Car insurance in India: all you need to know.
Do you need a car insurance?
Every day we hear news that some or the other car crashed in an accident or got stolen in a nearby locality. These incidents are increasingly becoming a norm and thus it is vital to get your car insured for fear of any untoward incident. Also owning a car is a dream for many and one of the prized possessions. For some having a Car is like having an extended family which they can rely upon for their transportation needs. Moreover, a Car Insurance is nowadays mandatory so it makes sense to cautiously choose a plan which will work best for your Car.
Why should you compare car insurances in India?
Car Insurance is a complex need and requires various criterions that define its success. In a country like India the competition is very fierce and hence it becomes important to carefully choose the insurance plan that suits you the most. The two most important reasons to get into a comparison are first that it will save you some money and secondly you can get a better coverage plan for your Car based on a whole host of options provided by a gamut of companies. Also comparing various insurance plans gives you a sense of how the current insurance market is and how you can optimally protect your vehicle.
How do car insurance companies calculate premiums?
The amount of premium that you need to pay for your car depends upon various factors. One of the preliminary factors here is the Make and Model of the Car. By Make we basically mean which Company is the manufacturer for example, Hyundai or Honda etc. By Model we essentially mean the model of the car namely in Hyundai i20, the i20 is the model. Many times the year of manufacturing is also taken into consideration as the model of a particular car.
What is IDV?
Insured Declared Value also referred to as IDV is the maximum amount assured by the insurer in the event that your car is stolen or there is total loss of your vehicle. It is the current market cost of the vehicle which is arrived at by subtracting the depreciation from the selling price listed by the manufacturer of the vehicle. Depreciation is calculated based on the age of your vehicle. The amount you pay as premium depends upon the IDV value. Thus, lesser the IDV value lesser shall be your premium and vice-versa. Having an IDV for your vehicle is important as it helps you to know the current market value of your car.
What is CC?
Comprehensive Coverage also referred to as CC in Car insurance is the most extensive coverage in a car insurance policy that covers various facets such as damage to the vehicle, theft to the vehicle, third party legality as well as personal accident cover. The scope of Comprehensive Coverage is very flexible and you can stretch it to cover various other attributes such as accessories cover, zero depreciation cover, engine protector, medical expenses etc. The Comprehensive Coverage proves to be full of respite to a customer because of its ample scope and ability to cover most daunting aspects in a Car insurance policy. It is also referred to as an end to end policy because of its extensive coverage. CC is also an important criterion for the calculation of your insurance policy premium.
City of registration
City of registration also plays an important role in the calculation of your insurance premium. If your vehicle is registered in an urban area then it will attract a higher premium as it witnesses a heavier density of traffic as compared to a suburban area which might not have a significant traffic density.
Does my city have an impact on the premium paid?
The city where you intend to get your vehicle registered does have an impact on the amount of premium that needs to be paid. This is based on a simple logic. The city which witnesses a higher density of traffic will be liable to a higher premium on your insured vehicle vis a vis a vehicle which is registered in a city with the lesser density of traffic. For instance, there could be a difference in the premium paid for a metropolitan city versus a smaller town, with the metropolitan city attracting a higher premium.
How to find the best car insurance online for your own situation?
To ascertain which car insurance is best suited to your budget and requirements, it is best to do a comprehensive research online to assess the various insurance policies provided by a host of competitive companies providing this service. One can also log on to a comparison site where one can easily compare the various policies provided by a respective service provider and can then deduce which policy is best suited to their need. A comparison site also works best because it enables the user to find all the information in one place.
What types of policies are available in India?
Third Party Car Insurance Policy
There are instances when a third party gets injured by your vehicle. In such case, if you have a third party Car Insurance Policy then it will prove to be very fruitful. This simply means that any legal liability that arises out of the injury or death of a third party where your Car is involved then that liability will be borne by the insurer. Having a third party Car Insurance in place will relieve the policy holder of any financial liability that arises out of an untoward incident that involves a third party. In the context of India, it is mandatory to have third party car insurance. The extent of the coverage for the third party would depend on the amount of premium that you are willing to pay for your Car Insurance.
Comprehensive Car Insurance Policy
A Comprehensive Car Insurance Policy is by far the most preferred form of Car insurance policy that is bought by most policy holders. The reason for this is simple. A Comprehensive Car Insurance policy provides optimal protection against any amount of liabilities whatsoever depending upon the amount of premium you can afford to pay. Its scope is extensive and it will guard you against damage to the vehicle, theft to the vehicle, third party legality as well as personal accident cover. In addition, you can also stretch your policy to cover for any accessory damage by opting for the accessory cover. Besides, it can also be used to cover zero depreciation cover, engine protector, medical expenses etc.
What is a No Claim bonus, and can it be transferred?
No Claim Bonus or NCB as it is generally referred to is the discount offered to a policy holder by the insurer if he does not claim any liability for his Car within the stipulated insurance period. The discount offered is on the premium for the next renewal cycle. The amount of NCB gets accumulated over the years and can be anywhere between 20-50% based on the number of years a policy holder has not asked for claims. The NCB is issued to the user and hence is transferable. This simply means that in the event that policy holder buys a new a vehicle he would still be eligible for the No Claim Bonus.
Why should you buy add-on car insurance covers?
The purpose of buying a Car Insurance is to ensure that you get maximum protection for your Car and are saved from the financial burden which arises out of an untoward incident. Thus it makes sense to choose an insurance plan wisely which lives up to your needs. An important aspect while buying your insurance policy are the add-on car insurance covers. These are essential as they broaden the scope of coverage and offer you respite from various other concerns including zero depreciation cover and personal accident covers amongst many others.
What types of add-on car insurance covers are available in India?
The various types of add-on insurance cover available in India are listed as under.
Zero depreciation cover as the name suggests is a cover in which there is no depreciation accorded to your vehicle. In other words the year on year depreciation accrued to your vehicle is virtually zero. This is the most appropriate cover that should be bought if your Car is new or relatively new. What it implies is that there would be no depreciation on your car parts and you will save a lot of money in case of accidents or any other damage to your vehicle.
Invoice cover also referred to as Return to Invoice (RTI) is a cover wherein you are entitled to reimburse up to the invoice value of your Car in case it gets fully damaged or is stolen. The only constraint to this cover is that it is usually applicable only until the first year of the purchase of your Car.
A No Claim Bonus or NCB as the name suggests is the discount provided by the insurer if a policy holder does not seek claims on his insured vehicle. Further, a NCB protect ensures that you enjoy the privileges of a No Claim Bonus even in spite of filing in a past claim.
An Engine protect cover helps to save you money in case your engine is affected especially in case of flooding. Since the engine is a core part of your vehicle which it runs on, so it makes a lot of sense to insure it by going in for an Engine protect cover. This might save you a lot of money when your engine demands heavy repair.
Roadside assistance is an emergency service provided by an insurer in case your Vehicle is stranded in a remote area where there is no presence of any service centers in the vicinity. Instances such as a flat tire, running out of fuel, battery related technical issues and a severe accident in a remote area are all covered under the scope of this cover.
Can I cancel my current car insurance anytime?
Most Car insurance providers give you the right to cancel your car insurance at any time that you deem fit as long as you give a proper notice. The unused premium will be refunded back to you at that instant in time. However, some companies do charge a fee if you decide to cancel your policy in the middle of the policy term.
3 tips to reduce your car insurance premium
1. Declare the right IDV
This is an important tip to consider while buying an insurance policy as it helps to maximize the reimbursement that you will get in case of any damage to your vehicle. Also, a right IDV would mean that you end up paying a lesser premium.
2. Don’t claim for small expenses
The lesser the claims the lesser will be your premium because the premium is calculated based on your past track record. It is best to avoid claiming for smaller expenses as that will help reduce your premium.
3. Pick and pay only for features you’d use
The coverage of insurance policies is very extensive so it makes sense to pay only for features that you intend to use. This approach will also help attract a lesser premium on your insured Car.