Purchasing a new car is a huge milestone for many. It is an important part of one’s life and it is important to secure the car by choosing the right car insurance policy. If you are buying a car for the first time, choosing an insurance policy can be quite challenging and here are a few tips to simplify this process.
Understand the Different Types of Car Insurance Policies
Third-Party Insurance – This car insurance policy is mandatory as per the Motor Vehicles Act 1988 and it offers protection from liabilities that arise out of an accident involving a third-party person or property. If one drives without valid third-party insurance, they can be fined heavily or imprisoned.
Own Damage Insurance – This is a policy that covers damages caused to the insured vehicle. Since third-party is mandatory, this policy will not suffice. One will have to buy a separate third-party insurance.
Comprehensive Insurance – This insurance policy provides coverage against own damages, total loss or damage caused to the insured vehicle caused by theft, explosion, fire, natural calamities, etc., and third-party liability cover. This is an all-inclusive policy that covers everything under one premium.
Understand Your Insurance Requirements
Purpose of the Vehicle – Understand the use and purpose of the vehicle before choosing the insurance coverage. If you depend a lot on the car and travel through heavy traffic every day you might require higher coverage.
Financial Affordability – The insurance coverage directly reflects on the insurance premium that one must pay. It is best to be not overly insured or insured for very low.
Compare Products Online
There are several insurance companies available today and choosing the most reliable and efficient insurance company can be quite a task. One can visit the official website of these insurance companies or read about them on insurance comparison websites. Policies should be compared on various parameters such as coverage, claim settlement, additional benefits etc.One must also read customer ratings and feedback to get a better idea about the insurance company.
Choose the Right Add-Ons
Additional covers can be included to enhance the coverage of the policy by paying an extra premium. Some of the add-ons available are zero-depreciation cover, return to invoice, engine protection cover, roadside assistance cover, consumables cover, etc. It is important to only choose add-ons that are necessary since each add-on is an additional cost.
Understand Insurance Terms
While buying insurance one can get confused due to the jargon used. It is important to be aware of some insurance terms which do have bearing on the performance of the policy. Here are a few examples:
IDV – This stands for Insured Declared Value, and this is the total amount that the policyholder will get in case of total loss or damage of the car. The IDV directly reflects on the premium to be paid.
Deductibles – There are two types of deductibles to be paid, compulsory and voluntary. A compulsory deductible is a minimum amount that must be paid to initiate an insurance claim. A voluntary deductible is an amount that policyholders can choose to pay if they are willing to share some of the financial burden.
NCB – No Claim Bonus is a discount offered at the time of renewing the car insurance for completing a claim-free year. One can avail up to 50% discount on their insurance premium.
Understand Exclusions of a policy
It is important to understand what is excluded from the insurance policy. A lot of situations such as loss due to war or outside geographical territory will not be acceptable by the insurer. It is better to be aware of all these conditions before one purchases a plan.
Understanding insurance in today’s day and age is simple, thanks to the advancement of technology and the development of new-age insurance companies. Make sure you are aware of the inclusions and exclusions, read the terms and conditions before buying a car insurance policy.
