Car Insurance: What you must pay in case of claims.

When it comes to insurance people assume that the insurance company will pay for all the expense that the insured incurs.  This causes lots of consternation and heartache. It is always helpful to know beforehand what will paid by the insurer and what you have to incur on your own. Furthermore what are the ways to minimize your out of pocket expenses?

Mandatory Deductible

In case of Car insurance, there is mandatory deductible that you must pay before Insurers will pay a single paisa. The mandatory deductible depends on the type of car you own.

Cubic Capacity	Mandatory Deductible
<1500 cc	Rs. 1000
1500 cc or higher	Rs. 2000

There is no way you can avoid this cost. Mandatory deductible is there so that insurance company is not burdened with lots of small claims that the owners can afford themselves

Depreciation

This is probably one cost that catches out most people.  Insurers take into account aging of the car while paying for replacement parts. While you will get a new part to replace a damaged part, the insurers will pay only a depreciated value instead of the full cost of the replacement.  The depreciation for car parts is as follows:

Age	Percentage Depreciation
6         to 12 Months	5%
1 – 2 Years	10%
2 – 3 Years	15%
3 – 4 Years	25%
4 – 5 Years	35%
5- 10 Year	45%
More than 10 Years	50%

Some insurers offer the pay full replacement value for the parts in lieu of an additional premium. This additional cover is known as Zero or Nil depreciation cover. This is typically available on selected models and for vehicles which are less than three years old.

Towing Charges

While towing charges are generally not payable, Insurers will often include limited towing charges as part of the insurance policy. The towing is often limited to say 10 kms and Rs 1500. Anything more than that is incurred by the owner.

Loss of Use

When your car is in the garage, you have to arrange for alternate means of transport. Insurers will typically not pay for these expenses under normal course. Some insurers however pay you a daily cash amount while the car is undergoing repair. The amount that you are paid is typically capped. You will need to shell out additional premium to get this facility.

What will never be paid?

In addition to this insurers will never pay for regular wear and tear due to normal operations. Examples of these are replacement of tyres or brake pads. Insurers will also not pay for any existing damages that were there before you took insurance.

Did you know?

There is one aspect of Car insurance that is not widely known. In addition to mandatory deductible, one can opt for a voluntary deductible. Voluntary deductible can significantly reduce your premium. However the insurer will pay only if the claims cost exceed the total of mandatory and voluntary deductible.

Voluntary deductible	Reduction in own Damage  premium
2500	20% subject to a maximum of Rs 750.
5000	25% subject to a maximum of Rs 1500.
7500	30% subject to a maximum of Rs 2000.
1500	35% subject to a maximum of Rs 2500.

You can find the best Car insurance Quotes for your car at Polictlitmus.com.