Owning a car is a big achievement in India. However, after purchasing a car, it is also your responsibility to protect it; and this can be done by getting insurance for your car. According to the Motor Vehicles Act, 1988, purchasing car insurance is a must in India, if you possess a car. Car insurance offers financial protection in case of a theft or damage to the insured car.
Before getting down to the factors guiding the purchase of car insurance, let’s understand the two sections under the car insurance available in India.
It covers monetary losses incurred by the insured car for any damage, death or injury to the third party. This policy is mandatory.
2. Comprehensive Insurance Policy
This policy covers both third-party cover and any loss or damage taken by the insured car.
Buying a car insurance policy can be a daunting task, given the fact that so many points need to be kept in mind before buying one. And if you are buying it for the first time, you need to be aware of all the aspects in order to take an informed decision. Let us look at some of the points to be considered:
Compare car insurance policies
Before you set out to buy a car insurance policy, don’t forget to compare the plans offered by various insurance companies. Check the coverage provided and the premium you have to pay for the policy. Before selecting one, opt for points like a company with a high claim settlement ratio (CSR) and a good number of network garages, as that would help in getting cashless claims.
Choose right add-on coverage
Car insurance companies also offer add-on coverage for extra protection. By paying a little premium, you can avail additional benefits through add-ons which basically provide additional coverage. Always analyse your needs before including the right sections in your insurance plan. Some of the important add-on covers are:
Zero depreciation cover: On getting this cover, you don’t have to pay for the depreciation of various parts of the car while settling a claim.
Engine protection: A normal car insurance package does not cover the car's engine. Thus, this coverage will make the insurance company cover the damage to the engine of the car.
Roadside assistance: In case you are stuck in the middle of the road due to some situation, you will get on-spot assistance to manage it.
Opt for deductibles
While settling the claim, the insured party has to pay some amount for repairs before the insurance company starts paying the rest. These are called deductibles. There are two types of deductibles – a compulsory deductible, which is a pre-defined amount; and a voluntary deductible, which can be adjusted as per the policyholder’s wish. You should use the deductibles wisely, because sharing repair costs reduces the premium amount.
Know the vehicle’s Insured Declared Value (IDV)
Always make note of the IDV offered by the insurance company. In case your car gets stolen or damaged, IDV is the maximum amount of claim the insurer will provide. This is calculated on the basis of the market value of the car. While comparing insurance companies, in case you are tempted to opt for a policy with a lower premium, be careful as it might be providing a lower IDV as well. In such a situation, you might end up paying from your own pocket during a car theft or accident.
Don’t ignore the ‘No Claim Bonus' (NCB)
If you don’t make any claim in the active policy year, you will be entitled to a discount on your premiums, ranging from 20-50 percent. This is called NCB. It is often regarded as the best way to reduce the premium amount at the time of renewal. Thus, it is suggested to not make any claim for minor damage.