Cashless Car Insurance Explained: Everything You Should Know

Driving a car in India requires investing in liability insurance, and comprehensive coverage is recommended for complete financial security on the road. But have you ever thought: what if, even after having insurance, you cannot get your car repaired after an accident because you don’t have enough liquid cash to pay for the hefty expenses? That is where cashless car insurance steps in.

What is cashless car insurance?

Cashless car insurance is a feature of your standard motor insurance plan that allows you to get your car repaired without paying anything upfront. Nowadays, car insurance providers have partnerships with reputable garages and service centres across India to ensure you get quick repair services without the hassle of reimbursement claims.

However, before you buy this plan, you must check if the insurer you choose has network garages in your city or along your commute route.

Steps to raise a cashless car insurance claim

1. Notify the insurer immediately after the incident that damaged your car. You may be asked to provide details such as the location, date, time, and extent of the damage.
2. Go to your insurer’s website and locate the nearest garage by providing your state and city details. You may also seek help from customer support executives.
3. Provide a copy of your policy document to the concerned person at the garage along with any other required documents. The garage will contact your insurer to proceed with the next steps.
4. The insurer will send a surveying officer to assess the extent of the damage and confirm whether the loss is due to the covered incident.
5. The surveyor will send the detailed inspection report to the claims department. If the claims support team finds it satisfactory, you can proceed with the repairs.
6. The insurer will credit the invoice amount to the garage’s account once the repair is done. As a policyholder, you will be required to pay the deductibles or costs excluded under your standard plan, such as depreciation.

Documents required to raise a cashless car insurance claim

To ensure a smooth claim settlement for car insurance online, provide the following documents:

• A duly filled claim form (available for download on your insurer’s website)
• A copy of your car registration certificate to confirm ownership
• A valid driving licence of the person driving the car at the time of the incident
• An FIR copy if the insured car is stolen or was damaged in a riot
• The estimated cost of repairs on the letterhead of the network garage
• Though the insurer directly settles the bill with the garage, it is still recommended to have a final invoice handy
• A document supporting your identity

Does cashless insurance mean 100% settlement?

The one-word answer to this is "No." The insurer requires you to pay the following two:

Deductible

A deductible in car insurance is the amount you must pay out of pocket before your insurer covers a claim. For example, if your deductible is ₹6,000 and repairs cost ₹18,000, you must pay ₹6,000, while the insurer will pay the remaining ₹12,000.

There are two types of deductibles: compulsory and voluntary. The IRDAI sets the compulsory deductible, which is ₹1,000 for cars with engine displacements up to 1500 cc, and ₹2,000 for cars with engine sizes over 1500 cc.

The voluntary deductible amount is selected by you. The higher the deductible you choose, the lower your premium, but your out-of-pocket expenses will increase accordingly.

Depreciation

Depreciation in car insurance refers to the reduction in your car’s value over time due to factors like age and wear and tear. When you make a claim, the insurer calculates the amount by deducting depreciation from the total repair or replacement cost.

For example, if you file a claim for a damaged car part that costs ₹10,000 and has depreciated by 50%, the insurer will only cover ₹5,000, with the remaining ₹5,000 being your out-of-pocket expense.

The rate of depreciation for cars and their parts is pre-decided by the IRDAI. Here are the details:

Car's Age	Depreciation Rate
Up to 6 months	5%
Between 6 and 12 months	15%
Between 12 and 24 months	20%
Between 24 and 36 months	30%
Between 36 and 48 months	40%
Between 48 and 60 months	50%

Depreciation of Car’s Components

Components	Depreciation Rate
Nylon, Rubber, and Plastic components	50%
Fibreglass components	30%
Battery	50%

Conclusion

Opting for cashless car insurance online or offline offers convenience and peace of mind. It allows you to get your car repaired at network garages without paying upfront, as the insurer directly settles the bill. This eliminates the need for tedious reimbursement claims and ensures faster service, saving both time and effort during unexpected breakdowns or accidents.