According to the Motor Vehicles Act of 1988, it is mandatory that every vehicle being driven on the road be insured. Although third-party car insurance is compulsory in India, opting for a comprehensive car insurance is as per one’s wish. All car buyers are flooded with a number of car insurance policies, making it difficult to choose. Choosing the right insurance policy can be a bit tricky, especially if you aren’t exactly adept at understanding the ‘fine print’. So how can you choose the best car insurance policy available in the market? Before we list the tricks to choose the right car insurance plan, let us know more about car insurance.
What is car insurance?
Car insurance is a contract between you and your insurance company. It is when you agree to pay the premium and the insurance company in return agrees to pay for your losses as defined in your insurance policy. Car insurance covers expenses related to the damage of a property, liabilities raised by an accident, and medical expenses. Most car insurance policies are for six months to one year. When your car insurance policy is about to expire, your insurance company will notify you via email or phone to renew it by paying the premium amount.
Ways to choose the right car insurance policy
When you buy a car, your car dealer will offer you a wide range of car insurance plans. It is easy to choose one from the options given to you. But don’t let the excitement of buying a new car cloud your judgement. When it comes to buying a car insurance plan for your dream set of wheels, you will have to research a lot, shop around, get some real-time reviews, and then choose a policy that matches your requirements. Make a well-informed decision when you choose the insurance cover for your prestigious possession as this will protect you from the huge bills you may incur if you meet with an accident. A comprehensive car insurance policy not only covers the losses incurred by you due to an accident but also protects you from third-party liabilities and legal bills.
- Shop around
- Don’t ignore the add-ons
- Make sure you have a free look period
- Ask for discounts
- Discuss the Insured Declared Value
- No claim bonus
- Claim Settlement Ratio
- Cashless facility
- Read the fine prints
When it comes to partying, we all hop from one club to another as we do not wish to miss out on the good things the second club has to offer. Likewise, while shopping for a car insurance, make sure that you compare various car insurance policies before you choose one. Do not restrict yourself to choose from the insurance plans offered to you by your car dealer. You can compare various car insurance plans online and narrow down your search of selecting the correct car insurance plan by filtering it as per your requirements. Apart from saving a lot of money and time, shopping car insurance online gives you numerous options. So compare car insurance before you finalize one and give a thumbs-up for your wise decision.
What are add-ons? We all know that a comprehensive car insurance cover includes damage to your car, loss, and theft of your vehicle as well as third party cover. However, if you pay a little extra on your premium, you can benefit from some additional benefits on your car insurance plan. These additional covers are called add-ons. Add-ons are not mandatory but optional. You can decide if you want an add-on or not. Some of the popular add-ons offered by car insurance companies in India are Depreciation Waiver Cover, Windshield Glass cover, Personal Accident Cover, Loss of Baggage Cover, and Engine Protector Cover. Give importance to add-ons and choose the ones you need wisely.
Free look period is the time frame you get from the insurance company to read the policy related documents and decide if you want to keep the policy or not. If you do not like the terms and conditions of your car insurance policy, you can return the policy within the free look period and ask for a refund. You will not be charged with a penalty if you return the policy within the free look period. Always choose a car insurance policy with free look option so that you have abundant time in hand to decide if you want to continue with the policy or not.
Do not be shy to ask discounts. It can help you save some money. Did you know you can earn upfront discounts for being a good and safe driver? Many car insurance companies offer discounts for a safe driver with a long safe driving record. They also consider older and married drivers to be responsible on roads. Take advantage of this and ask for discounts. If you have a car with sufficient safety features like anti-theft alarm, airbags, and ABS system, you can negotiate your car insurance premium. Insurance companies tend to offer discounts for people having cars with adequate safety features. For this reason, consider buying a car with high safety features as it not only safeguards you during an accident but also reduces your car premiums.
Insured Declared Value or the IDV is one of the major factors that decides the premium of the car. What do you mean by Insured Declared Value? Simply put, Insured Declared Value is the current market value of your car. It is the highest sum payable by the insurer for your car insurance policy. In other words, it is the maximum amount you can claim in case of total loss or in case of theft within your policy period. Always ensure the premium charged is correct because lower the IDV, lower would be the premium. If your IDV is stated incorrectly in your policy document, you will have to shell out a lot from your own pocket. Before selecting a car insurance policy, discuss the Insured Declared Value of your car with your insurer.
Insurance companies reward their policyholders for every claim-free year. They encourage their customers to not make claims and to drive safe. No-claim bonus is a discount the insurance company gives you if you do not make a claim during the term year. For example, if you do not make any car insurance claims claims for one year, your insurer will give you about 25% discount on your premium when you renew it. No-claim bonus is given to the policyholder and not the vehicle, so, even if you switch your cars, you will get this benefit. You can also use your no-claim bonus when you switch insurance providers. The percentage of the discount given increases with every claim-free year. So, when you choose a car insurance policy, make sure your insurance provider offers no-claim bonus option.
Always make sure that you buy a car insurance policy from an insurance company that has a good claim settlement ratio. What is a claim settlement ratio? Claim settlement ratio refers to the number of car insurance claims received by a company and the number of claims settled by them. Avoid purchasing a car insurance plan from an insurance company that has a bad claim settlement ratio. This means that the number of claims unsettled is more than that number of claims that are settled. This is very important because when you make a claim, you wouldn’t want it to be rejected for petty reasons.
Many insurance companies these days offer cashless facility to their customers. They have authorised garages throughout the country and all a customer has to do is take their car to one of the listed garages and get it repaired. This way, they do not have to pay cash upfront, submit a claim, and wait for the reimbursement. This saves a lot of time and makes it hassle-free as customers do not have to go through the tedious claim process. When you choose a car insurance policy, make sure you have cashless facility available.
Before finalising on your car insurance, make sure you read the fine print of your insurance policy carefully. Make sure you are not paying high premiums and are still undercovered. Read the “Exclusion” part of the policy document word-to-word as it lists out the things the insurance company will not cover.
If you planning to buy a new car policy or switch your insurance provider, make use of third-party websites like BankBazaar. This website not only allows you to compare several car insurance policies online buy also lets you apply for it immediately.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017