Top Tips to Consider When Buying Car Insurance

Planning to buy a car insurance? Here’re the top tips that you must consider.

Dealing with road accidents can be stressful and financially devastating. Car insurance acts as a financial shield, protecting you from the burden of repair costs, injuries, and property damage. However, with several options available, choosing the right car insurance policy can be confusing. Here are some key considerations to guide you through the process. These can ensure you secure the coverage you need at a budget-friendly price.

Understanding Your Needs and Car Value

Before diving into quotes, take a moment to assess your driving habits and car’s value. A newer car might necessitate more comprehensive coverage compared to a reliable older vehicle. Additionally, consider your annual mileage and parking situation. These factors all influence your risk profile and ultimately, the cost of your insurance.

Types of Car Insurance

There are three primary types of car insurance, offering varying levels of protection:

• Third-party Liability: This is mandated by law in India and is the most basic form of car insurance. It covers damage you cause to others’ property and injuries in an accident. Imagine you accidentally hit another car at a red light. Here, this would take care of repairing their vehicle and any medical bills. However, it does not cover any damage to your own car.
• Comprehensive Coverage: This offers broader protection compared to TPL. It covers situations like theft, fire, and own damage resulting from collision or other perils. So, if you hit a pole while parking, another driver collides with you, or a tree damages your car, comprehensive insurance would help fix your vehicle.
• Standalone Own Damage Cover: This option provides coverage for damage to your own car in case of accidents, theft, fire, and other perils.

Choosing Your Coverage Wisely

Selecting the right car insurance boils down to your budget and car’s value.

• Third-Party Liability: Ideal for older cars with a lower market value. This is considering you’re comfortable assuming the financial risk of repairs to your own vehicle in case of an accident.
• Comprehensive Coverage: Perfect for newer cars or for ultimate peace of mind. It safeguards your car against various perils beyond just accidents.
• Standalone Own Damage (OD) Cover: A cost-effective way to protect your own car against liabilities in an accident. It is suitable if a comprehensive policy doesn’t fit your budget.

Coverage Levels

Within comprehensive coverage, you’ll encounter different coverage levels. These determine the amount the insurance company pays for repairs to your car. Higher coverage levels translate to lower deductibles but also higher premiums.

Let’s use an example. Imagine you have a coverage level with a ₹20,000 deductible. If your car suffers ₹50,000 in damages, you’d pay the first ₹20,000 and the insurance company would cover the remaining ₹30,000.

Compare Car Insurance Quotes

Online resources and mobile apps have made comparing car insurance quotes from many providers much easier. Don’t settle for the first quote you receive! Take some time to compare different options. This allows you to find the best combination of coverage and price that aligns with your specific needs and budget.

IDV: Get the Right Value For Your Car

The Insured Declared Value (IDV) is essentially the maximum sum the insurer will pay in case of your car’s total loss or theft. An accurate IDV reflects your car’s current market value. A higher IDV increases your premium but ensures you receive a fair payout if needed. Here’s a tip: Research online resources to get an idea of your car’s current market value before finalising the IDV.

No Claim Bonus

The No Claim Bonus (NCB) is a discount on your premium for every claim-free year. Maintaining a clean driving record can significantly reduce your insurance costs over time. So, buckle up, drive safely, and avoid filing unnecessary claims! Remember, a good driving record benefits everyone on the road.

Optional Add-on Covers

Many insurers offer add-on covers that provide additional benefits beyond your standard policy. These can include zero depreciation cover, engine protection cover, and roadside assistance.

Choose add-ons that enhance your existing coverage without exceeding your budget. Roadside assistance, for instance, can be a lifesaver in case of a flat tyre or a dead battery, especially if you frequently travel long distances.

Claim Settlement Ratio

The claim settlement ratio indicates the percentage of claims settled by an insurance company. Opting for a company with a high claim settlement ratio assures you they prioritise settling claims efficiently. Research online resources to compare claim settlement ratios of different insurers. A high claim settlement ratio means the firm is financially stable and generally settles claims promptly.

Read the Fine Print

Before finalising your policy, take time to read and understand the terms and conditions. Pay close attention to exclusions, limitations, and claim procedures. Knowing what’s covered and what’s not will avoid confusion later. For instance, some policies might exclude racing or driving under the influence.

Imagine you accidentally damage your car while participating in an unauthorised race. If your policy excludes racing, you might not receive any coverage for the repairs.

Policy Renewal

Car insurance typically renews annually. Don’t blindly accept the renewal quote. Insurance companies can adjust their rates based on various factors, and your own risk profile might have changed too. Perhaps you’ve moved to a new area with lower risk, or maybe you’ve added a safety feature to your car.

Re-evaluate Your Needs

Take some time to re-evaluate your needs before renewing your policy. Maybe you’ve driven fewer miles in the past year, or perhaps your car’s market value has decreased. Utilise this information to your advantage.

Explore and compare quotes from different providers. Loyalty does have its perks, but staying informed empowers you to make the right choice at renewal time. You might find a better deal elsewhere, or your current insurer might offer a discount to retain your business.

By following these tips, you can navigate the world of car insurance with confidence. Car insurance is an investment in your financial security. Take the time to understand your options, compare quotes, and choose a policy that provides the right coverage at a price you can afford.

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