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How to Choose the Best Car Insurance?
Can’t Decide Which Car Insurance Policy to Buy? Here is a Comprehensive Guide to Help You Out!
Purchased a new car?
If so, then have you given any thought to which car insurance policy you will purchase?
According to the Motor Vehicles Act, 1988, it is mandatory to possess a third party liability car insurance policy to drive your car (old or new) on any Indian road. Therefore, being a new car owner, one of the primary things you should focus on before taking your car on the road is purchasing a car insurance policy.
But how to choose the car insurance that is most suitable for you?
Well, to choose an insurance policy, you will need to check through several parameters. To make things easier, we have provided you with a checklist of things you will need to look for while purchasing a car insurance policy.
Take a look!
Types of Car Insurance Policies You Can Avail
Before looking for potential insurance policies to choose from, you will first need to know the types of car insurance available in the market. Once you understand the types, you can easily dig further to know the underlined features and check with your budget, need and priority. This way, you will find out how to pick the best car insurance to protect yourself from unforeseen financial liabilities.
There are two types of car insurance policies available in the market. These are:
- Third-party liability car insurance
- Comprehensive car insurance
Third-Party Car Insurance
Comprehensive Car Insurance
|What it entails||
It is a type of car insurance which covers the financial liabilities arising from any damage or loss to a third party property/ vehicle or from the death or injury to a third person involved in an accident with the insured vehicle.
This car insurance policy covers not only third party damages but also losses arising from damage to the insured vehicle.
|What is covered||
1. Injury or death of a third person involved in an accident with your vehicle. 2. Damage to third party vehicle or other property. 3. Personal accident cover – This is to protect you from losses and damages that could happen if you, the owner or driver, got injured in an accident.
1. Losses and damages to the third party. 2. Personal accident cover. 3. Car theft. 4. Damages due to natural calamities, fire, etc.
According to the Global status report on road safety 2013, more than 2,31,000 people were killed in road accidents in India. Further, the Ministry of Road Transport and Highways has issued that the number of road accident increased by 0.46% in 2018 from the previous years.
Keeping these numbers in mind, you will need to determine which car insurance policy you should purchase. Because, after all, purchasing car insurance is not only about being a law-abiding citizen but also for your safety. It is, thus, advisable to opt for comprehensive car insurance as it covers all unpredictable odds.
Now, take a look at how to choose a car insurance policy.
What Should Your Car Insurance Policy Cover?
Did you know that if you get caught without a valid car insurance policy while driving, you will be penalised with a fine of Rs 2000/- and might also be sentenced for up to 3 months of imprisonment?
To avoid such situations, it is imperative that you purchase a third party insurance policy.
But, what about protecting yourself from the financial losses that arise if you damage your own car in an accident? Or, if you require hospitalisation under the same circumstances?
As we have discussed earlier, comprehensive car insurance covers third-party as well as the damages and losses to your own vehicle.
So, if you decide on purchasing a comprehensive car insurance cover, here is the list of features you can avail of:
- Your insurance policy will cover financial losses for damages to your own car due to a collision or an accident.
- A comprehensive insurance cover will cover your losses if your car gets stolen
- Your car insurance policy should also cover the damages caused by a fire.
- The policy provides cover against natural calamities like floods, earthquakes, cyclones, etc.
- Since damages from an accident are not restricted to your car, it can lead up to personal injury or even death. Having a comprehensive insurance cover in place can help to stave off the financial liabilities arising in such situations.
Apart from the features offered under a policy, you should also take a look through the following parameters while selecting an insurance cover.
Parameters to Look for Before Purchasing a Car Insurance Policy
An ideal car insurance policy offers a lot more facilities than what we have already discussed before. Thus, before zeroing in on any decision, you will need to know how to pick the right car insurance.
Here is the list of some additional features you need to look out for to maximise your benefits from your insurance cover:
1. No-Claim Bonus
No Claim Bonus or NCB is a discount offered by the insurance company on premium payment if the policyholder has not made any claim during the previous year. The No Claim Bonus can be referred to as a reward from the insurance company to the vehicle owner for using the vehicle carefully and safely. It is important for you to check if you can avail of the NCB benefit before you purchase a policy.
2. Add-On Covers
Insurance companies like Digit offer add-on covers in addition to your comprehensive insurance policy that allows you to maximise your benefits from it. Following are a few add-ons that you can avail for your car insurance -
- Zero depreciation cover – The value of your car gets depreciated over time. Zero depreciation add-on will cover the costs of depreciation and replacement of new spare parts of your car.
- Breakdown assistance – Cars can break down at any given point and leave you stranded in the middle of nowhere. With roadside assistance cover, you will be able to avail emergency assistance under such circumstances if you’re stranded within a radius of 500 km from the middle of the city.
- Tyre protection – Replacing your car tyres or can put a sizeable dent in your pockets. With this add-on, your insurance policy will reimburse you the cost for the same.
- Engine and gearbox protection – As the name suggests, you will recover the amount spent on repairing your engine and gearbox, which might have suffered damage after an accident, with this add-on benefit.
- Return to invoice cover – In case of theft or total damage to your car, return to invoice add-on will reimburse you with the exact amount mentioned on the invoice.
- Consumable cover – All your small expenses from engine oils to nuts-bolts and more will be covered under consumable cover.
- Passenger cover – Any injury to your co-rider or their accidental death will be protected with this passenger cover add-on.
- Key and lock protect cover - This cover comes in handy if you accidentally lose the keys of the vehicle. With key and lock protect add-on, the insurer incurs the cost for fixing or replacement of the keys and lock.
- Daily conveyance cover - With daily allowance cover the insurer pays a fixed allowance for daily commute or provides coupons from taxi operators equivalent to the per day fixed allowance or arrange for a standby vehicle if your damaged car is taking time to get fixed.
- Pay As You Drive (PAYD) cover - This cover offers you a discount on the premium of Own Damage cover. You can also top-up kilometers under the base policy by paying an additional premium.
Affordability is an important factor to consider while purchasing your car insurance cover. You should compare the coverage with the money you will be paying a premium for different insurance companies and choose the one most suitable for you.
To gauge affordability, you will also be required to look at -
An insurance policy having a deductible clause state that the insurer must pay a certain amount of money towards the repair of their vehicle before the insurance policy starts to kick in and cover the rest of the cost.
Deductibles in a car insurance policy can be of two types -
1. Compulsory deductible - With compulsory deductible it will be mandatory for you to pay the deductible amount towards your claim before your insurance policy kicks in. As per the IRDAI, the compulsory deductible cannot exceed Rs. 1000 for a car below 1500 cc and Rs. 2000 if the car exceeds 2000 cc.
2. Voluntary deductible - But with a voluntary deductible you can choose to pay the deductible amount on your volition, to reduce the premium amount paid towards your insurance policy.
However, you should remember that even though the policies having a deductible clause have a lesser premium, it is preferable to have a car insurance policy without such clauses.
Now, you will also have to check a few factors with respect to your insurance company to make sure that you avail the best services.
How to Choose the Right Car Insurance Company?
In the Indian general insurance market, you can find 34 organisations that are legally registered under IRDA, the regulatory body of insurance, to sell car insurance.
But how do you decide whose service to avail for your insurance cover?
Not a very difficult task to do, considering the advent of digital platforms. You simply need to conduct a background check of the company. Here is a list for you to adhere to while doing the same:
1. Claim Settlement Process and Ratio
A claim settlement ratio is the number of claims settled by the insurance company against the total number of claims raised. The higher the claim settlement ratio, the better your chances are for your claims to be settled.
Further, you should also look for an easy online claim settlement process to reduce your hassles while raising claims.
2. Insured Declared Value
Insured Declared Value or IDV is the maximum sum assured decided by the insurance company which is provided on theft or damage to your vehicle beyond repair.
In simple words, IDV is the price of your car as determined by its manufacturer minus the depreciation. In case of complete loss or theft of your vehicle, this amount will be provided to you by your insurance company. That is why to maximise your benefits from your insurance policy, you should look for insurance providers that offer an option to customize the IDV value.
3. 24X7 Assistance
Customer assistance is one of the vital points to look for when it comes to choosing an insurance provider. For instance, with companies like Digit insurance, you will be able to avail 24x7 customer assistance service, even on national holidays. This will allow you to settle grievances, if any, according to your convenience.
4. Network Garages
Network garages are a special chain of garages under your insurance company from where you can avail repairing and other services required due to accidental damage to your vehicle without paying any cash.
So before availing the services of an insurance provider, you must look for the number of network garages under it to broaden your scope of availing cashless facilities.
Nowadays, to keep the goodwill in the market, Digit is providing doorstep pick up and drop facilities. You can enjoy this benefit if you avail the services of any of the network garages listed under Digit Insurance.
5. Streamlined Claim Process
To make all the processes, Digit Insurance is providing a smartphone-enabled self-inspection process. This streamlines the process of raising claims to quite an extent and saves you from the hassle of getting your vehicle inspected by an agent from your insurance company while raising claims.
With these few factors in mind purchasing a car insurance policy can help you to avail the cover best suited to your requirements.
So, don’t wait any longer! Purchase your car insurance cover today!