Vehicle insurance isn’t merely a compliance paperwork, it acts as the financial bedrock that protects you from potential costs of surprise repairs, accidents, theft or natural calamities. Yet, finding the right policy can be complex and expensive. To help you choose the right car insurance policy, this blog presents a clear roadmap to help you select a policy that perfectly balances protection with premium cost.
Types of Insurance Coverage
To make the best choice, you first have to understand the available car insurance coverage options. There are three main types of vehicle insurance policies, which are as follows:
- Third-party insurance: Third-party insurance is a statutory mandate under the Motor Vehicle Act of 1988. It primarily covers damages to another person’s vehicle, property or injuries caused by the accidents. Third-party cover is the most basic form of vehicle insurance, and it does not offer protection for your own vehicle.
- Comprehensive Car Insurance: Comprehensive vehicle insurance offers all-around protection for your vehicle. It covers both third-party and your own car against damages caused by accidents, theft, fire, floods, and other forms of calamities. Moreover, comprehensive insurance can include a personal accident cover of up to ₹15 lakhs across platforms.
- Standalone Own Car Damage Insurance: For those who initially purchased a third-party only plan, a standalone Own-Damage cover can be purchased separately. This insurance policy is designed for policyholders to protect their own vehicle against damage without upgrading to a full comprehensive plan.
Assess Vehicle's Age and Location
Your vehicle insurance plan should align with your personal circumstances and the car you
drive. To know that, here’s what you need to evaluate:
- Vehicle’s Age: The age of your car is a critical factor in determining the policy cover you get. For an older car, you may get low market value and analyse if the car is in good condition or if it requires frequent servicing. For a brand new car, evaluate the route you travel frequently and the location of car parking.
- Location: If your car parking location is prone to any natural calamities, then you may need additional coverage. In such situations, you can choose comprehensive insurance that provides all-around protection for your car from natural calamities, accidents or theft.
Determine the Right Insured Declared Value (IDV)
The maximum value that your insurer will pay in case your car is stolen or completely damaged and can no longer be repaired (a total loss) is referred to as the Insured Declared Value (IDV). It is the present value of your car. It is important to make sure that the IDV represents your vehicle in its current market value.
Leverage Add-On Covers Wisely
Add-ons are supplementary coverage to your underlying all-inclusive policy, and they offer customised coverage at a higher cost. To ensure that you do not overpay, only those that truly address your particular needs should be chosen. The major insurers provide the right to choose what to include in your coverage:
- Depreciation Waiver: It is also known as zero depreciation cover, whereby the insurer will not deduct depreciation and will pay the entire liability of repair of parts that are not counted in depreciation. It is widely considered for new cars (usually up to 3-5 years old) to maximise payouts on claims.
- Roadside Assistance: This is an optional feature that provides services in case of a dead battery, empty fuel tank or a total breakdown. Additional services may entail assistance in towing and minor on-site repairs.
- Engine Protection cover: This provides the repair coverage of the engine damage by water ingestion, oil leakage, or hydrostatic lock. This is a necessary addition if you are residing in a region that is characterised by high levels of rainfall or floods.
- Return to Invoice (RTI) cover: This add-on helps you to get back the full amount you’ve paid for your car during the purchase if it’s stolen or completely damaged beyond repair.
Deductibles and No-Claim Bonus (NCB)
These have a considerable influence on your premium and out-of-pocket payments.
- Deductible: This refers to the sum that you agree to pay yourself whenever you make a claim. It is typically a compulsory deductible required by regulatory bodies, and you also have the option of a voluntary deductible. An increased voluntary deductible could result in a significant reduction in premiums, but you would be paying more out of pocket during a claim.
- No-Claim Bonus (NCB): When insurers offer No-Claim Bonus, they give significant discounts on the renewable premiums. For example, insurers like HDFC ERGO highly cut down your expenses in the long term up to 50% after five claim-free years.
Final Thoughts
The right car insurance policy helps you strike a balance between cost and all-around protection. You may choose automobile insurance depending on the conditions of your car and the route you frequently travel.
Moreover, evaluating your requirements and relevant considerations, such as IDV, deductibles, etc., you can choose the best insurance policy for your car between third-party, full comprehensive and standalone automobile insurance.
Use code carsaddiction for 20% off!