Auto Insurance

Auto Insurance

The investment in a vehicle is no small deal and hence finding the right auto insurance is very important to ensure the protection-maintenance cover for your second most important investment.

How does auto insurance work:

The types of vehicles covered under auto insurance include two wheelers like motor cycles and four-wheelers, both commercial and private. The latter category includes vehicles that carry goods, passengers and commercial material. The process of procuring auto insurance for your vehicle begins with the estimated evaluation of the vehicle. This is handled by professional auto insurance evaluators who work with the insuring company. The value of the vehicle is calculated on the basis of the value at which the vehicle can be bought or sold in the current market. This ‘market value’ is the claimable amount, affected though by the value of the vehicle in the market at the time of the theft or accident.

Types of auto insurance: Third party

While one claim is on the basis of valuation, another is the ‘no claim’ insurance coverage. The latter is a discount offered on the renewal of the policy, just in case there has been no earlier claim. The discount is offered on the damage component in the premium. The auto insurance policy could be either a third party or ‘act only’ policy or a comprehensive one. In the act only auto insurance or the third party auto insurance, the cover is applicable to the damage or harm caused to parties other than the insured. Considering the implications of auto ownership and the risks involved, the third party auto insurance becomes very essential and compulsory to invest in. In this auto insurance, the company takes over responsibility and covers the legal liability of the insured person. The cover is extended to handle death of or injury to any person, in event of which the liability is actually unlimited. It also takes care of property damage and that of goods.

Comprehensive auto insurance:

The comprehensive auto insurance is a loss/damage-to-the-vehicle auto insurance. In this auto insurance, the insuring company covers the insured person against loss or damage to the motor vehicle. This could result from a fire or an explosion or self ignition. The loss could result from burglary or house breaking. The comprehensive auto insurance also covers the vehicle damage from riots, earthquakes or shock damage and other natural calamities like floods, typhoons, hurricanes and hailstorms. However, the package does not include coverage or insurance in the case of consequential loss or depreciation. It also does not cover wear and tear or mechanical and electrical breakdown. This auto insurance does not extend help to the insured person in event of accidental loss or damage suffered under the intoxicating influence of liquor and drugs.

Auto insurance and automobile associations:

There is a fantastic understanding between the auto insurance companies and dedicated automobile associations. There are some great discounts and frills made available to the individuals insured, who sign on as members of recognized automobile associations. The members enjoy a discount on the premium. The insured person is required to furnish details on the membership number and date of expiry to avail of the benefits on payment of the additional premium and within the syndicate. There are automobile associations that also extend Personal Accident Cover and that too, irrespective of age! Of course, this cover applies to the passengers in the vehicle. The cover offered is subject to the type of vehicle. It differs from that offered for a motor cycle to one offered for a private and commercial vehicle.

Auto insurance is a very important investment, considering the cost of vehicles today. In the case of private vehicles, the benefits of the cover can be transferred to the next owner of the vehicle, if the same changes hands. When the insured sells the vehicle, for whatever reasons, the ‘no claim bonus’ can be transferred to the new vehicle purchased. Also, on producing proof of sale, the insurance can substitute the new vehicle within the existing auto insurance policy. In the same way, when a second hand vehicle is purchased, the insurance cover can be transferred to the name of the new owner or a new policy can be generated.

By Gaynor Borade Published: 3/17/2008

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