Checklist To Consider Before Buying A Car Insurance Policy In India

By Alok Kumar
January 4, 2017
Car Insurance Buying Tips

To buy a new car, you need to do research on models, prices and other features. You liked the price tag of the car and took the test drive to check whether it’s comfortable for driving. With much excitement, you decide to buy it. But there is one more price tag you should consider. That is your car insurance or auto insurance. Your car insurance is very similar to the medical insurance you purchase for yourself and your family. Just like your medical insurance provides medical benefits in case of an accident or other medical emergencies, similarly, your car insurance policy protects you from any financial loss due to any damage done to your car, or in the case of theft of the vehicle. Auto insurance also covers damage caused to a third party or property. It is mandatory in India; everyone with a car (or a two-wheeler) must get an auto insurance policy through a car insurance company.

Factors that Decide Your Car Insurance Premium

Car insurance companies take the following factors into account while deciding the insurance premium.

  • Insured Declared Value (IDV): IDV decides the coverage amount of the vehicle. The coverage is decided on the basis of the value of the car, after taking into account the depreciation.
  • Age of the Driver: The older the driver of the vehicle, the lower the car insurance premium charged. This is because of a belief that as people get older, they drive more carefully.
  • Occupation of the Driver: Car owners belonging to certain respectable professions such as medical doctors, lawyers, bank managers, defense personnel and chartered accountants are offered a discount on the premium.
  • Claim History: Car owners will be given a discount for not making any claims on the insurance policy in the previous years. The claim bonus can be as high as 10% to 50%. On the other hand, car owners who make a number of claims on their vehicle face the prospect of paying much higher insurance premiums.

Car Insurance Purchase

Key Factors to Consider Before Purchasing Your Auto Insurance

Before going to buy an insurance policy, it is very important for you to understand the insurance claim process clearly. In general, the true colors of an insurance company will come out when it is the time for them to pay for your claim. Hence, it is very important for you to check their policy terms online. The main benefit of having an insurance policy lies in the coverage offered to the customer. Considering the above-mentioned factors, you can clearly understand the coverage you may get from the policy you’ve opted for. The premium which you will get will be determined by the IDV of your car. The value of the IDV is directly proportional to the cost of your premium plan. So in case, your vehicle has a low IDV then you will pay a lower premium amount for your policy.

The following are the five commandments to consider before purchasing an insurance policy:

  1. Insurance coverage plan: This is the most important commandment you should look for in your insurance provider policy. Some companies offer other added services, including towing services and depreciation coverage in their policy. Therefore, it is very essential for you to thoroughly read your policy documents before going to purchase a plan.

  2. Price: While looking for a car insurance policy, you should consider comparing the cost to the feature ratio of the policy. Don’t be trapped by looking only at the whole cost of your insurance plan. You should compare different policies online and make a list of things you want in your insurance plan.

  3. Customer service reviews: Before buying an insurance plan, read customer service reviews online and opt for a good insurance company. Make sure that the insurance service provider has a good reputation with its customers and good service feedback at the time of claim settlement.

  4. Performance reviews of insurance companies: It is very important for you to check the insurance company’s claim settlement ratio which is determined by the total number of settled customers out of the total number of claims made by customers. Also, you should identify their claim settlement time frame.

  5. Riders or add-on services provided: Some companies also provide add-on services to their customers, with which your insurance plan cost can get a little bit higher, but in the end it is worth purchasing.

    These add-ons may include:

    • Engine protection – In case your engine gets damaged then you may go for this add-on. For details, you have to talk to your insurance provider.
    • Zero depreciation coverage – This add-on covers full reimbursement of damaged car parts in an accident. However, you should read the terms and condition carefully as it may vary from company to company.
    • Roadside assistance coverage – This covers an array of mechanic to basic services such as refueling, towing, replacement of tires, etc.
      Now that you are fully familiar with the “do’s” of purchasing an insurance policy, you are safe to choose the best insurance provider.

Car Insurance Policy

Final Thoughts on Getting New Car Insurance

Generally, when you buy a new car, the insurance is arranged by the showroom itself. But you don’t have to purchase the insurance quote from the showroom.

You can always check insurance quotes online and get the insurance directly from the insurer. This is a great way to save on the premium costs and get comprehensive coverage for the lowest possible expense.

If you are buying a second-hand car or a pre-owned car, the car insurance provider will send someone to inspect the vehicle before deciding on the premium to be paid.

It is very important that you should not make any false declarations when applying for car insurance online. Any wrong information provided by the car owner can cause the policy to be immediately terminated.