What All To Consider When Buying Car Insurance? Here's A Complete Guide

Imagine you¡¯ve just bought a car worth Rs. 22 lakh, and it is somehow involved in an accident; your car's repair cost will now come to almost Rs. 2 lakh. You would be devastated to pay such an amount, right?

That is why we get insurance when we buy a car so that we don¡¯t burn a hole in our pockets when there is a mishap and our car is damaged, and we keep renewing it so that we don¡¯t lose out on insurance for even a day. This and many other reasons contribute to why one should never lose out on car insurance.

When considering buying car insurance, it's critical to approach the confusing market with knowledge. Finding the greatest potential coverage for your requirements takes a detailed awareness of a number of aspects, so this process entails more than just locating the cheapest choice. This article tries to walk you through the most important factors to consider when purchasing car insurance, from comprehending the many kinds of coverage available to taking the standing and dependability of insurance companies into account.

Let us first know the types of car insurance. There are mainly four types of car insurance:

Types Of Car Insurance

car insurance types/vietnamnews

Third-party insurance

Third-party insurance does not cover damages to your car. Here, the policy covers the damages accidentally caused by you to other people¡¯s property or the injuries/death of any third party. Third-party car insurance is mandatory as per law. The premium of Third-party Insurance is usually low.

It has now been compulsory to include a personal accident cover for the owner (driver) of the car while buying Third party insurance, where the insured will get compensation if he suffers from permanent disability or death in the accident. Since the personal accident cover is applied on a one-to-one basis, i.e., one Personal Accident cover for one person, it is advisable to take four personal insurance covers if you have a family of four.

Comprehensive insurance

This kind of insurance includes coverage for your vehicle plus all the advantages of third-party insurance. This coverage covers all vehicle damages brought on by theft, fire, natural disasters, and accidents. Customers can enhance the coverage policy by selecting from various add-ons that this insurance offers based on their needs. It is optional to have comprehensive insurance. Also, the premium is usually high here as it provides extensive coverage.

Zero Depreciation Cover

The term zero depreciation states that the value of your car will not depreciate because of any damaged parts, i.e. this plan will cover the total cost of repairs of your car, including replacement of parts. Due to this, your car's Insured Declared Value (IDV) remains higher. This insurance includes comprehensive coverage. The premium will be higher since this cover will lead to no depreciation.

Pay as you go

This is the new concept of insurance where the insured amount, the depreciation of the car, the premium amount, everything is based on the number of kilometres driven by the car, including the speed at which it is driven. All this is done via a tracker fitted to your car, which gives the data to the insurance company.

What is an IDV?

It is the estimated value of your automobile, also known as the insured declared value. It is the maximum amount of money your insurance will pay you in the event that your car is stolen or destroyed.

Also Read: How Gear Type Affects Car Insurance Premium

Mistakes And Things To Consider While Buying Car Insurance

car insurance types/insurancedekho

Taking insurance via the dealership: The dealers have a mindset that they will cross-sell the insurance with the car to the customer. Customers also tend to purchase insurance from their car dealer only because they think that if they have purchased a product from a dealer, the dealer can only give the best insurance suitable for their car. In almost all cases, the price quoted by dealers for insurance tends to be much higher than the original policy compared to the policies purchased from elsewhere. The prices of add-ons in the insurance provided by the dealer are always higher because, for the dealers, these additional sales have a high margin, which contributes significantly to their profitability.

Agent: It is never a good option to proceed with one agent as most agents are connected with only a few types of insurance companies where the commission is high. So, there is a high chance of misselling by the agent while purchasing car insurance. So always try to consult 3-4 agents and compare all quotes and benefits provided by them and then proceed with the suitable one to minimise your chances of getting missselled.

Review insurances: Always check for customer reviews of existing insurance policyholders of the insurance you are willing to purchase. Check for their reviews, feedback, claim process and the ease of claiming with the maximum and minimum claim percentage actually offered.

Deductibles: The deductible is a fixed basic amount you pay while settling an insurance claim. The rest of the amount approved by the insurance company will be borne by the insurance companies. For example, for an insured amount of Rs. 5 lakh, you have a fixed deductible of Rs. 20000. Therefore, in case of any damages to the car, the insured will pay the first twenty-thousand (i.e. you). Then, the rest will be paid by the insurance company.

Value of your vehicle: You must consider your vehicle's value while deciding on the coverage you want. More premium cars require more add-ons in the coverage to safeguard them from unwanted risks. In contrast, in a low-segment car, expensive high-end insurance will be of no use because the insurance premium will turn out to be higher than the expenses the car will actually bear in future.

vehicle insurance/jiomart

No claim bonus: Try to avoid claims for small and minor damages. Insurance companies provide no claim bonus, which means if you do not avail any claim in a year, then the insurance company will provide you with a discount on the next year's premium amount because of no claim. Hence, try to pay for minute expenses on your own.

Place of residence: The add-ons in the insurance should be chosen carefully as per your usage and place of residence. For example, if you reside in an area that is waterlogged most of the time, you must take an engine protection add-on, as the water can seize your engine, making it hydrolocked. Next, if you reside in an area where the roads are smooth and traffic is less since it will lead to fewer accidents, the premium will also be lower for your car.

Exclusions: Always ask for the exclusions in your insurance policy. It is generally difficult for a layman to understand all the technicalities and hidden words companies use in their insurance terms and conditions. So, the best way to check for it is to ask the insurance provider about the situations and covers excluded in the policy.

Usage of vehicle: If you drive a car safely and always maintain your car, then the insurance companies also provide discounts on the premium for maintaining a clean driving record. This is usually checked from the data of your claim history. You must know that a bad claim history, i.e. you have encountered many accidents, means you have a bad driving performance. Hence, it will lead to an increase in your premium.

Low premium: Never opt for insurance based on the premium amount being charged. You may get lured by a low-premium insurance advertisement and may purchase it, but it will surely land you in trouble in future at the time of claim. Remember that insurance is a risk-based product, so always check for the needs and considerations you require and the benefits the insurance provides, then go for the price filter.

In summary, buying car insurance is a choice that should not be made hastily. It's important to protect your peace of mind and financial stability in case of unanticipated events, not only to follow the law or choose the least expensive alternative. It's critical to stay clear of frequent dangers like relying too much on dealers or lone agents and to read your policy carefully to understand the exclusions. Never forget that an insurance policy you carefully select is an investment in your safety and your car's safety.

As a result, take your time, perform extensive research, and select a policy that fits your unique requirements and situation. By doing this, you'll make sure you have enough coverage and be able to drive with more security and confidence.

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