Purchasing car insurance is more than just fulfilling your legal obligation as a car owner. Car insurance provides a number of benefits, including financial protection against loss or damage to your vehicle caused by an accident, natural disasters, and man-made disasters such as floods, earthquakes, fires, riots, and even theft. It also covers your financial and legal liability if your car causes third-party loss or damage in an accident.
We’ve put together this essential check list to help you with your car insurance purchase.
7 Things to know before buying car insurance:
Understand the Different Types of Car Insurance Policies
The first item on your checklist when purchasing car insurance should be to understand the various types of car insurance plans available from insurance companies. This will allow you to make an informed decision based on your needs.
Third-Party Car Insurance: According to the Indian Motor Vehicles Act of 1988, all car owners are required to have third-party car insurance. This is a basic plan that only covers third-party legal liabilities.
So, if a third party is injured or killed, or their vehicle or property is damaged as a result of your car, your insurance provider will pay the compensation.
Comprehensive Car Insurance: Comprehensive car insurance has a much broader scope and provides more coverage. It combines third-party liability and own-damage coverage, which covers damage to your vehicle caused by an accident, natural or man-made disaster, or theft. It also provides you with the option of purchasing add-on covers to further extend your coverage.
Set the proper IDV for your vehicle.
The insurer’s maximum sum assured is the Insured Declared Value (IDV) of your vehicle. In car insurance, the IDV is the amount you would receive if your vehicle was damaged, stolen, or lost.
Insurance companies set the IDV for the duration of the policy, based on the manufacturer’s selling price of the car less the depreciation value of the vehicle parts. Make sure that your IDV is not set higher (which will raise your premium) or lower (which will result in a lower claim amount) than the market value of your vehicle.
Know the Coverage of Your Car Insurance Policy
Your car insurance coverage is essentially all that is included in your car insurance policy document for which you will be compensated. Make it a point to consider what your auto insurance policy does not cover.
To avoid making a claim about anything that isn’t covered by your regulation, read the list of exclusions in your policy paper.
For example, if you file a claim for car damage in an accident but your car insurance was expired at the time of the accident, your claim will be denied. As a result, you should take the time to carefully read the policy paper.
Find out All About Add-On Covers
Insurers sell add-on coverage to expand and enhance the auto insurance policy’s coverage. Add-on coverage is an extra charge that you can add to your extensive auto insurance policy. If you file a lawsuit, they can be very useful and cost-effective in the long run.
When buying comprehensive auto insurance, just purchase the add-on coverages that you need. Zero depreciation, no claim bonus (NCB), 24×7 roadside assistance, engine protector, accessories cover, and personal injury cover for passengers are some of the optional coverages you can suggest.
Know the Factors That Can affect Your Car Insurance Premium
When purchasing auto insurance, you should be aware of the variables that influence how the insurance provider calculates the premium on your policy. These factors influence whether you pay a higher or lower premium.
Some considerations are beyond your power, such as the model of car you purchase, the engine cubic capacity (cc), the car’s age, value, add-on coverage chosen, No Claim Bonus (NCB), and the car’s Insured Declared Value (IDV).
However, you might not be able to change the driving position where your car is registered. The premium would rise if the area has a high vehicle density and is vulnerable to theft.
Learn more about the insurer’s cashless garage network.
Since an emergency situation can occur at any time and in any place, make sure your car insurance company has a nationwide network of garages that can provide cashless service in an emergency when you file a claim. This will come in handy if you need big repairs or spare parts for your car after an accident.
Check Claim Settlement Ratio of the Insurer (CSR)
Check the Claims Settlement Ratio (CSR) of different auto insurance companies online and compare them. The premium settlement ratio (CSR) is the amount of claims that the insurer pays out.
Knowing the claims settlement ratio will assist you in determining which auto insurance provider is the most dependable in terms of settling potential car insurance claims.
Also read: Car insurance policy lapse explained
Also read: 7 steps – How to buy car insurance?