Buying a car is one of the most expensive purchases you will make, second only to the acquisition of a house. So it is imperative that you are conscious about all aspects related to the purchase of your new car, including insurance. However, you should be cautious when deciding on an auto insurance policy.
There are several products available in the market, with varying levels of insurance cover and costs. It is important to follow certain steps while purchasing a policy, so that you get the best deal on your car insurance. Here is how you go about it:
Compare car insurance policies online - There are around 28 general insurance companies in India, most of which offer car insurance as well. Since the customer has a wide range of options available, he/she can benefit largely if the purchase of the policy is backed by a good amount of research.
It is understood that each insurer decides the premium for a vehicle based on its Insured Declared Value (IDV) and the rating of the car’s model. The latter may vary based on the insurer; hence the same model may attract different premiums, depending on the insurance provider.
In order to get the most optimum rates on your auto insurance, it is advisable to compare quotes from different companies. Several neutral third-party financial websites enable you to compare policies online. You should make use of this service to narrow down on a car insurance plan that best suits your needs.
Make a note of the discounts you are eligible for - Listed below are some of the discounts offered in motor insurance:
- No Claim Bonus (NCB) discount - If you do not raise any claims during a policy year, you will accrue a No Claim Bonus on your policy. This amounts to a reduction in your car insurance premium for the next year.
When you observe several claim-free years, the amount of NCB you accrue will constitute a significant amount. For instance, it is seen that if you refrain from raising claims for 5 continuous years, you may receive an NCB that gives you a 50% reduction in your premium for the subsequent year.
It is also advisable to not raise claims for small damages to your car, as this will enable you to preserve your NCB. However, you may lose the accrued NCB if you do not renew your policy for more than 2 years. So, it is critical to renew your policy on time.
- Anti-theft device discount - If your car has an anti-theft device installed (that is approved by the Automotive Research Association of India), then your insurer will offer you a discount on premium.
- Automobile Association member discount - Insurance providers offer a discount of 5% on premium for cars owners who have a membership with the Automobile Association.
- Discount based on profession - The car owner’s profession plays a significant role in availing a discount on auto insurance premium. So, if you are a doctor or chartered accountant, then you will be eligible for such discounts.
- Discount based on age - Some insurance companies provide a discount on premium based on the age of the driver. If you fall in the age bracket of 25 years to 65 years, you can avail a discount in your car insurance premium.
- Zero Depreciation rider - Also known as the Nil Depreciation or Bumper-to-bumper rider, this add-on plan eliminates the factor contributing to the depreciation of your car. So, if your car is damaged in an accident, the part of the claim amount that corresponds to depreciation of the vehicle will be paid by the insurer. If you did not have this rider, you will have to bear this part of the claim.
- NCB Protect rider - The No Claim Bonus that a car owner accrues on his policy can be protected using the NCB Protect rider. So, even if you raise a claim under the policy during the tenure, your NCB will remain unchanged.
- Return-to-invoice cover - Adding this rider to your base policy ensures that you get the on-road price for your car at the time of a theft/complete damage claim. If this rider was not included in your car insurance, you will only receive the Insured Declared Value (IDV) of the vehicle. The IDV is lower than the initial cost of the car owing to depreciation.
- Engine Protect cover - To protect your car from breakdown due to water-logging, leakage of coolant, and the like, you can buy an Engine Protect add-on cover that reimburses you for such losses.
Choosing a comprehensive car insurance policy with the relevant add-on covers will provide you the optimum coverage for your vehicle.
The steps mentioned above will help you in getting the best deal on your motor insurance. However, you should remember to renew your policy on time, so that you do not lose out on the benefits offered by your plan.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017