Things to Check when Buying Car Insurance

Are you purchasing a car insurance policy for the first time and don’t know where to begin?

Don’t worry; we have you covered!

If you are wondering why you need it, let us begin by looking at some figures.

Even though in 2015, India had signed the Brasilia declaration and committed to reducing road accidents and subsequent fatalities by half within 2020, the goal is still yet to be reached. In the two years since signing the agreement, the number of fatalities from road accidents had reduced by a mere 1.9% in 2017. Things took a worse turn in 2018, with the number of fatalities increasing by 2.4%.

Looking at the number of accidents that occur every year in the country, car insurance policies are the need of the hour.

So, what should be the things to check when buying car insurance?

Let us begin right from scratch!

What Type of Car have you Purchased?

The first thing to do before purchasing your first car insurance policy is to know about various types of insurance policies you can avail. It primarily depends on the type of car you have purchased - a private car or a commercial vehicle.

Assuming that you are looking for insurance cover for a vehicle for private use, the following is an elaboration on the same.

What are the Different Types of Car Insurance Coverage?

In India, there are primarily two types of coverage options available under car insurance policies. These are:

• Third-Party Car Insurance - Availing a third-party car insurance cover is deemed compulsory by the Government of India. This insurance cover offers financial protection against legal liabilities that can arise from accidental death, property damage or injury to a third party. If you are found driving without a valid third-party insurance cover, it can attract legal consequences. However, you must note that this insurance cover will not protect your car or you against any damage.
• Comprehensive Car Insurance - As its name suggests, a comprehensive car insurance cover offers much more well-rounded protection. It covers the financial losses incurred due to damage to your car, a third-party car or property, as well as personal injury and even death. But you can opt to avail add-on covers over your existing comprehensive that can safeguard you and your vehicle against specific risks. But this add-on cover can only be availed in lieu of extra premium payment. 

If you are purchasing a car insurance policy for the first time, it is better to opt for one that provides comprehensive coverage. This way, you can safeguard yourself and your vehicle under unforeseen circumstances in a more protean manner.

Know more about the difference between Comprehensive and Third Party Insurance.

Now, when it comes to availing a car insurance policy, whether a third party liability cover or a comprehensive one, it is crucial to check some key points to ensure that you can maximize your benefits from it.

So, what to check when you are buying car insurance?

Let’s take a look!

If you are buying a car insurance policy for the first time, it is pertinent to look through the list given below. This not only helps you to enjoy maximum benefits from the policy but also informs you of the various terms and conditions mentioned under it. 

1. Understand your requirements

To ensure that you choose the right insurance policy, especially if you’re buying for the first time, it is crucial to identify your requirements beforehand. These may include the age of your vehicle, your driving habits, and your insurance budget. 

For a new car, you may choose a comprehensive policy to cover both your own damages and third-party liabilities. However, if you are strict on budget, you may go for the third-party policy that is mandatory by law. 

2. Research and compare the policy options available

As a first-time insurance buyer, it is crucial to first research the details of different insurance policies available in the market. With most of such details available online, you can check, review and compare between different types of car insurance policies to avail the one best suited for your needs. The following are a few key points to look out for: 

• Low Premium 

• Coverage provided

• Claim settlement ratio

• Add-on covers, and more.

Further, you can also make use of an online car insurance calculator to get your policy to calculate your premium payable to avail a policy based on its affordability.

3. Check the Claim settlement process

There are three types of insurance claim ratios that you must understand before availing a policy. These are as follows –  

• Claim settlement ratio - Claim settlement ratio is given by the number of claims settled by the insurance provider against the number of claims reported. 

• Claim repudiation - Claim repudiation ratio is given by the number of rejected claims against the total number of claims.

• Claims pending - The claims pending ratio is the total number of outstanding claims against the total number of claims raised.

Checking these ratios allows you to analyse the insurance provider’s claim handling process and history. It further allows you to make a comprehensive decision about which policy to avail.

4. Features to look for under Third Party Car Insurance Cover

This cover offers legal coverage and financial assistance for any third-party liability that was caused by your vehicle. The following are some of the features you should check for while availing this cover: 

• Personal damage caused to a third party

• Damage caused to a third-party vehicle or property

• Further, with Digit car insurance, you can avail of personal accident add-on cover which can protect you from financial losses that can arise if you are injured in an accident involving your insured vehicle.

But before availing this cover, it is crucial for you to check the instances that are not covered. Some of them include:

• Damages sustained to your vehicle.

• Situations where you are driving under influence or without a license.

• If you hold a learner’s license and were not driving with a driving license holder in your passenger seat.

With Digit Insurance policy, you can avail this cover for a premium payment starting at Rs. 2072. Further, under this policy, you can avail unlimited liability coverage for personal damage to third-party and coverage of up to Rs. 7.5 Lakhs for property damage to the third party. 

5. Features to look for under Comprehensive Coverage

Since a comprehensive car insurance policy provides all-inclusive benefits, it is crucial to review the plan carefully before you avail of it. Following is a list of features to look through before you purchase a policy –  

• Cover against damages incurred to your car due to accidents

• Financial protection in case of car theft

• Benefits offered under a standard third-party liability cover

• Protection against personal injury or death in an accident

• Cover against the damages caused in a fire

You can further choose to make your comprehensive cover even better-rounded by customising it with several add-on covers, like:

• A zero-depreciation cover which helps you to avoid paying your car’s depreciation cost while filing your car insurance claim.

• Roadside breakdown assistance cover, allowing you to avail help on the road, whenever you require it!

• Tyre protection cover.

• Consumable cover.

• Passenger cover to protect the person riding in the car with you.

Further, with Digit Car Insurance, you will be able to avail a return to invoice cover which provides you with your car’s invoice value in case of theft or any other damage. Comprehensive insurance is, thus, the most beneficial option for first-time insurance buyers.  

But like third-party liability covers, there are certain exclusions under the comprehensive policy as well. Some of them are:

• Driving under influence or without a license.

• Any consequential damage that occurs after the accident.

• For any damage that arises due to contributory negligence.

• Damages incurred if you are driving with a learner’s license.

6. Look for the lowest Compulsory Deductible amount

Deductible refers to the portion of the claim that has to be paid by the policyholder before the rest is covered by the insurance provider. Deductibles for car insurance are of two types: 

• Compulsory Deductible - According to the rules put forth by the IRDAI, the policyholder has to pay a mandated compulsory deductible of Rs. 1000 if their car does not exceed 1500 cc and Rs. 2000 for cars more than 1500 cc. The compulsory deductible amount may vary at the discretion of the insurance provider. Thus, it is pertinent to look for lower compulsory deductible amount while availing the policy. 

• Voluntary Deductible - This refers to the amount chosen by the policyholders to meet a portion of the claim from their own pockets. This amount is decided at the discretion of the policyholder, based on factors like risk and affordability.

However, you should also remember that your premium amount is not affected by compulsory deductibles. Premium amount is calculated based on factors like Insured Declared Value, the make and model of your car, etc.

7. Look for Insurance Policies with fast Claim Processes

The claim process is one of the key points to look for before you avail a car insurance policy. A fast claim process allows you to make sure that your claims are settled without any hassle. There are mainly two types of claim processes for a car insurance policy. These are –  

• Cashless claim

• Reimbursement claim

With Digit Insurance, you can file the claim in simple steps, you only need to submit a few required documents to file the claim.

8. Check the number of Network Garages for Cashless Repair

As far as car insurance policies are concerned, if it offers cashless repair benefits, it is a big plus. With cashless repairs, you can avail emergency repair services for your vehicle without paying a single penny out of your pocket.

This benefit is extremely beneficial, especially under circumstances when you are left stranded with a broken car and do not have cash readily available at hand. 

Insurance providers have network garages from where you can seek cashless repairing for your vehicle. Make sure you check out the number of network garages listed under your insurance provider – the more, the merrier!

9. Look for a higher IDV under your Car Insurance

IDV or Insured Declared Value of a car refers to the market value of your vehicle. It is the sum insured offered by your insurance provider and is provided to you under circumstances like loss or theft of the insured vehicle. 

For example, a brand-new car fetches the highest IDV. As time passes, the depreciation on the car also keeps increasing and the sum assured keeps getting lower. Your insurance provider decides the premium payable against your insurance policy based on the IDV. 

You should, thus, look for a high IDV per rupee and customisable IDV options to maximise your benefits from the insurance cover.

10. Check the No Claim Bonus policy for your insurance

Even though the no claim bonus in car insurance is not applicable when you purchase a policy for the first time, it is best to be informed about it. It is one of the additional perks that you can enjoy under your insurance policy that allows you to avail of a discount if you haven’t filed any claim in the previous policy year. 

The NCB discount can range between 20% and 50%. Usually, insurance companies provide an NCB discount of 20% if you haven’t filed claims in the first policy year. This discount further increases by 5% each year and can amount to a total 50% reduction in the sixth consecutive year of not filing any claims.

It is best to review the NCB policy of your insurance provider while purchasing the car insurance policy to maximise your benefits from it.

11. Review your insurance provider’s reputation

Given the sudden influx of insurance providers in the Indian market, it is best to review a company’s reputation before you opt to purchase a car insurance policy from them. A quick background check on the company’s reputation can help you learn about the transparency it maintains with its customers.

Nowadays, with the advent of the digital platform, it has become much easier to gauge a company’s reputation. Just go through Facebook comments, Google reviews, online customer testimonials, etc. and you will be able to learn about the company’s services. 

12. Go through the policy document carefully

It is important to thoroughly read your car insurance policy document before buying it. Take your time to understand the terms and conditions, coverage specifics, exclusions, and procedures for filing a claim. If you have any questions, get them clarified from your insurer then and there.  

13. Renew your Policy Timely

Lastly, remember to renew your car insurance policy on time to avoid any gaps in coverage. Confirm from your insurer the duration of grace period for renewal after the policy expiration date, as failure to renew within this period may result in a higher premium or loss of accumulated benefits.

14. Additional benefits

Apart from the above, you should also look for other features in your car insurance policy that can aid you to maximise your benefits from them. For instance, with Digit Car insurance you can avail additional benefits like –  

• Doorstep pickup, repair and drop services for your vehicle.

• Round the clock support, even on national holidays.

• Self-inspection facility for the damage to your vehicle. Through this facility, you can use your smartphone to check for the damage yourself and save the hassle of getting it checked over by a surveyor.

• A high insured declared value against each rupee. 

• Every step of the claim process can be carried out online

Also remember...

Apart from the points mentioned above, you should also make it a point to look through the points mentioned below:

• It is best to purchase a long-term car insurance policy because it allows you to enjoy benefits like discounts on the overall premium, avoiding risks on non-renewal of policy and a greater convenience.

• Compare the premium payable on the car insurance policy offered by different insurance providers to boost its affordability.

• Look for insurance providers with an active customer service and helpline number. This will allow you to contact them and resolve any problem regarding your insurance policy without any hassle.

Sounds great, right?

So, with this list of “tips for car insurance buyers” in mind, move forward and make your purchase. After all, the faster you avail of an insurance policy, the sooner you can start driving your car. Get your car insurance policy today!