8 Mistakes to Avoid while Renewing Car Insurance Policy
If you happen to own a car, you must always ensure that it is covered by a car insurance. Not only is having at least a valid third-party insurance mandatory in India, but your insurance can also protect you and your car from a whole lot of potential losses and damages.
Imagine walking out in the rain and getting wet only because you refused to use an umbrella that your friend had just offered you! Well, having an insurance is like accepting that umbrella and choosing to stay safe and dry.
This is why it is essential that you try to avoid letting your car insurance policy expire – when you drive an uninsured vehicle not only will it get you in trouble with the law, but it also means that you won't be fully protected in the case of any unfortunate incident.
So now that you know why it is so important to renew your insurance, here are some common mistakes that you can easily avoid while renewing your car insurance:
1. Not renewing your policy on time
Sometimes, time is sensitive and that’s why, one of the very first things you need to remember to do while renewing your car insurance is to make sure to do it on time!
When you buy a car insurance policy, it will be valid for a set period of time (usually a year), and then you need to renew it to keep it going.
So, it is a little bit like getting Netflix, you buy its subscription and then keep renewing your subscription every month so that you can go on binge-watching your favorite shows!
Just like with Netflix, if you don’t renew your policy on time, it is considered expired and you will not be able to benefit from any of its covers.
If your insurance lapses, and you have a gap in your coverage, it can lead to traffic fines and penalties AND you can end up losing all your accumulated benefits. 🙁
While some insurers might offer you a little extra time to make payments and get back on your policy (this grace period is about 30 – 45 days), just remember that you still won’t be covered by your insurance during this time.
2. Not comparing policies
When you want to upgrade your phone, you probably spend hours and hours online researching the best brand and model that perfectly fits your needs and your budget. Why shouldn’t you do the same when it comes to your car insurance?
So, while it may be easy to just renew your existing policy, it might actually be worth it to find out what else is out there by comparing different policies and find the one that fits you best. You might even find an insurer offering better benefits, or more add-on covers.
The best time to do this is when your car insurance is up for renewal, as then you can decide whether or not you want to stay with the same insurance company.
3. Not opting for the right type of policy
Just like you need to pick the right phone for you, it is also very important that you choose the right kind of policy for you.
Generally, there are two primary types of car insurance. A third-party only policy will cover damages to a third-party person or their property, and having at least this minimum coverage is made mandatory by the Motor Vehicles Act in India.
Once you know exactly what different policies offer, you will be able to see which kind of policy is the best for you.
If you’re someone who doesn’t use their car a lot, or you’re sure that you are a super safe driver, then you might want to make do with a third party only policy that protects third-party people and property, but not your own car. It would give you the mandated legal cover and be less costly.
4. Not taking the chance to update or correct your information
If your insurance company doesn’t have the correct up-to-date information about you, they might not be able to give you the best protection.
For example, if you have recently moved to a new house, or you have got a new phone number, your insurer might have trouble getting in touch with you.
So, if you have changed any information or personal details since you bought (or last renewed) your insurance, remember to update these details in your policy.
Similarly, if you just noticed that your name was spelled wrong in your policy, or that it shows an incorrect date of birth, the time of renewal is when it is easiest to get such details corrected. Just remember that you might have to submit some documents to verify the newly updated info.
5. Not making the most of your NCB
If you’ve been a good driver who has not gotten involved in any accidents while you have been covered by your insurance, don’t you think you should be rewarded? Well, we think so too!
When you haven’t made any claims during the policy year, your insurer might offer you a No Claim Bonus, or NCB. This is a discount (between 15 to 50%) that you will get on your premium upon renewal, and the more claim-free years you have, the higher your discount will be!
So, when it’s time for you to renew your insurance, be sure to check if you are eligible for this NCB and to make sure that it is applied to your renewal premium.
6. Not choosing the right IDV
An Insured Declared Value, or IDV is the current value of your car. It is also the maximum amount which your insurance company will pay you in case your car is completely damaged or lost, and therefore it can affect your premium too.
Your car might be precious to you, but unfortunately, as it gets older, it’s value decreases. This is known as depreciation, and the rate of depreciation can reduce your car’s IDV over time.
Now, since a lot of insurance providers let you choose your IDV (usually you can change it from the current value of your car by plus or minus 15%), you need to be careful to select the right IDV.
Remember, the higher the IDV, the more your premium will be. But if it is too low, you might get a lower premium while not fully covering the value of your car.
7. Not considering your voluntary deductible
Once it’s time to renew your car insurance policy, you might be trying to look for ways to reduce your premium. After all, who doesn't like to save money? Well, one easy way you can do this is to opt for a voluntary deductible.
Deductibles are basically just an amount you need to pay out of your own pocket before your insurance company pays a claim or reimbursement. While there is a compulsory deductible, you can also choose to pay an extra amount as a Voluntarily Deductible.
Choosing a higher voluntary deductible can lower your premium, but remember that if you do end up making any claims, you’ll have to pay this amount out of pocket!
8. Not opting for the right add-ons
While these add-ons might come at a small extra cost to your premium, they also transform your insurance into something that is customized just for you.
If your insurance policy is up for renewal, it’s the perfect time to consider adding or removing any of these covers to your policy, as you can have as many or as few of them as you want. Since add-ons can increase your premium, it is important that you pick only those that are suited for you and your car.
Some good options are:
- No Claim Bonus Protection Cover - with this you can protect your NCB even if you do end up making a claim.
- Zero Depreciation Cover - if you have this cover, your insurance company will not consider the depreciation of your vehicle and its parts when making any claim for repair or reimbursement.
- Roadside Assistance Cover - it helps you out in situations where you might be stranded on the road, like if you face a breakdown or flat tires.
- Passenger Cover - this cover gives financial protection for anyone who is with you in the car in case you get into an accident.
Renewing your car insurance online is an extremely easy process these days. Just remember to renew your policy well before it expires so that you don’t have any gaps in your coverage, as this can lead to unfortunate consequences.
And as long as you avoid making these mistakes at the time of your car insurance renewal, you should be one on your way to driving your car stress-free.