Motor insurance: What is best for you?

A prompt and fair settlement of claims is the hallmark of good service to the insuring public. Motor insurance comes on the top of the list when it comes to insurance. It is for effective claims that we get our cars insured.

We know from the previous article -- 100% insurance = 60% reimbursement -- that there are very little chances of us getting the full loss amount. However, we can still try and figure out ways where we can get the maximum reimbursement.

When our vehicle gets damaged, we are often confused about the choice between a cashless claim and a reimbursement claim. Since, we know that certain amount has to be shelled out from our pocket, which one would be a better option?

Cashless claims

For cashless claims; most of the insurance companies have their own garage network, which they use to repair the vehicles, insured by them. The expenses are dealt directly between the garage and the company.

The owner of the vehicle does not have to worry about the expenses other than the accessories, which are not covered under the policy. They have to make the payment of only the difference amount as confirmed by the claims manager to the garage.

"In a cashless claim, after completion of repair at company's preferred garage, we will make payment of their share of the loss directly to the garage. The insured will have to pay the excess mentioned in the policy and depreciation, salvage, etc informed by the customer service manager," informs Kartik Jain, head, marketing, ICICI Lombard.

Advantages

• "A cashless claim is a complete responsibility of the company. It reduces the worry of the owner of the vehicle," says Kartik.
• The surveyor would take the car to the garage, get it repaired and return it to the owner.
• The company's garage network is generally reliable.
• The service provided by them is much better than any other local garage.

Disadvantages

• A lot of formalities take place before any action takes place.
• Often, the reparations are delayed since the surveyor may do the complete inspection and then take any decision.
• The garage, which they may choose might be expensive and since, the owner has to pay some percentage of the expenses, he may end up shelling out more money than usual.

Reimbursement claims

If the car is serviced in a garage outside the purview of the company's network, then you can claim reimbursement for the same. You choose your own preferred garage and get your car repaired with your choice of mechanic.

You then forward the original bill to the insurance company -- claims manager/surveyor. In case of reimbursement or non cashless claim, original bills and payment receipts are to be submitted to the insurance office.

"The liability and reimbursement amount working will be done by insurance company. Payable amount, along with detailed statement of calculation, is forwarded to the claimant," says V Ramakrishna, managing director, India Insure Risk Management Services Pvt. Ltd.

Advantages

• You may get your car repaired at your preferred garage by your trustworthy mechanic.
• An immediate action can be taken place just after the inspection.
• The garage may fall into your budget as well since even you have to pay for certain expenses.
• You may also repair your other parts of the vehicle which were not damaged at the time of accident.

Disadvantages

• You have to take the entire responsibility if in case the car is not repaired the way it was expected.
• The product replacements done by a local garage may not be as dependable as a renowned garage.
• Many a times, faulty bills are made of bigger amounts are claimed by the TPA (Third Party Agent) on behalf of the owner. He pays the owner for reparations and keeps the additional money with himself. "For example, if the expense were of Rs 5,000, he would claim Rs 8,000 from the insurance company and keep the additional Rs 3,000 with himself," says the DO (development Officer) of one of the renowned insurance company.

Based on these advantages and limitations of both options, it is extremely important that you conduct an appropriate research before giving your car to any garage and get the terms and conditions cleared from the insurance company's representative before taking any action.

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