyer should approach a duly licensed agent/broker/An Insurance company registered with IRDA for buying Insurance Policy or for any other essential information. Here are some tips that you must follow while buying Car or Two Wheeler Insurance:

1)  Compare Policy among Top Insurers

Now-a-days, there are various website available, which enables comparison among Top Insurers to get competitive quote and buying insurance easily and hassle free. Customers should get to know top brand insurers such as Apollo Munich, Bajaj Allianz, Chola MS, Future Generali, L & T insurance, Liberty Videocon, Oriental Insurance, New India Assurance, Religare, Universal Sompo, Reliance, Bharti AXA, HDFC ERGO, IFFCO-TOKIO, MAX, STAR, TATA AIG Insurance etc. Insurance policies from these insurers are trusted and satisfactory.

2)  Read the fine prints

Policy plan on a particular website may seem to be a great deal with different discounts, but you have to be careful. Read the fine prints and understand the hidden policies to avoid hassles in the future. Many insurance service providers offer 24X7 swift, detailed and transparent assistance. Customers can get full assistance from these insurance service providers and get their best-suit insurance policy.

3)  Analyse Your Vehicle’s Price

If you want to renew your Auto Insurance, a little bit mathematics calculation can save from buying insurance at large premium. This is important to analyse your car’s market value before buying or renew your car insurance. Consider if the market value of your vehicle was Rs. 6 lakhs and after three years it is of Rs. 3 lakhs. It means your car values has depreciated by 50%. So while renewing insurance, take policy on the depreciated value i.e. Rs. 3 lakhs instead of Rs. 6 lakhs.

4)  No Claim Bonus

This bonus is rewarded by Insurer for not making any claims under current policy. After the policy matures, the premium amount can reduce by up to 50% over the years. You should be aware of this No Claim Bonus to get this benefit.

Click here to know more IRDA guideline about Motor Insurance

All You Need to Know about Motor Insurance?

To own a Car for better convenience is one of the big investments of everyone’s life and definitely it costs huge amount of bucks. While owning a Two Wheeler is the first choice of most of the Indians. Its easy-to-drive and easy-to-handle features make it very popular among the teenagers as well. So, the security of the Vehicle is a must-have responsibility and a major concern for every vehicle holder.

According to the Motor Vehicle Act, 1988 “Driving a motor vehicle without insurance in a public place is a punishable offence.”

So the question comes “how to secure own vehicle from any damage or loss?” The answer is Motor Insurance.

What Motor Insurance is:

The term “Motor Insurance” gives protection to the vehicle holder to cover against:

1)    Losses or damages to the owner’s vehicle due to any unfortunate and unforeseen event and

2)    Pays for any TPL (Third Party Liability) considered as per law against the owner of the vehicle.

Types of Motor Insurance:

1)    Comprehensive Policy Plan:

       This policy covers against Third Party Liability, losses, damages to the vehicle and its owner.

2)    Liability only policy Plan:

       This policy covers only against damages occurred from Third Party action.

What Motor Insurance covers:

Comprehensive Motor Insurance policy covers following:

1)    Earthquake

2)    Land/Rock slide

3)    Terrorism Acts

4)    Fire, Detonation, Striking, Self-Ignition

5)    Theft

6)    Malicious Act

7)    Burglary/Housebreaking

8)    Flood, frost, cyclone, hailstorm, tempest, storm, whirlwind

9)    Riot, strike

10)  Accidental external means

11)  While in Transit by Rail/Road, Inland Waterways, Lift, Elevator or Air

On what basis Motor Insurance is calculated?

1)    For Own Damage:

Coverage on Motor Insurance Policy for own damage is calculated on the basis of the concept known as Insured’s Declared Value. The value, which is decided on the basis of the Manufacturer’s present value and depreciation rate based on the age of the vehicle.

2)    For Third Party Damage:

Coverage on Motor Insurance Policy for third-party damage is calculated as per the Motor Vehicle Act 1988. In this cover, Compulsory Personal Accident cover for owner-driver is also included. This coverage policy can also be extended to cover other risks such as Personal Accident to occupants of vehicle, Workmen’s Compensation to Driver etc.

What Motor Insurance excludes:

Following are the terms excluded under the Motor Insurance Policy:

1)    The policy is not considered for those, who are Not Having a Valid Driving License

2)    Breakdowns due to Electrical or Mechanical happening activity

3)    Accident has been done beyond the Geographical limits

4)    Under Drugs/ Alcoholic liquor Influence

5)    Vehicle is used for any illegal purpose

To know more about IRDAI Guideline for Motor Insurance, visit IRDAI website