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Common Errors to Avoid When Buying and Renewing Car Insurance

By Juhi Walia
17 August 2022, 3:16 PM

The practical mix of accessible internet and inexpensive cellphones drives India's digital revolution. The insurance sector is one of the businesses that has benefited from this. As a consequence, purchasing and renewing automobile insurance is now simple. The convenience of the entire insurance process has increased with the advent of digital-first insurers. 

Compared to ten years ago, the procedure for purchasing or renewing auto insurance is now quicker, simpler, and smoother. However, you must know a few warning signs before buying insurance. This article will help you in avoiding these errors and can make your buying journey smooth and hassle-free.

1) Neglecting Basic Research

Purchasing an car insurance policy is identical to purchasing any other good or service online. When trying to buy something online, you must conduct fundamental research. For example, you can check if an online insurer is certified before purchasing or renewing your automobile insurance. This may be accomplished by searching the internet for the CIN number and registration number for the IRDAI. 

2) Not Comparing Policies

A healthy life motto is to avoid comparing yourself to other people. However, failing to compare policy prices and inclusions regarding automobile insurance premiums might result in insufficient insurance coverage. To ensure that you obtain a fair rate, it is advised to take your time comparing insurance. But to achieve that, you must exercise critical thinking. 

3) Selecting Minimalistic Coverage

Insurance aims to provide financial support in the event of unfavourable circumstances. Another reason to purchase automobile insurance is to ensure you comply with local laws. Owning a car requires you to have at least third-party car insurance. This plan provides a limited level of coverage such as only third-party liabilities. The policy does not cover you and your vehicle in case of any mishap. Hence, is less expensive than the comprehensive car insurance plan. However, it is advisable to go for a comprehensive policy to get complete protection. 

4) Avoiding the Online World

Some people find change challenging. However, remaining stiff and unchanging can also be detrimental. Policies available online are considered more economical and easy to purchase than offline plans. In addition, the infrastructure for online shopping has a wide range of benefits. The three most notable ones are no paperwork, anyplace, and anytime purchases.

5) Avoiding Anti-theft Gadgets

Automobile theft is a catastrophe. Nobody anticipates having their automobile stolen, even if they always take great care to place it in a secure location. But mistakes can happen. However, if you have an anti-theft device (ATD) placed in your automobile, you are making it much harder for thieves to steal your prized vehicle. ATDs also assist in bringing down insurance costs.

You might receive a discount on the premium if installed ATDs are approved by the Automotive Research Association of India (ARAI). You must inform your car insurance company that an accredited ATD has secured your vehicle. This allows them to provide a deduction on your comprehensive insurance plan because it somewhat lowers their risk.

Read more - Theft Cover in Your Car Insurance

6) The Imbalance with Add-ons

Add-ons provide better services and coverage, but you must pay an additional sum to use them. Car insurance add-ons might improve your claim pay-out, increase your level of convenience, or waste money. The latter occurs when purchasing add-ons with a comprehensive insurance plan is not done with sufficient consideration. Choose your add-ons wisely by understanding your needs first. 

7) Dealing with Imbalance in IDV

The comprehensive plan's premium calculation procedure heavily relies on an automobile's Insured Declared Value. The car's current market value is not its invoice or resale value. Insured Declared Value is the figure calculated after considering the cost of the vehicle's depreciation. Additionally, it is the amount insured that the insurer pays to the insurance holder if the automobile is declared a total loss (irreparable, stolen, and lost). Here, insurers frequently give policyholders a selection from which to select the IDV. 

8) Mismanaging the No-Claim Bonus (NCB) Component

An excellent strategy to reduce your payable premium is correctly managing the NCB component of a comprehensive insurance plan. This extra is a discount for renewal. It is made available to people who have avoided filing any claims during the policy's duration. The policyholder receives this reward from the insurer for maintaining a claim-free record during the duration of the policy.

Read more - How to Calculate NCB for Car Insurance

9) Not Sharing Correct Information

When sharing personal information to purchase coverage, it is essential to be accurate. Additionally, you should be open and honest when responding to the insurance representative's inquiries during a car insurance claim. Mutual trust is the base of insurance. The insurance provider abides by the terms of the policy, and the policyholder expects to provide accurate information as needed.


Avoiding these common mistakes is crucial when purchasing auto insurance. The overwhelming variety of coverage options and language makes it simple to become sidetracked as a beginner in vehicle insurance. Making an informed and healthy decision would be easier if you avoid these typical mistakes.


1. What is Insured Declared Value (IDV)?

The maximum claim your insurance company will pay if your car is stolen or requires beyond economical repair is the "IDV." For example, when you purchased the policy, the market value of your automobile was INR 8 lakh. This implies that if you raise a claim now, the current market value of your car would be given to you as a claim compensation. 

2. What is the difference between the Insured Declared Value (IDV) and the resale value of a car?

The IDV of a vehicle is essential for determining insurance premiums. It directly affects the premium that must be paid and the amount covered in the event of a total loss. A vehicle's resale value is entirely up to the seller's judgement. IDV may be thought of as the car's current worth. But to generate a profit, it might be sold again for a far greater price than the going rate

3. What exactly should I check before renewing my automobile insurance?

Here is a checklist of questions to ask yourself before renewing your automobile insurance.

  • Type of plan
  • Add-ons
  • Check the network of cashless garages
  • Adequate IDV
  • Deductibles
  • No Claim Bonus or NCB
  • Claim history
  • Enhanced security
  • Overall premium

4. Does IDV decrease annually?

Every year, the depreciation factor reduces the IDV claim and its premium. For example, the value of a new automobile depreciates by 5% in the first six months of ownership. A conversation decides a vehicle's price between the parties if it is older than five years (car owner and insurer).

5. Is IDV value significant in car insurance?

The IDV is crucial in determining how much you will pay in motor insurance premiums for your auto insurance. 
This is because IDV matches the responsibility of your auto insurance provider at the time of claim settlement and represents the current market value of your automobile.

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