Vehicle insurance is a policy issued by an insurance company to mitigate the effects of risks to the vehicle that may arise from external events such as: fire, lighting, explosion, burglary, riot and strike, malicious and terrorists act, earthquake, flood, landslide, collides etc.  The vehicle insurance also provides financial protection by reducing personal liability, and the costs associated with an auto accident.  During a recent conversation with NECO Insurance Deputy Manager Mr. Manoj Singh Bhandari, Mr. Bhandari pointed out that third party insurance is an integral part of vehicle insurance, and that it is compulsory in Nepal to obtain a third party insurance.

Things to consider before or while owing vehicle insurance                                    

  1. Make comparison between service providers.

As there are sixteen general insurance companies operating within the industry as service providers, you may want to search for the best service provider, irrespective of the fact that there is uniformity in pricing mechanism as facilitated by Beema Samiti. There is no need to reach a final decision solely on the basis of marketing tools or undue influence from the marketing intermediaries of a particular company.

  1. Question the asymmetric information provided by insurer or marketing intermediaries.

The most common mistake that almost all vehicle owners make when purchasing a vehicle insurance is their over reliance on the information provided by the insurance company without even being aware of the list of possible exclusion and inclusion that may be imbedded within the policy. So, it is recommended that you carefully go through all the terms and conditions written in the policy at least once before making endorsement on policy proposal and choosing the service provider.

  1. Keep yourself informed about the status of insurance policy.

Actually keeping track of insurance policy, policy period, and renewal date is important to get the maximum leverage on risk coverage and the financial benefit in timely manner. This is because the loss of policy paper, expiration of policy, and delay of even a single day in renewal pose a delay in claim settlement.  Therefore it is always advisable to have all that information readily available to reduce the negative consequences of non- payment or delay in payment of claims.

  1. No falsification of information.

Providing false information or concealing material facts about vehicle are akin to facilitating the insurance company for non-payment of the claim.  It is important to be able to protect your own financial needs and benefits for which you have paid a substantial amount of money throughout the period.  Being responsible for your own decisions and actions is far better than blaming the insurance company for non-payment later on. 

  1. Ask the bank or a financial institution.

The majority of vehicles in Nepal are financed by either banks or other financial institutions, so they insist on a comprehensive vehicle insurance policy to protect their own interest as a collateral security.  You, as an informed individual, should not forget to ask about the fees these institutions charge, the discounts they offer, and the basic coverage they provide. 

Simplifying your claim settlement process

It is true that many people resist purchasing vehicle insurance because of the hassles involved in claim settlement process rather than because of monetary reasons.  But that is no longer going to be the case as some insurance companies such as Neco insurance and Sagarmatha insurance have already started the spot payment facility in the market.

In the unfortunate occurrence of accident, in order to simplify your claim settlement process, you should:

  • Report the incidence, with following details, to the insurance company (if possible the claim department) immediately through an intimation letter:
  • Policy details
  • Date, time, place, and cause of accident
  • Third party’s name, address, telephone number, vehicle no, and extent of damage (if third party is involved)
  • Properties involved in accident
  • Estimated loss amount
  • Location
  • Contact person and address with contact details.
  • Report the accident to the police.
  • Wait for the inspection of the vehicle by the surveyor.
  • In case of theft, publish a notice about lost vehicle in a national daily and submit the original blue book and key to the insurer.

 

  • Auto Spot Payment Services
    The choice you make in purchasing insurance affects how much your insurance will cost and what claims will be paid in the event of an accident.  The following points should be kept in mind when obtaining a vehicle insurance policy:

·   Go for a company with a good track record of settling insurance claims.  Companies such as Neco Insurance Ltd are known for easy claim settlement and also provide Spot Payment on claims against the insurance policy. The Spot Payment service makes it possible for the insurance company to provide fast and hassle free payment on your claim on the spot.  Recently, Sagarmatha Insurance also introduced this service.

·         Pay the premium on time: A motor policy is usually valid for a period of one year and has to be renewed before the due date. Pay the premium on time as no insurer offers a grace period for paying the premium. In case of lapse of policy by even one day, the vehicle has to be inspected. Moreover, if a comprehensive policy is allowed to lapse for more than 30 days, the accrued benefit of NCD (No Claim Discount) is also lost.

·         Do not undervalue your assets while insuring:  If you do that, you might face the problem of underinsurance in case of claim.  Larger deductibles (Voluntary Access) mean a lower premium, but think about what an accident would cost you.

·         Understand the claim procedure:  You should understand the claim procedure and the depreciation on different item that will be liable while claim settlement.

·         Depreciate the value of vehicle:  Don’t forget to depreciate the value of you vehicle while insuring, otherwise you will end up paying a high premium. Depreciation terms are provided by Beema samiti.

·         The maximum coverage:  The insurance companies provide a maximum cover of up to only Rs. one crore on SRDMDST (strike, riot, damage, malicious damage, sabotage and terrorism).