Cashless Car Insurance Policy – Need of The Hour

Buying car insurance has become fairly easy thanks to faster internet speeds and companies that have made it a point to simplify how insurance works. Nowadays, car insurance policy comes with a number of features as compared to early motor insurance plans. One such feature that ensures a smooth claim process for the policyholder is the option of Cashless Claim.

What Is Cashless Car Insurance?

A policyholder raises a claim after an unfortunate event, like car accident occurs. The claim amount can be availed in two ways – through Cashless or Reimbursement claim. As the name suggests, Cashless Claim is when the policyholder does not have to pay the cost of repairing damages or treating injuries. This amount will be borne directly by the insurer.

A cashless claim can be availed only if a car is sent for repairs at a garage which is a part of the insurer’s network. This way, the insurer can directly get in touch with the garage and pay the cost of damage. It is important to note that cashless claims are not 100% cashless. The policyholder needs to pay a small part of the claim amount in the form of deductibles and depreciation. Here is a brief on the deductibles to be paid by the policyholder.

Role of Deductibles in Car Insurance Prices

The deductible is an amount which needs to be paid by the owner of an insured car at the time of claims. The main aim of introducing deductibles is to discourage claims and encourage safe driving. Irrespective of the claim, deductibles are of two types – compulsory and voluntary.

A compulsory deductible is based on the cubic capacity of the insured car’s engine:

Engine cc

Compulsory amount

Up to 1500cc

Rs. 1000

Above 1500cc

Rs. 2000

As the name suggests the amount of compulsory deductible needs to be compulsorily paid by the policyholder at the time of claim. On the other hand, the amount voluntary deductible is set by the policyholder voluntarily. This affects car insurance prices. The amount of car insurance premium can increase or decrease depending upon the amount of voluntary deductible.

Is Cashless Better than Reimbursement Insurance?

In a reimbursement claim, the policyholder pays for the cost of repairs or treatment of injuries first, collect the bills and necessary documentation and then raises a claim with the insurance company. As compared to this process, cashless claims are less hassle.

In case of reimbursement claims, verification of the submitted bills and payments is an added step for the insurance company. Whereas in cashless claims, the insurer will directly make all the necessary payments.

As mentioned earlier, for a reimbursement claim the policyholder needs to first bear the entire claim amount and then raise a claim. As opposed to this, in a cashless claim, the policyholder only needs to pay a small part of the claim amount and does not have to shell money from their pocket.

Expenses Borne by Customer in Cashless Claim

Depreciation: While availing a cashless claim, the policyholder needs to bear the cost of depreciation till-date of the damaged parts. This is because the owner of the insured car has already used the car parts when they were in their best form.

Consumables: Consumables are parts like nuts and bolts, engine oil, lubricants, etc. which need replacement/refill on regular basis. If the policyholder has bought a consumables cover, he/she does not have to bear this cost. It will be borne by the insurance company.

Deductible: As mentioned earlier, paying deductibles discourages policyholders to raise claims and encourages them to drive safely.

Expenses Borne by Insurer in Cashless Claim

Cost or repairing the damaged parts/injuries/compensation for death: When a claim is raised the insurance company will bear the cost of repairing damaged car parts. This amount does not include depreciation. If people are injured in an accident, the insurance company will pay the cost of treating their injuries. Also, if a death occurs due to the insured vehicle, the insurer will bear the entire cost of compensation to be paid to the family.

Labour charges: This part of the damage repair is borne by the insurance company. During any kind of vehicle repair, the cost of paying the laborers is charged separately.

Is a Cashless Car Insurance Policy Need of the Hour?

As compared to reimbursement claims, a cashless claim is definitely the preferred choice of the car owners nowadays. Due to it being more convenient and pocket-friendly, cashless claims are the need of the hour.

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