Important factors to consider before taking a car insurance

Important factors to consider before taking a car insurance

When taking car insurance in India, there are several key factors to consider to ensure you get the right coverage while balancing affordability. Here’s a comprehensive guide on things to keep in mind when purchasing car insurance in India:

1. Types of Car Insurance Policies

Third-Party Liability Insurance:
- This is the minimum legal requirement in India. It covers you against liability for damage or injury caused to third parties in the event of an accident.
- It doesn’t cover damage to your own vehicle or injuries to yourself and passengers.
Comprehensive Car Insurance:
- This is full coverage that includes third-party liability, as well as coverage for damage to your own vehicle due to accidents, theft, fire, natural disasters, and vandalism.
- It also often includes personal accident cover for the driver and passengers.
Standalone Own Damage (OD) Policy:
- This covers only the damage to your own vehicle and doesn’t cover third-party liability. It is typically purchased in combination with a third-party policy.

2. IDV (Insured Declared Value)

IDV is the maximum amount the insurance company will pay in the event of a total loss or theft of your vehicle. It is calculated based on the current market value of your vehicle, less depreciation.
Higher IDV means higher premiums but better protection, while lower IDV reduces your premium but might leave you underinsured in case of a total loss.
Check the depreciation percentage used by insurers (usually based on the age of the car) to ensure a fair IDV.

3. Coverage Options and Add-Ons

Zero Depreciation Cover:
- Standard policies deduct depreciation from the claim amount, but with a zero depreciation add-on, you can avoid these deductions. It is particularly useful for newer vehicles.
Engine Protection Cover:
- This protects your engine from damage due to water logging, floods, or mechanical failures.
Roadside Assistance:
- Provides emergency support, such as towing, battery jumpstart, or fuel delivery, if your car breaks down on the road.
Key and Lock Replacement:
- Covers the cost of replacing lost or stolen keys, and even the entire locking system if required.
No Claim Bonus (NCB) Protection:
- Even if you make a claim, you can retain your No Claim Bonus (a discount for not making claims) by opting for this add-on.

4. Deductibles

Voluntary Deductible: This is the amount you choose to pay from your own pocket at the time of a claim. A higher voluntary deductible can lower your premium.
Compulsory Deductible: This is a fixed amount (set by the insurance company) that you’ll have to pay during a claim.
Balance Deductible: This is the portion of the claim amount that you are responsible for, over and above the compulsory and voluntary deductibles.

5. Claim Settlement Ratio

The Claim Settlement Ratio (CSR) is the ratio of the number of claims settled by the insurance company to the total number of claims received. A higher CSR indicates that the insurer has a good track record of settling claims.
Before buying a policy, check the insurer’s CSR to assess their reliability.

6. Third-Party Liability vs. Comprehensive

Third-Party Insurance is legally required in India, but it only covers damages to others and not your own vehicle. For better protection, especially in case of severe accidents, comprehensive insurance is recommended as it includes own damage coverage as well.

7. Premium

Factors Affecting Premium:
- Age of the Car: Newer cars usually have higher premiums, while older cars are cheaper to insure.
- Car Make and Model: Premiums vary depending on the vehicle’s make, model, and engine capacity.
- City of Registration: Urban areas usually have higher insurance premiums due to a higher risk of accidents, theft, and vandalism.
- No Claim Bonus (NCB): If you haven’t made any claims in the previous year, you can avail discounts of up to 50% on your premium.
Discounts: Some insurers offer discounts for installing anti-theft devices, taking safe driving courses, or purchasing policies online.

8. Policy Exclusions

Be aware of what your policy does not cover. Common exclusions include:
- Driving under the influence of alcohol or drugs
- Racing or reckless driving
- Wear and tear, mechanical failures, and electrical breakdowns (unless specifically covered by an add-on)
- Damage caused by war, riot, or nuclear accidents
- Driving without a valid license.

9. Insurance Provider Reputation

It’s crucial to choose an insurer with a good reputation, not only in terms of claim settlement but also in customer service. Check customer reviews, financial stability, and the claim settlement process before finalizing a provider.
Consider looking at IRDAI (Insurance Regulatory and Development Authority of India) reports, as they provide a good overview of the performance of insurance companies in India.

10. Cashless Garage Network

Many insurers have cashless garage networks where you don’t need to pay out of pocket for repairs, except for the deductible. Ensure that your insurer has a good network of garages in your area for convenience.

11. Add-on Covers (Optional)

Loss of Personal Belongings: Some policies offer coverage for personal belongings (such as your phone, laptop, etc.) stolen from your car.
Consumables Cover: Covers consumable items like nuts, bolts, brake oil, engine oil, etc., which are usually not covered under standard policies.
Tyre Protection: Covers the cost of damage or loss to tyres, which isn’t typically included in a regular comprehensive policy.

12. Legal Requirements in India

Mandatory Third-Party Insurance: In India, you must have at least a third-party liability policy as per the Motor Vehicles Act, 1988. This covers damages to other people, vehicles, or property caused by your car in case of an accident.
Driving Without Insurance: If you’re caught driving without insurance, you could face penalties or even legal consequences.

13. Transfer of Insurance (in case of Sale)

If you’re selling your car, ensure that you transfer the insurance to the new owner or cancel it and get a refund for the unutilized period.
You may also need to adjust the IDV if you’re selling or transferring ownership to ensure the policy reflects the current market value of the car.

14. Renewal and Re-billing

It’s important to renew your car insurance on time. Lapses in coverage can make it more expensive when you renew, and there could be legal implications if you’re found driving without valid insurance.
Some insurers offer auto-renewal facilities, but you should review the terms and conditions annually to make sure the coverage is still appropriate.

15. Use of Technology

Many insurers now offer online policy management, allowing you to buy, renew, and manage your policy conveniently through apps and websites.
You can also look for insurers that offer telematics insurance, where your driving behavior is monitored, and safe driving habits can lead to lower premiums.

Conclusion:

Choosing the right car insurance in India depends on various factors such as the type of coverage you need, the value of your vehicle, the location, and your budget. It’s essential to thoroughly compare different policies, understand the terms, and make sure you’re getting value for money while ensuring adequate coverage for both third-party liabilities and your own vehicle.

Happy Motoring !!!

TEAM MOTOWORDING.COM

Important factors to consider before taking a car insurance When taking car insurance in India, there are several key factors to consider to ensure you get the right coverage while balancing affordability. Here’s a comprehensive guide on things to keep in mind when purchasing car insurance in India: 1. Types of Car Insurance Policies 2. IDV (Insured…