Buying a motor insurance policy in India, for the most part, is nothing more than a formality as people often look at car insurance as a mandatory thing rather than protection. In most cases, the motor insurance premium is the deciding factor of buying a car insurance policy. However, we tend to forget that having little protection is equal to having no protection at all, as it won’t provide any benefits.
A common mistake that insurance buyers commit is not spending for a good insurance policy and buying a policy that is easy on the pocket. You can easily search for motor insurance online, compare the policies, and buy the policy that meets your needs as well as your pocket.
Things You Must Know Before Purchasing Car Insurance
It would be wise to go online to compare motor insurance policies available on different parameters like features, benefits, etc. including costs. Besides this, you should also be well-informed about different features of car insurance before buying it.
Buying insurance is equally important as buying the car itself. Here are the 10 things that you must know before purchasing car insurance in order to optimize your purchase and to enjoy better benefits-
- Understand the types of motor insurance policies
There are two types of insurance policies that you can buy-
- Liability of Third-party insurance
This is the most basic insurance that is compulsory for every car on road and covers only the loss or damage incurred on third party in case of an accident. The policy does not cover any loss or damage to the insured vehicle.
- Comprehensive insurance
An all-inclusive policy, this provides complete cover in case of an accident i.e. loss or damage to insured as well as to the third-party.
- Know the factors that affect your premium
Insurance premiums are affected by a number of factors and you should be familiar of these factors when you buy insurance. These factors are as follows-
- Driving record- Drivers withprevious records of violations or accidents are considered to be at higher risk.
- Location- Urban areas have more claims than rural areas
- Vehicle use- Higher annual mileage results in higher risk exposure
- Make and model of your vehicle- Luxury and sports cars average a higher number of claims
- Buy additional covers based on your risk profile
Every type of insurance comes with add-on covers that help extend the coverage of the policy, but comes at an additional price. You can add extra cover to your existing insurance policy based upon your risk profile. Add-on covers like road assistance can be of great help in case your vehicle breaks down on a deserted place or at an odd time.
- Get personal accident cover
When on road, you are vulnerable to the threats of accidents and injuries, which is why opting for a personal accident cover is a great idea. Personal accident cover provides adequate protection against physical loss or disability during a car accident. This cover can also be extended to all passengers in your vehicle based on its seating capacity.
- Know Insured Declared Value (IDV) of your vehicle
The premium of your car insurance will be calculated on the basis of certain factors like the IDV, car model, etc. Hence, you must get an understanding of IDV. The Insured Declared Value (IDV) is basically the market-value of your car and the maximum amount that you can claim in case of total loss or theft. IDV decreases with the age of the car, which means that a brand new car will have a higher IDV than a year-old car of the same model.
- No Claim Bonus or NCB
NCB is bonus that you get when no insurance claims are made for an entire year. When the policy gets renewed, NCB needs to be accurately calculated and can be carried forward. NCB can be accumulated up to a maximum of 50%.
- You can port your policy
Motor Insurance policies are portable, which means that you can take your policy from one insurer to another at the time of renewal. When you port to a new insurer, check with your new insurer to know whether all benefits, like No Claim Bonus, accurate IDV, etc. have been duly continued.
- If you use your vehicle for work, get commercial insurance
If you use your vehicle for commercial purposes but have covered it under a private car insurance policy, your claims won’t be allowed. All vehicles that are used for commercial purposes should be insured commercial insurance.
- Understand the claim procedure
One of the most important aspects of motor insurance policy is the claim procedure. You must check the efficiency of the claim procedure of the insurer you’re buying the insurance from. When you buy insurance, it is important to understand the claims process. Also, check the claim settlement ratio as it details about the number of policies that are settled by paying back the claims in a year. So, this ratio talks about the reliability of the insurer.
- Review your policy
As your vehicle ages, your insurance needs may not be the same needs as it was when it was new. Hence, it is very important to review your insurance policy with time. You may consider cutting down on some coverage or adding some.
Like every general insurance policy, car insurance also includes different terms and conditions, as well as inclusions and exclusions. Hence, when you buy car insurance,read the fine print and get sight of the hidden clauses to stay well-informed in times of insurance claims.