Buying a car insurance is not only a mandate one must follow to let your car run on the roads but also helps in financial cushioning in case of expenses incurred on car damages. Many people often make hasty decisions when buying a car insurance policy. This may lead to inadequate coverage that only serves the legal purpose. Although buying third-party car insurance is mandatory, opting for a comprehensive one is wise.
Purchasing a four-wheeler insurance policy has evolved over the years and has become customer-friendly. Insurance providers offer several features that can help you easily compare car insurance, renew your policy or initiate claims online. With several add-ons or riders to enhance your coverage, the various jargon involved and an understanding of the procedures, there are a few things that first-time car insurance buyers must know.
Let us discuss the five crucial tips for a new car insurance buyer.
Five Tips When Buying Car Insurance for the First Time
You put in a lot of thought and effort while purchasing your dream car. However, not equal effort is put into purchasing a new car insurance policy. The right four-wheeler insurance policy will protect your dream car without burning a hole in your pocket. Thus, consider these five tips before you make a decision.
1. Understand the types of car insurance offered
Typically, insurance companies in India offer two types of car insurance: third-party and comprehensive. Third-party insurance is mandatory by law. Thus, you must have car insurance to be eligible to drive on the roads. In case of an accident, the policy provides financial support to cover the costs of the damaged third-party vehicle. The third-party will receive compensation for the damage, thus protecting you from financial liability.
On the contrary, a comprehensive car insurance policy covers the third-party liabilities along with your vehicle, personal accident etc. Since insurance covers many situations, opting for a comprehensive plan is highly recommended. Moreover, you can enhance your cover by adding a rider.
2. Learn about the riders or add-ons
As mentioned, you can enhance your cover in a comprehensive plan by adding a rider or add-ons. For example, a zero depreciation cover protects the vehicle’s depreciation value. During a car insurance claim with zero-dep cover, you can get reimbursement of the total value of your car’s components without any deductions for depreciation. It ensures you get reimbursement of the full value of damaged vehicle parts without considering depreciation.
Similarly, various other add-ons can help enhance the coverage. You can opt for an engine and tyre secure cover for a new car or return to invoice cover.
3. Take the online route
With almost every insurance provider offering an online feature, buying your new car insurance online is a great idea. Buying online insurance has several benefits. From hassle-free and quick processes to minimum to zero paperwork, and from ease and security on purchase, renewal and claim initiation to saving a few extra bucks. Also, ensure the insurance provider has a good network of garages and service centres.
4. Insured Declared Value (IDV) and No Claim Bonus (NCB)
Insured Declared Value (IDV) significantly affects the premium amount. Thus, it is essential to consider IDV when buying a new car insurance policy. IDV is the current market value of your car upon which the coverage is offered. In short, it is the maximum claim amount you are eligible to receive in case of theft or total loss of your vehicle. IDV must be decided carefully, as it may have consequences during the claims process and may impact the premium and insurance coverage. Hence, determining the appropriate IDV for your vehicle is very crucial.
No Claim Bonus (NCB) is another motor insurance terminology you must know about while purchasing new car insurance. NCB is a discount the insurance company gives to the policyholder for not filing any claim during the previous policy year. This discount may vary between 20 and 50% of the policy premium. It is thus recommended to avoid filing claims for minor repairs to take the NCB advantage.
Deductibles are a part of the claim amount that is not payable by the insurer. The deductible varies between the insurance provider and the policy opted for. Typically, policies with higher deductibles will have lower premiums and vice versa. Some policies also have zero deductible, which means the insurance company will pay the complete claim amount. This will attract a higher premium.
Possessing a good knowledge of the car insurance policy can help you purchase the best one as per your budget. Ensure you pick a trusted insurance provider like Tata AIG that offers best-in-the-class products at affordable rates.