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Which Car Insurance is Suitable For You?

By Vikas Chandra Das
21 July 2022, 11:46 AM

The choices you make today will be the realities you face tomorrow. Tomorrow is a very uncertain time. At this moment, no one can foresee what tomorrow holds for any of us, and hence it is impossible to find solutions to the probable difficulties awaiting us. But what we can do is follow the prudence principle and set aside a provision for all likely mishaps to pull us out of the fire.

Setting aside a provisional amount at regular intervals of time seems easy enough, right? Let us take the example of the car you drive. All you have to do is define your needs, decide upon an amount, decide upon a channel of investment, steel yourself on what situations you would allow yourself the money for, and now it doesn't seem so simple anymore.

Here, car insurance policies present themselves as your guardian angels. They act like templates containing detailed information about all the dimensions, as mentioned earlier. All you have to do is choose the right policy for yourself.

Types of Car Insurance

A prelude to choosing a suitable plan is knowing the available plans and their utility well. It is crucial to achieve a fit between the needs you have identified and the provisions being offered by the plan.

The first kind of plan available is called the Third Party Liability. To elucidate further, this provides coverage against the claims made by a third party for any damage or injury caused to them due to the accident. It also covers the legal expenses and payouts that the insured party is liable for.

The second type of coverage available is known as Comprehensive Coverage. Comprehensive car insurance coverage is the kind of insurance that provides for damages to your car due to circumstances other than road accidents. Arbitrary factors like destruction due to natural calamities, vandalism, and damage due to fallen trees are covered in Comprehensive coverage.

The third type of insurance coverage available is called Pay-as-you-drive Coverage—this type of insurance charges a premium based upon the car's usage. Although the steps to choosing a suitable insurance plan are not written in stone, we have provided a framework to make it easy for you to make an informed choice.

Steps to Choose a Suitable Car Insurance Policy -

1. Define your needs - The insurance plan best suited for an individual depends on his car usage. It is important to note that the car usage patterns of a person, when compared with another, can be as different as chalk and cheese. For instance, for a person living in a rural area, where there is a higher probability of a run down with animals, Comprehensive Coverage might come in handy. The same cannot be said for an urban dweller. 

Consider another instance. If your car's usage is few and far between the days, the Pay-as-you-drive policy is more apt for you. If you have a full-time policy for such scanty use, you might end up paying far more than you actually should have as compared to the actual usage of the car.

2. Compare different policies - Comparing different insurance plans is a walk in the park, thanks to the internet. Money-saving is a top benefit you receive when you compare insurance policies online. You can compare quotes of policies that offer the desired coverage at a low price. Digital-first insurers provide 'low cost, high coverage' policies online because of their tech-driven strategy. 

For example-Richa was confused when it comes to buying her car insurance policy. She was unclear which insurer would be good to buy an insurance policy from. She went online and compared various quotes of different insurers online, right on one platform. Hence, in quick and easy steps, she purchased her car insurance policy online.  

3. Ask which add-ons are applicable per plan - Look for the coverages you actually need. The age of your car and the daily usage pattern is often a good indicator of this. The area where you live should also be considered as it defines people's general driving tendencies in that area. Buying Comprehensive coverage is a good idea if you live in an area prone to natural calamities. You might also have to consider purchasing additional benefits depending upon the state laws.

4. Understand the claims process - In case of an accident, most of you pin all your hopes on the car insurance plans you have purchased; thus, it is essential to understand how claiming against the damages incurred works in your policy. Sometimes the claiming process is so tedious that it becomes a cure worse than the ailment. 

Usually, it involves placing claims by the plaintiff, followed by a timely investigation of the claims made and the pieces of evidence submitted; if the evidence holds metal, the insurance company processes and approves the request and provides the insured with all possible help as per the policy terms.

5. Find out the insurer's claim settlement ratio - Inspecting your insurance policy provider in detail is as important as inspecting the policy terms. The claim settlement ratio of the insurer is an excellent way to assess that. This illustrates the number of claims settled by the insurer against the total number of claims that were made. If this ratio is too low, you might want to reconsider your insurance provider.

6. Read the terms carefully - It is essential to go through all the documents provided by the insurer thoroughly before signing the policy. Every insurance policy should have the following sections; declarations page, insuring agreements, exclusions, conditions, definitions, and a segment on 'who is insured.' Every insurance buyer should proactively ask for all of the above information in case it is missing. Also, confirm the essentials like name or type of the coverage provided under the policy, the name of your organisation, the policy's duration, the names or numbers of endorsements included in the policy, and the limits of coverage and associated deductibles. Always ask for clarity from the insurer in case of ambiguity and try to be clear on as many details as possible.

7. Choose between reimbursement claims and cashless claims - Cashless claims are an arrangement where the costs incurred are settled directly between your insurer and the third party. In contrast, a reimbursement claim is the format prima facie, you pay the amount, and later your car insurance company pays you the full amount.

Thorough research and planning are of paramount importance in choosing a suitable plan for your needs. Without them, you might be stuck with a plan that you can't use to its full potential!

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