In addition to selecting and buying a car, you will have other important things to do. One of them is insuring your car with the right insurance policy. However. we tend to consider it as just another job to do.
Think of the purpose of having an insurance policy. When you buy car insurance, you pay a nominal annual amount to your insurer. They cover the costs incurred if your car gets damaged or stolen.
There were 36,177 reported cases of motor vehicle theft in 2021, as against 33,128 cases in 2020.
Car insurance benefits us in several ways. But because money is involved, insurers include many terms and conditions in your insurance policy. Although it’s beneficial to go through the fine print of your new car insurance policy, you could get overwhelmed with the technical jargon.
Still, you can ask a few basic questions before buying an attractive car insurance policy. By asking the right questions, you can make your car insurance work for you.
What Type of Insurance Policy Do You Require?
In India, Article 146 of the Motor Vehicles Act, 1988, prevents an individual from driving an uninsured vehicle. The minimum requirement is third-party insurance. This type of insurance covers the cost of damages caused while you or someone else drives your car.
Typically, third-party car insurance price is the lowest compared with other types of insurance. However, the benefits that you get might be limited. You need to consider your requirements if you want an effective financial shield for your car.
Here are a few additional features that you might like to consider before buying new car insurance:
1. Accident Coverage
Under this feature, the insurer covers repairs to your car damaged due to an accident. There will be a certain amount that you have to pay, known as deductible pay. But the insurer will bear the remaining amount minus some exempted items like consumables. If somebody gets hit by your car, your policy should cover the financial loss and medical well-being of the concerned individual. It can be ensured with either a third-party liability policy or a comprehensive policy that we will discuss now.
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2. Comprehensive Insurance
A comprehensive car insurance policy covers many types of damage. For example, it can cover theft, damage from floods, fire, and several other incidents. Besides, it comes with a third-party liability cover you need to drive legally on the road.
You can enjoy some additional features by paying a nominal extra amount. Your insurance agent may suggest many add-ons while discussing your new car insurance policy. But which are the ones that will benefit you?
For instance, loss of personal belongings and roadside assistance can prove to be extremely helpful during a breakdown. However, you might opt out of add-ons like engine or tyre damage cover, especially if you have a new car.
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What does a Car Insurance Plan not Cover?
You need to know other aspects of your car insurance details, like what your plan does not cover. The word that describes this part of an insurance policy is exclusion.
All types of car insurance in India feature a list of exclusions. Look at the list and study it carefully before purchasing. Exclusions on a car insurance policy typically include the following:
- Damage caused by wear and tear.
- Electrical or mechanical defects that cause damage to your car.
- Vehicle damage due to driving under the influence (DUI) of drugs or alcohol.
- Financial loss due to not carrying the required vehicle documents.
Exclusions may vary from one insurance provider to another.
What Should Be Your Deductible?
The deductible amount on your car insurance policy is the amount mutually decided between you and your insurer that you will pay in the event of an accident. The deductible amount can be voluntary and compulsory. They are both self-explanatory – the compulsory deductible will be mentioned in your policy document. You should be aware of this amount before you buy car insurance.
By agreeing to a voluntary deductible, you express your willingness to pay an additional amount in case of a claim. It reduces your annual premium. However, make sure you have the voluntary deductible amount available when required.
How does the Insurance Provider Evaluate the Car?
Many factors decide the value of a car, whether new or old. The Society for Indian Automobile Manufacturers (SIAM), estimates the value of a car based on its dimensions. So, bigger cars will have a higher value.
But various insurers use other information to decide on the value of a car. These include make and model, registration date, the location of registration, depreciation rate, etc. So, be aware of how your insurance provider places a value on your car. You can find the same in your car insurance policy document.
Tips for Buying New Car Insurance
If you are buying a new car insurance policy, here are three valuable tips you can follow:
1. Shop Around a Bit
Don’t go for the first insurance policy you see. Get car insurance quotes from different providers and compare them before grabbing the best deal.
2. Identify Your Needs
As we mentioned above, you need to know your requirements to find a car insurance policy that best meets your needs.
3. Consider the Insurer’s Track Record
If you search online, you can find comments and feedback from existing customers. It will give you an idea of the company's reputation, and you can spot any red flags.
Read more - Guide to Switch Car Insurance Policy Online
You don’t have to be a financial wizard to understand the basics of car insurance and what to look for before buying it. Nor do you have to be stuck to an online car insurance calculator going back and forth calculating different premiums.
Before you take the plunge, ask yourself these four questions about the car insurance benefits an insurer offers. Based on the answers to these questions, you can select a suitable car insurance policy.
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