Everything You Need To Know Before Buying Your Car Insurance The insurance industry in India is clearly undergoing changes and has a significant distance to cover, particularly in terms of raising awareness about its importance and usefulness. This is particularly noticeable in the motor insurance sector, where many vehicle owners view it as a mandatory procedure to avoid hefty fines. However, motor insurance provides more than just that. It is understandable that no one wants the excitement of owning a new car to be overshadowed by the fear of potential accidents or damage in the future. Nevertheless, insurance serves to prevent such unexpected crises and therefore requires thorough research and planning before buying.
The initial stages of the lockdown resulted in a significant decrease in overall mobility and had an impact on car sales. Now that the restrictions are being lifted and there is increased activity on the roads with new cars, it is a good time to reconsider how you purchase your car insurance. Additionally, the Covid-19 pandemic has accelerated digitalization across various industries, including the insurance sector. Traditional methods of buying insurance have been replaced by more efficient digital transactions. There are multiple factors that car owners should consider to maximize their insurance coverage, including regulatory requirements, additional features, and the advantages of purchasing insurance online. Here is an overview of everything you need to understand about buying insurance for your vehicle.
Understanding Third-party Cover and Own Damage Cover
Unfortunately, despite our best efforts, accidents still occur beyond our control and can be devastating for those affected. According to a recent report from the World Bank, India experiences a concerning 4.5 lakh road accidents annually, with a high rate of fatalities despite representing only 1% of the world’s total vehicles. Lack of awareness about insurance can have serious consequences for all parties involved. Recognizing the critical need for insurance, the law mandated third-party liability cover for all vehicles, both personal and commercial, in 2019. In the event of an accident, third-party insurance provides coverage for the damage caused by your vehicle to the third party.
However, this does not provide any protection against risks for you or your vehicle in case of an accident. Therefore, it is recommended for all car owners to choose a comprehensive insurance policy that includes coverage for their own damage. This is particularly important if your car is new and used frequently. Additionally, it’s important to consider that new car owners are mandated by law to have a one-year comprehensive three-year third-party insurance policy when purchasing the car.
However, for the second and third years, the owner only needs to buy a separate own damage policy. It’s important to note that accidents are not the sole danger that your car needs to be safeguarded against. A comprehensive policy will not just protect your car from accidents, but also from other unfortunate events such as theft, burglary, flood, or fire.
Online Purchase: Comparison, Convenience and More
The global digital transformation, accelerated by the impact of Covid-19, has had a widespread impact across all sectors. The traditional method of purchasing insurance typically involved in-person meetings with agents and a limited selection of choices. However, with the rise of social distancing due to the pandemic, there has been a significant shift towards contactless transactions.
The option to purchase insurance online has greatly simplified the process, allowing individuals to easily compare policies from various insurers and select the most suitable one. This online approach is not only less time-consuming and faster, but also offers the potential for more affordable premiums compared to traditional offline methods.
Online motor insurance is surrounded by numerous misunderstandings. One common misconception is the belief that there is a greater risk of claim rejection when applying online. In reality, this is completely untrue. Managing claims online is actually much simpler and alleviates a significant amount of stress. Additionally, whether it’s for policy renewal or changing insurance providers, the online process is unquestionably more convenient and secure.
Make the Best Out of the No Claim Bonus (NCB)
The no-claim bonus is a built-in component of your policy that acknowledges safe driving and refraining from making any claims throughout the policy year by providing a reduced premium at the time of renewal. According to regulations, vehicle owners can receive discounts of up to 20% for the first year without claims, 25% for two years, 35% for three years, and 45% for four consecutive years. Safe driving can lead to a significant reduction in your premium with the help of NCB.
Here are some quick tips to make the most of your NCB:
- Don’t forget to renew your policy in time. You could lose your bonus if you don’t renew the policy within 90 days from the expiry date
- Pay out of your own pocket for minor damages. If you have accumulated a good amount of NCB, you could lose it all by claiming even a small amount
- Opt for no claim bonus cover. This cover comes with an extra premium and protects your bonus even if you make a small claim
Claim Settlement Ratio (CSR)
When purchasing a car, it’s crucial for owners to consider the claim settlement ratio of the insurance company. This ratio indicates the number of claims settled against the total received in a year. It’s advisable to choose a policy with a claim settlement ratio of over 90% to ensure a smooth process. A low CSR can lead to unsettled claims and complicated settlement procedures. To avoid confusion, it’s important to understand the policy details and choose an insurer that offers a simple and efficient claim settlement process along with a high CSR.
Best-Suited Add-Ons
When it comes to insurance policies, comprehensive coverage doesn’t just refer to the policy features included, but also additional benefits that can be added on for an extra cost. These add-ons or riders can prove to be quite useful for policyholders. For instance, a personal accident cover can provide financial assistance in case of disability or death resulting from an accident. Similarly, a zero depreciation cover can help mitigate the depreciation costs of your car parts during repairs. It is essential to evaluate the available add-ons and choose the ones that best suit your requirements. While they may increase your premium rates marginally, these add-ons can offer a higher level of protection and peace of mind in times of need.
Zero depreciation (bumper to bumper) cover
When you submit a claim, the insurance company considers the decreased value of your car. Consequently, the coverage is based on the decreased value of the damaged parts, rather than the present market value. This can make the damage more costly for you. Nonetheless, you can avoid this by selecting the zero depreciation cover. Under this cover, the insurer will cover the entire cost without factoring in depreciation.
Engine protection cover
The standard comprehensive car insurance does not cover non-accidental damages to your engine, despite the wear and tear it experiences over time. This is especially relevant in India, where water-logging, drainage, and ditches are common, making the engine susceptible to damage from water ingression, oil spillage, and more. This additional coverage will protect your engine in such cases.
Ambulance and medical expense rider
Accidents result in harm to both the vehicle and the drivers. With high accident rates, experiencing a severe physical injury is a distinct possibility. This policy will provide assistance and cover emergency medical treatment if you require immediate aid. Please verify the coverage details with your insurance provider.
Roadside assistance cover
Emergencies can occur without warning, often at inconvenient times and locations. It is impossible to predict when one might require assistance if their vehicle malfunctions in a remote area. By choosing this option, a single call to your insurance provider ensures that you receive the necessary aid. The insurer will arrange for a mechanic to assist you on the spot. This particular feature is highly beneficial, especially during extended road journeys or when traveling through secluded regions.
Personal accident cover
Car owners are required by law to have this cover, as accidents can have fatal consequences. It’s impossible to predict such events, so it’s best to protect yourself. A personal accident cover can be very helpful in these situations, providing compensation for physical injuries, permanent disability, or accidental death resulting from an accident. This cover is included in both comprehensive policies and third-party liability covers due to its mandatory nature.
Does My Car Insurance Cover Rental Cars 2024?
How Much Car Insurance Do I Need?
Select a High Insured Declared Value (IDV)
One of the key terms related to your car insurance policy is the Insured Declared Value (IDV). This represents the current market value of your vehicle as determined by the insurance company. When making a claim for total damage or theft, the insurer will offer coverage based on this amount. It is advisable to set the IDV to the highest possible value when purchasing new insurance or renewing an existing policy, based on the previous IDV. While this may impact your premium, it can be beneficial in challenging circumstances.
Renew Your Policy on Time
When purchasing a car, most owners don’t think about renewal, but it’s crucial to understand the potential consequences of not renewing your policy on time. In the current times of limited mobility, it’s easy to overlook renewal dates. If the policy is not renewed within the grace period, it will lapse, leaving your vehicle uninsured and putting you at risk of financial losses. Renewing after the due date will require you to start the entire process over and you will lose your accumulated no-claim bonus. It’s always wise to renew your cover well in advance.
Customize Plans Based On Requirement
Despite the gradual return to normalcy, Covid-19 continues to pose a threat, particularly with the emergence of the Omicron variant. In light of this uncertainty, the prospect of remote work and staying at home may resurface. For those who rarely use their vehicles, there are tailored insurance plans designed to offer coverage for third-party damages, fire, and theft during such times. These plans are cost-effective and can be conveniently purchased online.
Summary Of Everything You Need To Know Before Buying Your Car Insurance
Buying car insurance is an important decision that requires careful consideration. It’s crucial to understand the different types of coverage available, as well as the factors that can affect your premiums. By doing thorough research and comparing quotes from multiple insurance providers, you can ensure that you get the best coverage at the most affordable price. Additionally, it’s important to regularly review your policy and make updates as necessary to ensure that you have adequate coverage for your needs. Remember, car insurance is not just a legal requirement but also a valuable financial protection in case of accidents or unforeseen events. Take the time to educate yourself about car insurance before making a purchase and make sure to choose a reputable provider that offers excellent customer service. With the right knowledge and preparation, you can find the perfect car insurance policy to protect yourself and your vehicle on the road.
