A Guide to Choose Your Car Insurance Policy

Buying car insurance is not only a legal requirement but also a wise decision to keep your valuable asset safe and secure. It is not correct to just buy any policy with the lowest premium. The focus should be on buying the best auto insurance for your vehicle following a clearly thought-out plan based on practical facts. There are certain considerations to be kept in mind when you choose your car insurance policy or decide to buy an insurance policy for the car so that your hard-earned money and investment in the car, as well as the policy, don’t go waste.

Let’s share with you four pointers that will help you massively while you go to choose your car insurance policy to cover your car:

1. Selecting Insurance

There are two types of car insurance in India:

(i) Third Party Liability Insurance

This is a compulsory plan for all vehicle owners and it covers damage to property, accidental death, and injury to a third party to the contract. The first two parties are the insured and the insurance provider.

(ii) Comprehensive Plan

This is a plan that may be a bit expensive, but it covers damage to the own vehicle as well as the third party obligations. It also covers theft and damages caused by events like fire, earthquakes, cyclones, floods, etc.

2. Premium

This is what interests most people while buying auto insurance. This amount is calculated based on certain factors, which are described below:

(i) Based on Vehicle

Depending on the age, make, fuel type, etc. of the vehicle, the premium amount is established. Certain vehicles like SUVs or vehicles running on diesel compared to petrol command higher premiums than their counterparts. Also, at the time of renewal, the age of the vehicle and its depreciation plays an important role while calculating premiums. You have to get your car properly inspected so as to arrive at a figure that works to your advantage, providing adequate cover at the lowest possible premium.

(ii) Based on Location

the place where you live also affects the premium on your car insurance policy. For example, if you’re living in a part of the city where auto theft is rampant, then chances are that the premium will be higher. Also, locations like dense localities, places near highways, etc. attract higher premiums.

(iii)  Based on Claims History

If you have filed for claims in the previous year, there is a good possibility that when you go for renewal, the premium charged to you would be on the higher side. Unclaimed policies lead to no claim bonus the following year and this policy is followed by all insurance companies.

(iv) Based on Driver

A car that is driven by multiple people may attract a higher premium compared to a single-driver run car. The idea of car insurance is not only to make life easy for you but also to cover all possible risks for an insurance provider too.

3. Ways to Reduce Premium

There are some smart decisions that you can take to reduce the premium on your car insurance policy. If you decide to pay for some petty expenses out of your pocket and buy a car insurance policy only for major damages, you can reduce the premium amount substantially. Also, if you buy a car with in built enhanced security features, approved by the Automotive Research Association of India (ARAI), you stand to get discounts from your insurance provider. Of course, not filing claims consecutively for 3-4 years can lead to a no-claim bonus of as much as 40-50% in the fifth year.

4. Precautions

There are some common mistakes we commit while buying car insurance. First of all, reducing the value of the car while declaring in the form. This might help initially to reduce the premium, but in case of an accident, this proves real costly. Hence, always try to provide the right value of the car to gain maximum benefits at the time of an accident. Also, never forget to renew your policy on time. An insurance provider usually provides a grace period of a week from the date of expiry of the policy. Post that, you stand to lose discounts and other premium benefits on the new policy.

Car insurance in India is legally binding and rightly so. However, whom to buy it from and how, depends entirely on the buyer. Appreciate this freedom of choosing your car insurance and doing thorough research to buy the best policy for your car.