Auto insurance is a purchase that makes you feel extremely safe and secure on the road, as you are assured of not having to pay for damages that may occur accidentally. Nevertheless, most of us purchase a car insurance policy due to the fact that it is mandated by law to be in possession of a minimal motor insurance. However, you should be more prudent in your purchase and look to cushion your car with an appropriate insurance cover.
It is also important to read through your insurance policy documents thoroughly, as it would equip you with the knowledge of what is included in the cover, so as to make better decisions at the time of a mishap. But the legal terminology and clauses would deter at least some of us from understanding the inclusions and exclusions from our policy.
Let us go through a few scenarios that explain the most commonly misunderstood aspects of auto insurance.
- Waiving of towing fee
If you meet with an accident that damages your vehicle to an extent that you are unable to drive it to a service centre, you would obviously get it towed to the nearest garage. What you may not be aware of here is the fact that you are eligible to receive a reimbursement of your towing charges under your basic car insurance cover. Generally, an upper limit is specified for the amount that will be reimbursed by the insurer. So you can claim for your towing charges multiple times until the total claim amount reaches that cap. The towing charges coverage will be reinstated at the time of policy renewal.
- NCB will be restored if you renew your expired policy within three months
Imagine a scenario where your car insurance policy is due for renewal and you missed all the warnings. By the time you realise that you are running late for policy renewal, your insurance may have already lapsed. So what happens to the No Claim Bonus that you have painstakingly accumulated over the years?
You should be aware that there is a 90-day period from the date of policy lapse before which you can renew the policy, and stand to get your NCB transferred to the new policy.
- Online policy renewal
Nowadays all insurance companies provide you the facility to renew your car insurance policy online. This mode of renewal is found to be simpler and less expensive, as well.
- Short-term car insurance
If you have been deputed to a city for a short duration, and would like to acquire an insurance for a temporary car that you intend to drive there, you can purchase a short-term car insurance. This type of policy enables you to insure a vehicle for a duration as less as one month. However, the cost of this coverage will be 20% of the total premium of an annual policy. This indicates that a long-term insurance plan is more beneficial, both financially or otherwise.
- Installation of security features
In light of the increasing incidents of theft today, it is found that a vehicle devoid of safety devices is more likely to be targeted by anti-social elements. So, upgrading your car with the latest anti-theft equipment ensures that it is protected from vandalism and theft.
Additionally, installation of a safety device that has been approved by the Automobile Research Association of India (ARAI) gives you a significant discount on premium. This rebate is offered by insurers to encourage policyholders to install approved safety devices, so that there are lesser instances of thefts and subsequent claims.
- Discount on third-party liability premium
If you consider yourself to be a conscientious driver who is capable of averting third-party claim situations, then you can request for the limit of your third-party liability coverage to be reduced. This slash in coverage amount will contribute to a reduced premium. This facility is particularly useful to owners of motorbikes, as these vehicles are less likely to cause significant damages to third-party.
- Add-on coverage to protect car accessories
You can purchase add-on covers to protect specific accessories in your vehicle. For instance, if you own a CNG/LPG vehicle, the basic insurance coverage that you purchased for the car would not provide you sufficient cover. The CNG/LPG kit would have to be insured separately, with an additional premium.
Various add-ons are available to protect specific features of your car;hence you should explore the ones that are most appropriate for your vehicle and upgraded accordingly.
It is important for an insurance policyholder to be aware of the intricacies included in the policy fine print. Otherwise, he will be vulnerable to losing out on the inconspicuous benefits that the insurance coverage provides him.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017