Buying Car Insurance - What all to watch out for!

In India, having car insurance is mandatory for driving the vehicle on the road. Many owners opt for insurance to avoid legal implications without giving proper thought to it. When it comes to buying car insurance or renewing the old one, low premium costing insurance is the first choice for many of us.

That results in covering all the legal aspects of the motor vehicle insurance laws but, yields no benefit in case of any mishap. Insurance experts always suggest doing proper research and considering your risk factors, before opting for any car or vehicle insurance.

There are several factors to consider, while determining which policy to buy, including premium to be paid, service offered, deductibles, and add-ons. Let’s dive deep and look into various important aspects of a car insurance plan.

There are two broad categories of vehicle insurance - third-party car insurance and comprehensive car insurance.

Third-Party Car Insurance

It is the basic car insurance policy that provides no benefit to the insurance holder, in case of an accident. A third-party car insurance policy, as the name suggests, covers mishap to others in scenarios where the insurance holder meets with an accident. Since the insurance covers only the third-party, the premium is relatively low.

In the case of car insurance, the policy buyer is the first-party, insurance issuer firm is the second-party and the one who met with the accident with the policyholder as the third-party.

The third-party liability coverage is of two types:

1. Bodily injury liability: It covers the injuries that occurred to the third-party. The coverage includes the cost of the medical bill, monetary loss, and pain and suffering that was caused due to the accident.

2. Property damage liability: It covers the expenses for the repairing of the property that is damaged during the mishap. It includes the amount paid by the first-party to replace landscaping and other structure at the venue of the accident.

Legal Significance of Third-Party Insurance:

As per the Indian Motor Vehicle Insurance Act, any vehicle owner, before going behind the wheel, must have minimal coverage for bodily injury and property damage.

How can you Claim the Third-Party Insurance?

As soon as the mishap occurs, you should first inform the policy insurer about the incident, by calling on their customer care number. The firm will then arrange to tow the vehicle to its network of garages.

Generally, insurance companies will requisition the following documents at the time of filing claim:

1. A claim form duly signed by the insured.

2. Driving license copy.

3. Police FIR copy.

4. RC copy of the vehicle.

5. Company stamp (in case of company registered, the vehicle’s original documents).

6. Copy of policy document.

Comprehensive Car Insurance

It provides comprehensive coverage to both the parties, i.e., the other party involved and the policyholder, in case of an accident. As the policy provides a greater level of protection, therefore, they cost more.

Premium and Insured Value (IV):

The sum that the vehicle owner needs to pay to buy or renew an insurance policy is called a premium.

Insurance advisors always suggest opting for a policy that covers the risk profile of the buyer while being affordable at the same time. For example, if you drive your vehicles for long hours, you should include wear and tear claims. Or, if you drive in cities only, you should avoid roadside assistance as you will find a service garage every few kilometers.

The insured value or insured declared value (IDV) is the amount that the policy owner will be paid while making an insurance claim. In general, if the premium of your insurance coverage is low, the insured value will also be low.

Add-On Features:

With several online players coming into the car insurance market, a vehicle owner gets a lot of options to choose from.

Some of those features include:

1. Roadside Assistance: This feature allows you to avail of emergency assistance services if your vehicle breakdowns, meets an accident, has a flat tyre, etc., in any remote location. Some insurance providers also assist in case of key theft or loss.

2. Engine Protect: Since the engine of the vehicle is one of the most pivotal parts of it, the policy covers the damage that occurred to your engine from an accident.

3. Zero Depreciation: With every passing year, the valuation of your vehicle is reduced because of the wear and tear of the parts. Under Zero Depreciation, all such deductions are eliminated, and complete coverage is provided.

4. Co-Passenger: It is obvious that now and then you will be traveling with someone like your family or friends. This add-on would protect your co-passengers as well if, they got injured in an accident while being in the vehicle.

5. Garage Cash: With this add-on, you will be given a daily allowance for the number of days your car is kept in the garage for repairs.

6. Consumable Items: Under this add-on policy, the expenses on items like nuts, bolts, screws, etc., are covered in case of accidental damage.

Deductions:

Whenever you make a claim for insurance in case of any mishap, most of the amount is paid by the insurance provider. Still, you will have to bear some of the expenses.

Deductions mean the non-coverage amount or the amount that you have to pay. The lower the deductions, the less amount you have to pay in case of any mishap. However, deductions are inversely proportional to the premium amount, i.e., higher the deductions lower is the premium.

No Claim Bonus (NCB):

Insurance providers provide some discounts in the premium amount in the case of non-filing of claims in a year’s duration. This discount is known as No Claim Bonus or NCB. Insurance advisors always suggest opting for insurance policies that offer NCB, before opting for any coverage.

Conclusion:

To sum up it all, it is necessary to understand various nooks and corners of car insurance before making any call, as there is no one-stop solution for every problem.