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Top 5 Car Insurance Plans of 2016

Nothing spells success and joy for a family like the purchase of a new car. That model you’ve had your eyes on for months in the colour that your wife and kids are in love with – that’s the beautiful four-wheel drive you have been saving up for. This is the car that is going to take you to work and back home, the car that is going to take you on trips with your family and the car that you are going to make uncountable memories in. Would you not wish for all these memories to be happy ones, then?

But let’s face it – these Indian roads can be quite the nightmare! Making one’s way through the busy packed streets, while trying to block out the incessant constant unnecessary honking, is an art that most car-owning Indians have managed to master in their years behind the wheel. Yet, there remains that inevitable accidental mishap every day. With the number of accidents on Indian roads rising practically by the minute, it has become an absolute necessity to get that precious new car insured against any possible damage or against the heavy financial losses that one would incur in the grim possibility of an accident.

What is Car Insurance?

Auto insurance, or car insurance, in laymen terms is an insurance policy which is purchased by a car owner (the insured) under the terms of which he is required to pay an annual premium amount to the insurance company which can later be claimed by him from the insurance company in case his insured vehicle meets with an accident of any sort causing damage to it. This helps to minimise the financial losses incurred by an insured individual in case of an accident involving the insured vehicle and causing damage to this vehicle.

There are three kinds of car insurance policies available, which are as follows:

  • Third-Party Insurance – Under this type of an insurance policy, the expenditure for damages incurred by the other party to their vehicle, property or people involved in an accident are fully incurred by the insurance company and the insured party does not have to pay the other (third) party for any damages incurred in an accident involving them. 
  • Collision Insurance – This kind of policy or insurance plan provides the insured party with coverage of damages to the insured party’s vehicle in case of an accident wherein a collision occurs. This plan does not cover losses due to theft or calamity or other damages not resulting due to a collision of the vehicle. 
  • First-Party Insurance (Comprehensive Plan) – Under this type of an insurance policy, the insurance company is responsible for paying the entire amount for damages to the car and property of the insured party as well as the other party. It also covers losses due to theft of vehicle, due to damage to the vehicle or due to personal accidents. This type of policy is more expensive due to the higher benefit value reaped by the insured party.

Why You Need Car Insurance?

In India, it is illegal to own a vehicle without having it insured for damages to a third party.

Auto insurance can be seen as a precautionary measure or a safety net of sorts which safeguards an individual against the burden of heavy potential financial losses in case of the occurrence of an accident on the road involving one’s vehicle. As optimistic an outlook as we may have, it is often better to be realistically prepared for anything that might be thrown our way. It is like the age-old adage so righteously, yet so aptly, preaches:

“Hope for the best; prepare for the worst.”

When one is making such a hefty investment of a conspicuous chunk of their financial resources on a vehicle they hope to cherish for a long, long time, it is only sensible to provide against financial losses that may be incurred in the repair of potential, yet possible damages to this prized possession. After all, why not let the insurance company incur these repair expenditures for the insured person, in case of an accident?

The Industry Trend

In spite of motor third party insurance being a legal compulsion in our country, the third party insurance sector has been characterised by heavy losses in the past few years. The combined ratio of losses to the total premium income earned by insurance companies is far above and beyond an astonishing 100% which simply goes to show that the underwriters are not making any profits at all and have not been making profits for the past few years.

Business Standard has recently reported that to combat this high figure of losses, most of the motor third party insurers are planning to increase their third party premiums by at least a margin of 20-25% in the current financial year 2015-16. In fact, some of the companies plan to hike their third party premium up to as high as 55-65% of their current third party premium amounts.

However, with the claims for accidents rising by about 15-20% during the year, it is doubtful that even with this hike in income in the form of third party premiums, the general insurers can even break even, forget earn any profit. The periodic income is slow to arrive into the general insurance players’ kitty while the claims seem to be flowing like free water. However, the motor insurance industry has been growing at a rapid 10-15% over the years. The year 2010-11 was the year which showed the maximum growth of the motor insurance sector. The following graph shows the data for motor insurance for the years 2008-11:

MOTOR INSURANCE SECTOR (2008-11)

Best Car Insurance Companies Picking the Perfect  Motor Insurance Plan

With the increase in the motor insurance industry, the number of market players is increasing rapidly and the customers are spoilt for choice. While the generous variety is helpful to the consumers as they can enjoy motor insurance policies ideal for their needs, this increased choice has also made things confusing for the layman simply trying to find a comprehensivesuitable plan to insure his automobile.

Think of all the hours you spent in researching the ideal car to buy for your family. Similarly, one must buy an insurance policy for their car only after a thorough research of the market and a critical comparison of each of its key players has been carried out. A critical analysis of all companies and their plans is necessary so as to ensure that you get the best deals suited to your requirements and you save money through discounts and special offers. Once you have picked the perfect plan you can quickly purchase the particular motor insurance policy with ease through online portals of websites and with minimum paperwork, thanks to the Internet.

We have brought together a list of the 5 best car insurance companies in India for the year 2016, which is as follows:

  1. Bajaj Allianz General Insurance Company Limited–A major private player in the motor insurance market, this company has been known for being customer friendly and for its after-sales services. It has been awarded by the ICRA for its impressively high capacity of meeting claims of the insured. This company’s motor insurance plan boasts of cashless claim settlement post repair of a damaged vehicle at more than 4000 preferred garages across the nation and where cashless claim settlement is not available, 75% of the expenditure incurred is settled by the company. It also provides 24*7 customer support over telephone and social media, easy purchase and renewal and towing facility in case of the vehicle breaking down. There are three different plans to choose from.
  2. ICICI Lombard Car Insurance Company Limited– Another private insurance giant in the market, this firm was formed in 2001 as a joint venture between ICICI Bank and Canada’s Fairfax Financial Holdings Limited. It provides various coveted facilities such as cashless services in a network of over 3350 garages across the country, Garage Cash Cover, Road Side Assistance Cover, Zero Depreciation Cover and No Claim Bonus. It is held in high standing due to its efficient and helpful support team. 
  3. National Insurance Company Limited – Established in 1906 under the control of the State, this insurance company has been serving innumerable clients across India and Nepal through its 16000+ employee base. Having been awarded the second best insurance company of the nation in the financial year 2013-14, its motor insurance coverage is one of the strongest and most comprehensive. It offers two kinds of policies and provides No Claim Bonus, various special Discounts and Concessions on modified vehicles specifically for differently-abled people. 
  4. Tata AIG General Insurance Company – A relatively new entrant in the general insurance market in 2011, this company has risen to bag a place on our list of the top 5 due to its convenient claim payments and various facilities and services. A joint venture of the Tata Group of Companies and the American International Group (AIG), this insurance company offers free car pick-up services, 6 months warranty repair services, one week claim settlement policy and direct settlement facility, all of which have made its motor insurance plan a market force to be reckoned with. 
  5. New India Assurance Company Limited – The largest insurance company of the country, it is wholly owned by the Government and was nationalised in 1973. In collaboration with some of the largest public sector banks such as SBI and Central Bank of India, this company has one of the widest networks in the market. It offers two kinds of policies – liability only and package policy – and has a comprehensive and simplistic motor insurance plan. It is known for its reliable support team, quick claim decision and payment, speedy grievance resolution and is characterised by a long-standing customer base and an impressive international presence.

A Comparative Analysis

The following table provides a comparative analysis of the five companies which have made it on the list. It explains, in brief, the special features of each of these companies’ motor insurance plans as well as the main exclusions from the coverage of these plans. Pick wisely, sit back and enjoy your new car!

COMPANY

SPECIAL FEATURES

EXCLUSIONS

Bajaj Allianz General Insurance Company Limited

Quick, transparent and comprehensive claim settlement

Robust 24×7 expert customer support

Depreciation and any consequential loss

Damage/loss endured by vehicle when driven without a valid license

ICICI Lombard Car Insurance Company Limited

Cashless services in a network of over 3350 garages

Garage Cash Cover, Road Side Assistance Cover, Zero Depreciation Cover

Normal wear and tear and general ageing of the vehicle

Depreciation or any consequential loss

Mechanical/ electrical breakdown

National Insurance Company Limited

Third party coverage and damages/loss to one’s own vehicle, co-passengers or self

Discount for approved anti-theft devices installed in the vehicle

Insurer is limited to 50% of the cost of replacement

Consequential loss,wear and tear, mechanical or electrical breakdown, failures or breakages

Tata AIG General Insurance Company

Free car pick-up services

6 months warranty repair

7 days claim settlement

Direct settlement facility

Unique add-ons

Accidental loss/damage from consequential loss, nuclear weapons, war

Accidental loss/damage whilst the vehicle being used against the ‘Limitation as to Use’ document

New India Assurance Company Limited

Offered in two forms- Liability only policy and Package policy

Fast, hassle free and transparent claim process

Loss/damage to vehicle due to war, nuclear risks, civil war, etc.

Use of the vehicle against the terms set in the ‘Limitation as to Use’ document

Source: Bank Bazaar (Modified)

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