10 things to look out for when buying car insurance

car insurance

Many car owners buy car insurance as a formality without giving it a thought. Often, low premium costs are the sole deciding factor while picking a car insurance product. This could easily mean not having adequate protection cover during an accident or damage.
It would be wise to go online to compare various insurance products available by several parameters including costs. Not just that, you should also be aware of all the facets of car insurance before finalizing a product.

Buying car insurance should be given just as much importance as buying the car itself. With a little understanding of car insurance, you can optimize your insurance purchase and enjoy greater benefits.

Points to keep in mind while shopping for your Car Insurance Renewal Policy:

There are certain must knows of Car Insurance Policy Renewals, that must be kept in mind. Mind you, I mentioned Renewals because the first policy is usually purchased from the car dealer and hardly any thought goes into the same. It is only from the first renewal that it makes sense to analyze the need and then purchase the policy. Thus it makes sense to choose the best policy that suits your needs keeping the following points in mind:

  1. Type of Plan: You need to decide whether you need a Comprehensive Car Insurance Policy or a standalone Third Party Liability Insurance.
    Third Party Liability Motor Insurance Policy is a mandatory Car Insurance Policy which covers injuries caused to other people in an accident but not damage to property or vehicle.  A Comprehensive Car Insurance Policy covers self vehicle damage as well.
  2. Add on features: There are quite a few riders or additional benefits that are available with standard Car Insurance policies and some of them are very helpful like:
    • Zero Depreciation cover: This is almost a must-have rider for a Car Insurance policy especially for higher end cars where the depreciation amount would be much higher than the additional premium payable.
    • Hydrostatic Cover: which covers consequential loss due to water logging
  3. Cashless Facility at the Affiliated Garage: Check with your favorite garage for which insurance company they have a tie up for cashless claims so that cashless claims can be easily settled rather than running around for reimbursement!
  4. Insured Declared Value or IDV: Insured Declared Value is the basic amount which is fixed by the insurer for that year’s current market value of the vehicle which is provided in case the vehicle is stolen or total loss of vehicle.
  1. Compulsory and Voluntary Deductibles: Is the basic minimum amount that needs to be paid for each and every claim. For example it is Rs 1000 or Rs 2000 which is the minimum guaranteed amount you would have to pay to make each and every claim. Including deductibles usually reduce premium so that fake or small claims are avoided or at least reduced
  2. No Claim Bonus or NCB: Is an additional coverage that is provided to the policies which does not claim for an entire year. So, if you have not claimed in your motor insurance policy for one whole year, about 5-10% of the IDV is given as a bonus on renewal. So, on renewal, NCB needs to be checked that it has been accurately calculated especially if there has been no claim in the previous year and NCB needs to be carried forward. NCB can accumulate up to a maximum of 50%.
  3. Renewal Quote: The renewal quote can vary due to variable quotations based on:
  • IDV (Insured declared value): The basic value of the car depends on the IDV
  • Additional riders as chosen or omitted
  • Deductibles: compulsory or voluntary depending upon the type of plan
  • No Claim Bonus: Which is carried forward
  • Other Features and Benefits
  1. Portability: Motor Insurance policies are completely portable from one insurer to another with all benefits continued and hence when you port any policy to a new insurer, you need to check that all benefits have been duly continued, like No Claim Bonus, accurate IDV, etc.
  2. Claim Procedure: The most important aspect of a “good” motor insurance policy would be easy and efficient claim procedure and hence knowing the same and being aware is a very important factor while shopping for your car insurance renewal policy.
  1. Compare Quotes Online: Last but not the least, while shopping for the car insurance policy renewal, it makes most sense to fill in your requirements and get a few quotes and then compare the same based on the best price benefit. This way, you will not only get quotes, but also be able to compare the same and choose the best plan that suits your needs and also your budget!

Think twice about dealer insurance:

Your car dealer may offer you insurance at the time of making your car purchase. It may not necessarily be your best option nor would it necessarily be the cheapest option. As a thumb rule, do not buy an insurance product before comparing quotes and features from multiple insurers.

Know the Insured Declared Value of your car: Your car insurance premium is linked to the Insured Declared Value (IDV) of your car. IDV is the maximum amount that you can claim under a motor insurance policy. For example, a new car will have a higher IDV compared to a car of the same model and make which is one year old.

Car insurance premium is linked to location and cubic capacity of the vehicle:
Your car insurance premium takes into account the cubic capacity of your car’s engine along with your geographical location. Therefore, for the same make and model, living in metropolitan regions may mean that you end up paying a higher insurance premium compared to living in a semi-urban or rural area.

Happy shopping for your Car Insurance Policy!