Looking to buy the best car insurance policy? A well-researched decision to choose a car insurance policy can benefit the policy holder in many ways, say experts. While owning an active car insurance policy is a must for driving a vehicle in the country, insurers today provide many added benefits to choose from. For example, when it comes to buying a new car insurance policy or renewing an existing one, many individuals make a hurried decision. Result: they end up buying a car insurance policy that serves the legal aspects as stipulated by the motor vehicle insurance laws but fails to provide reasonable benefits to him/her. That is why insurance experts emphasise on the importance of due diligence before taking a call on a motor insurance policy. Besides, choice of insurer can also determine a policy experience in terms of factors such as premium, service, deductibles and add-ons.
Here’s a lowdown on some of the most important aspects one must consider while choosing an insurance plan:
There are a few basic features that one should look for in a car insurance policy. These include characteristics such as type of insurance, premium, insured value and riders.
Car insurance policies can be broadly categorized into two types:
1) Basic/ Third party car insurance policy
2) Comprehensive car Insurance policy
For example, a basic car insurance policy such as a third party insurance may not provide any benefit at all to the policy holder should the need for a claim arise. A third party car insurance policy only covers damages to others in case the policy holder meets with a car accident.
On the other hand, a car insurance policy may not only provide cover to the victim in case of an accident, but also provide cover for the owner of the vehicle. Such policies, known as comprehensive policies, provide more protection – to the policy holder as well as others involved in the accident – and therefore cost more.
Car or motor insurance policies can also be distinguished on the basis of features such as liability coverage, collision coverage, medical payment coverage and personal injury coverage.
2. Premium vs insured value (IV):
Insured value, also known as insured declared value (IDV), is the amount that the subscriber has to pay to purchase or renew an insurance policy. Insurance experts advise on choosing a car insurance policy that is both suitable as per one’s needs and yet affordable. Making a hurried decision based on what the insurer is offering, without assessing your own needs should be avoided, they say.
IDV or insured value is the total sum that the insurer is liable to pay in case of eligible claims. For example, a car insurance policy may offer low premium but, at the same time, a low insured value. You should do a firm assessment of your car insurance needs – consider various riders and types of covers included in the policy – along with the premium payable and the insured value to find the best fit, before buying a policy, say experts.
3. Add-on features:
Many insurers today provide special facilities. Breakdown assistance is one of them, wherein the insurance policy also provides a helpline and roadside assistance. Some insurers also offer assistance in case of loss of car key. For an individual open to spending more than minimum on a motor insurance policy, making a list of desired features before zeroing down on an insurer is advisable, say experts.
Other features may include personal accident cover, for the family of the policy holder in the event of disability or death, natural calamity cover, in case of damage caused by select, defined natural calamities such as storm, and zero depreciation cover. Car insurance policies generally take into account the depreciation of the worth of the vehicle as it gets older. This translates into adjustment in the value of the vehicle periodically. Opting for a zero depreciation cover assures the entire claim amount without taking into account the depreciation sum.
This is the portion of damages payable by the car insurance policy holder. A higher deductible means the insurer will pay the remainder amount of damages in case of an accident. A higher deductible also leads to a lower premium.
5. No Claim Bonus (NCB)
No Claim Bonus is the benefit that a car insurance policy holder gets, generally in the form of discount in the annual premium payable, for not filing any claims during a year. Before buying a car insurance policy, one must learn about the NCB in order to be able to make the best decision should the need for a claim arise in a year. For example, a damage that would cost less than the no claim bonus can be paid by the insurance policy holder out of his or her own pocket, therefore making most of this feature. Being aware of the No Claim Bonus promised by the insurer in an active car insurance policy helps the policy holder to make the best judgement on whether to file a claim, say experts.
Many insurers today provide car insurance policies through online as well as offline modes. Meanwhile, before buying or renewing a car insurance policy online, one must understand all these aspects and compare them with his or her own requirements to take a call, say experts.
IFFCO Tokio is a general insurance company that provides a range of products such as motor insurance and travel insurance.