Stop, not just low premium! Take buying car insurance policy seriously; 4 critical factors
19 Feb 2019
With a little knowledge and understanding of car insurance, you can best optimize your insurance purchase and enjoy great benefits in the future.
While zeroing in on car insurance, low insurance premium often remains the sole deciding factor.
There is no denying the fact that in India, most car owners buy car insurance as a mere formality, without giving it a required thought. Moreover, a major reason why people buy car insurance is that as per the Indian law, you need to have adequate insurance for your vehicle before you drive the vehicle on the road. While zeroing in on car insurance, low insurance premium often remains the sole deciding factor. This certainly results, most of the time, in not having an adequate coverage for your car against any damage caused during an accident.
Truth better be told; buying car insurance must always be given as much importance as buying the car itself. However, before buying car insurance, it is very important to get introduced to its various components. But, with a little knowledge and understanding of car insurance, you can best optimize your insurance purchase and enjoy great benefits in the future. As a car owner, it is very important for you to be aware of all the facets of car insurance before finalizing a product.
Third Party Insurance is Mandatory
As per the Indian Road Safety Act and Indian Motor Vehicles Act, third party insurance is compulsory for every vehicle. As per the new law, third party insurance cover for all new cars is mandatorily for a period of three years. So, people buying a car for the first time must make sure at least to buy a third party insurance for your car before driving the vehicle on the roads. Third party insurance offers the vehicle an adequate coverage against damages caused to any third party that may include a person, vehicle or property.
However, under third party insurance, you cannot seek any claim for any damage caused to own vehicle. Hence, it is always suggested to buy a comprehensive policy for your car, especially a brand new car, which covers the damages caused to third party as well as your own vehicle. This is important since the cost of getting your car repaired is increasing every day and a policy which covers your car does make sense.
Look for Comprehensive Cover for Complete Protection
It is strongly advised to go for a comprehensive insurance cover for your car as it offers protection against all damages caused to the car and self in the event of an accident. In addition to accidental damages, comprehensive car insurance protects your car against any theft, accidental fire, and any other damage caused to the car. Apart from buying a comprehensive insurance, you must also understand and spend on buying a few add-ons on your policy in order to get optimum protection. Some popular add-ons to look for are zero-depreciation cover, engine protection and road-side assistance.
The premium of the car is also dependent on the total cubic capacity of the car’s engine and the geographical location where the car is registered. The insurance premiums for a same model of a particular manufacturing year may differ if registered in a metropolitan region as compared semi-urban or rural area, generally the latter being cheaper.
Know Your Car’s Insured Declared Value
As a car owner, you must know that the insurance premium of your car is directly linked to the Insured Declared Value (IDV) of your car. The greater the IDV, the higher will be the premium of the car. Simply put, IDV is the maximum amount that you get under a motor insurance policy in case of theft or total damage of the car.
Prefer Buying Insurance Online
Third party insurance as well as a comprehensive motor policy are generally provided by the car dealer, but often the premium cost is added into the vehicle purchase price and it may not be the best available option. So, it is always advisable to check for the best available quotes for your car on your own as most of the times the prices for comprehensive motor policies are inflated. Also, you must check whether or not a ‘voluntary deductible’ is added by your dealer in your policy. This is purely done in order to lower your car insurance premium. However, under the deductibles clause, you agree to share the costs of repair with your insurer during a claim which means you need to shell out additional money from your own pocket.
As a thumb rule, it is always recommended to check quotes online. By buying car insurance online, you get the option of comparing policies of multiple insurers with a detailed description of what all is included and it helps in making an empowered decision.
(Disclaimer: These are the author’s views. Readers are advised to consult their financial advisor before buying any plan)