Things to Consider When Buying Motor Insurance
So you’ve decided to buy your dream car and are working your way through the financing process, feels ecstatic, doesn’t it! But wait a moment! Have you decided on car insurance yet? Car insurance isn’t something that you should buy in a hurry or can buy later, but something that needs due diligence and is mandatory with a car, whether it is new or old.
Why buy car insurance?
Do you buy car insurance just because it is mandatory? Or do you buy the minimum possible cover for your car so that you can pay lower premiums? If the answer to any of these questions is a ‘yes’, it means that you are committing a big mistake.
Though car insurance is mandatory to drive a car on road, the main purpose of car insurance is to protect your car against the financial consequences in case of an accident, theft or loss in the event of natural occurrences, etc.
Here are a few things to understand about car insurance, before you buy one -
· Car insurance types
Before buying a car insurance policy, you must understand the different types of policies on offer, and the cover offered by them. Depending upon your car’s usage - commercial or private, you can buy commercial car insurance or private car insurance, respectively.
There are two types of car insurance policies that you can buy: -
- Liability of Third-party car insurance
This is the most basic insurance cover which is compulsory for every car on the road. It covers only the loss or damage incurred on the third party in case of an accident. However, this policy does not cover any loss or damage to your vehicle.
- Comprehensive car insurance
This is an all-inclusive policy that provides complete cover in case of an accident, loss or damage to you as well as to the third-party.
While third-party insurance is mandatory, you must consider the best-possible comprehensive cover that secures your car completely against accidental damages, theft or loss.
· Policy terms
As is evident, Inclusions entail what the policy covers, while exclusions are what the policy doesn’t. One mistake that insurance buyers often commit is that they read about the policy benefits, but forget to read about the conditions that the policy does not cover. Hence, make sure to understand both inclusions as well as exclusions, to make an informed decision.
· Car insurance riders
After buying comprehensive car insurance, you may feel the need to extend the policy cover. You can extend policy cover with riders. Riders are add-on covers that can be added to existing policy on payment of an extra premium. So, before you buy check with your insurance provider about car insurance riders, such as on-road assistance, personal accident cover, NCB protection, etc., to get the maximum possible insurance cover as per your requirement.
· Insured Declared Value (IDV)
A car insurance premium is calculated based on factors like the IDV, car model, etc. So, understanding the IDV of a car is important. The Insured Declared Value (IDV) is the maximum amount that you can claim on insurance in case of total loss or theft. IDV goes on decreasing as the age of the car increases, which means that a brand new car has a higher IDV than a year-old one of the same model. In simple terms, IDV is the current market value of the vehicle.
· Personal accident cover
While on road, you can be exposed to threats of accidents and injuries, hence opting for a personal accident cover is a good option. Personal accident is usually an add-on cover with a car insurance policy which can be purchased by paying an extra premium. If there happens to be a mishap, you need to have adequate protection for physical loss and disability. You can also avail of personal accident cover for some or all passengers of your vehicle according to its seating capacity.
· No Claim Bonus or NCB
NCB is an added bonus that is provided to you when you do not make any claims for an entire year. So, on policy renewal, NCB needs to be accurately calculated and can be carried forward. You can accumulate your NCB up to a maximum of 50%.
· Claim procedure
One of the most important aspects of a “good” motor insurance policy is the ease and efficiency of its claim procedure. When you buy a motor insurance policy, ask your insurer about the claims process. Also, check the claim settlement ratio of the insurer. The claim settlement ratio of a company tells about the number of policies that are settled by paying back the claims in a year. Thus, this ratio tells you about the reliability of the insurer.
Accepting a renewal quote from your existing insurance provider might seem the easiest option for you, but doing so can make you pay extra for your insurance. So, why not shop around a little before you decide on buying a plan?
Tips to buy car insurance
The mistake that most car insurance buyers make is failing to shop around for the best policy benefits and premiums. The good news is that getting the best car insurance quote is much easier nowadays. Just explore insurance policies online, compare policy benefits and premiums, and find the best price in a fraction of a time you’ll spend following up with an insurance agent.
Here are a few helpful tips that will help you find a motor insurance plan to suit your needs-
· Know what are your requirements
Before you start looking for an insurance plan, first understand your requirements. Assessing requirements can include determining the type of car insurance cover you want to buy, any additional covers that you may want to add to car insurance cover, premiums, etc. However, coverage should be your focus while choosing insurance, and not the premiums that you pay.
Understand your priorities before you start looking for car insurance. Ideally, you’ll be looking for an insurer that offers comprehensive coverage at an affordable price, together with an easy claim process and faster processing of claims.
· Compare insurance quotes online
When buying motor insurance, you must compare quotes online. Car insurance online quotes can be accessed instantly by entering your requirements in an online quote request form. Arriving at a decision after comparing the quotes will help you access the best price as well as the best protection, as per your requirement.
· Choose a provider with a wide network of garages
Car insurance providers have a network of garages where they provide repairing and servicing of motor vehicles, in case of a claim. When you look for an insurer, make sure to check its list of network garages. Choose an insurance company that has a wide network of garages where you can get the facility of cashless claims. Choosing such an insurance provider ensures that the claim settlement is faster and easier and involves fewer hassles.
· Check the claim data
Claim data details about the history of the claim handling process of the insurer. However, one thing to understand is that new insurers typically would have a lower claim settlement ratio. But, you can check the incurred claim ratio and the claim settlement ratio to understand the reliability of an insurer. Though genuine claims rarely get rejected, being informed about the efficiency of the claims process will help you arrive at a better decision. Choose a company with the best claim settlement ratio and an easy claims process. You can easily find the claim data about different insurance providers online.
· Accumulate No claim Bonus
Accumulating No Claim Bonus is a great way to reduce car insurance premiums. You can accumulate up to 50% NCB and use it later. One thing to understand with NCB is that it is linked to the policyholder and not to the vehicle. So, you can benefit from your accumulated NCB when you replace your old car or in case you switch to another insurance provider upon renewal of the policy.
· Get zero-depreciation cover
Zero depreciation cover comes at an additional cost with your car insurance. If you have this cover, then upon a claim you will get complete reimbursement for the parts replaced without any deduction for depreciation. Although your premium will be on a higher side than otherwise, you’ll be the benefit as you will get complete reimbursement in case of an accident.
· Finally, consider buying car insurance online
The most obvious advantage of buying insurance online is that you save time and money. Further, you have a wider choice as you can find policies from a range of insurance providers in one place. In addition to this, you can make a better and more informed decision, by doing complete research and then purchasing online.
In a nutshell, choosing appropriate motor insurance isn’t that difficult. In fact, with a little due diligence and research, it can help you get the best protection for our car within your budget.
**To understand exactly about the policy coverage, exclusions etc read the Policy Wordings carefully.**