CKYC Insurance and It’s Impact on Car Insurance in India

When you purchase a car, there are certain responsibilities that you need to be aware of as a car owner, which include following all the rules when driving, always maintaining proper road safety, and servicing your car from time to time for its smooth functioning. However, the main responsibility you should not forget about, is the purchase of car insurance, which you can buy online as well. Recently, the central authority for insurance has made it mandatory for insurance buyers to carry out KYC (know your customer) whenever they buy a new insurance policy. If you are looking to buy car insurance for your new car, then here is why you might need to do undertake KYC process.

What is KYC?

Know your customer (KYC) is the process of verifying details about yourself. You must have observed in banks how they require you to do go through this process every year. It helps the bank authorities remain in the loop if you have updated your details, such as your address or contact number. While KYC deals with the information being stored by one single entity, CKYC stands for Central Know Your Customer. For CYKC, it is the central government that stores all the data. The data provided by you goes into the central KYC registry. This helps in creating a general database of everyone’s information. It eliminates the requirement of having to do KYC for every other process, thus saving your time as well as the time of those in-charge of verifying and consolidating it.

KYC in car insurance

As per a recent directive from the central authority for insurance, it is mandatory for insurance companies to have new customers go through the CKYC procedure. This means, if you are looking to purchase a comprehensive motor insurance policy, you would be required to go through this procedure*. Generally, when you purchase an insurance policy, like car insurance, you are required to furnish documents such as an Aadhar card or driver’s license as identity and address proof. Along with this, you need to provide information about your car, such as the purchase receipt, chassis number and registration number. These details are mentioned in your policy document. However, if you were to relocate or change your contact details, your insurer might not know about this change. One of the reasons the CKYC process has been mandatory for all insurance buyers is to avoid such instances. For example, your current car insurance policy is about to expire, but you are contemplating opting for a four-wheeler third-party insurance policy. You have recently relocated to another city, but this has not been updated in your insurer’s database. If you were to file a claim; since your insurer does not have your updated details, this might cause problems with your claim process*. With the central KYC however, your details get updated automatically in this database, which then notifies the insurer about it. This benefit can help reduce any issues which might arise at the time of your claim process.

How is this process carried out?

At the time of purchase of your insurance, you are required to provide either of these documents to your insurer:

1. Aadhar card
2. Driver’s license
3. PAN card
4. Passport-sized photograph

The details mentioned into these are then entered in the central registry to create a database of your information. A 14-digit CKYC number is generated which gets linked to your proof of identification. Once the details have been verified properly, they get stored in the registry.

Conclusion

Other than reducing the number of fraudulent claims, a CKYC negates the requirement of having to manually update your details every time. While this process is new, it’s beneficial for everyone in the long term. If you are looking to buy a new car insurance, you can use the online car insurance calculator  to check the approximate cost of the policy as per your requirement. This includes the duration of the coverage, the number of add-ons and the type of vehicle you own. Before you purchase the policy, make sure you get your doubts cleared with your insurer to avoid any confusion. Read More: The New IRDAI Rules Regarding KYC in Car Insurance Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale. *Standard T&C apply