KYC stands for Know Your Customer. This is a particular bunch of logistical formalities that financial institutions and insurance companies follow to verify the identity and assess the risk associated with their customers.
Regarding car insurance online, the KYC for car insurance process ensures the authenticity of policyholders and evaluates their coverage eligibility. This is how insurance companies weed out potential for scams and money laundering.
Is KYC Mandatory for Car Insurance?
Since the start of this year, the IRDAI has made KYC a compulsory document when buying any insurance plan. So, if you are planning to purchase or renew new car insurance, carinsurance KYC is mandatory by law.
What Has Changed With KYC?
In simple terms, the revised car insurance KYC is a mandatory process and is more for the customer’s convenience. It is worth mentioning that IRDAI regulates this customer-centric approach. While the process was a voluntary decision previously, now every insurance seeker must provide KYC details when purchasing any insurance.
Furthermore, it is only natural that the insurance purchasing and renewing process will take longer. This is because the KYC is a mandatory document now. The insurers have a better footing now to filter out false claims and retrieve customer information more transparently.
Significance Of Car Insurance KYC
→ 1. Scam Prevention
The primary intention behind implementing car insurance KYC is to prevent fraud. Previously, scammers would ask for a 4-wheeler insurance policy with false details and no proper customer identity verification. This would typically lead to significant financial losses for insurance companies.
→ 2. Danger Assessment
From the perspective of the insurance providers, they must ideally assess the risk associated with each policyholder. KYC assists in determining your previous claims, driving history, and other relevant information. This benefits the insurance companies in setting suitable premiums and coverage levels.
→ 3. Obedience
Many countries compel 4-wheeler insurance policy companies to align with anti-money laundering and counter-terrorism financing laws. Failing to do so ideally leads to financial and legal consequences for insurers.
Suppose you are a first-timer; you must understand the KYC process in car insurance. This will leave you in a stronger position to deal with third-party car insurance providers. The process defends against fraud and ensures compliance with regulatory requirements.
Ideally, it would be best to make it a point to be transparent and honest during the application process. This will directly impact the car insurance quotes, claim processing, and insurance experience. KYC is a required step when purchasing vehicle insurance. Make the same effort while obtaining or renewing your auto insurance.