• Tips For An Informed Car Insurance Purchase

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    Car insurance is an agreement between the insurer and the policyholder where the insurer promises to financially protect the policyholder against liabilities that may arise as a result of mishap, in exchange for a fixed premium. As per the Motor Vehicles Act in India, it is mandatory to insure your vehicle with at least a third-party liability cover. Car insurance cover can be comprehensive or third-party liability, based on the coverage you opt for. A comprehensive car insurance plan covers liabilities towards own damage and third-party that you incur at the time of mishap. A third-party liability insurance plan covers liabilities towards third-party that you incur at the time of mishap.

    Here are five tips to ensure you get the best out of your car insurance policy:

    • Understand various types of car insurance policies

    Car insurance available in India are basically of two kinds:

    • Third-party car insurance - This insurance plan offers limited coverage by covering third-party liabilities alone.
    • Comprehensive car insurance policy - This insurance plan offers extensive coverage by covering third-party liabilities and own damage liabilities.
    • Identify all the factors affecting car insurance premium

    Before you avail a car insurance policy, you have to understand the car insurance policy that you are availing. Even though every insurance policy seems to be similar, the clauses present in each of the policy will vary. It is also vital that you know the factors based on which your insurance premium is determined.

    The factors that determine the car insurance premium is evaluated based on the risks involved such as:

    • Risks related to the car - Factors such as make and model of the car, vehicle’s engine capacity, etc. determine the car insurance premium The vehicle’s IDV and age also determine the car insurance premium.
    • Place where the vehicle was registered - Geographical location also determines your car insurance premium. In places where the standard of living is higher such as metropolitan cities, the car insurance premium will be higher. This is because the risk of an accident, vandalism or anything else happening in such a place is higher than other places.
    • The car owner’s driving history - Insurers offer discount on insurance premium based on the driver’s driving history. A driver with a good driving record will have a lower car insurance premium when compared to someone with a bad driving record.
    • The credit record of the car owner - Having a good credit score will motivate the insurers to give a discount on the car insurance premium.
    • Determine ways to minimise the cost of car insurance

    There are several ways you can reduce the cost of your car insurance, a few of them are mentioned below:

      • Voluntary deductible

    A voluntary deductible is part of the insured amount that you volunteer to pay at the time of claim settlement. If you opt for a higher voluntary deductible, you will get a discount on your insurance premium accordingly.

      • No-Claim Bonus (NCB)

    No Claim Bonus or NCB is a discount on car insurance offered by the insurer to the policyholder for every claim-free year. You can accumulate NCBs for a maximum of 5 years.

      • Install anti-theft devices

    Insurers offer you discount on the insurance premium if you have installed or are planning to install ARAI (Automotive Research Association of India) approved anti-theft devices such as car alarm, GPS tracker, locks, etc.

      • Become a member of AAI

    Becoming a member in any of the automobiles associations in India will fetch you discount on your car insurance premium.

    • Opt for add-on covers/riders

    Car insurance plans come with exclusions and inclusions. Now, if you want to include some of the set exclusions, you will have to avail the appropriate add-on covers. Some of the popular add-on covers available in the mart today are:

      • Zero depreciation cover - Also referred to as Nil Depreciation or Bumper to Bumper Cover, this insurance does not consider the depreciation of car parts. In a normal comprehensive car insurance policy without this add-on, the insurance provider reimburses only the value of car parts after depreciation. This add-on provides you the benefit of availing the claim amount without considering depreciation.
      • Return-to-invoice cover - This cover is most useful for expensive cars or new cars. In case your car gets stolen, as per the set norms under the cover, you are eligible to receive a full compensation of the amount as mentioned in the original purchase invoice of your vehicle.
      • NCB protect cover - No Claim Bonus protect is a rider that when added to your base policy will protect all your accumulated bonuses regardless of whether you make a claim or not.
      • Engine protect cover -

    Engine protect cover is a rider that protects the vehicle's engine. Under this cover, the insurer will be liable to pay for the repair of the vehicle engine that has undergone damages as a result of the mishap.

    • Ensure your car has been evaluated appropriately

    Your vehicle's IDV (Insured declared value) determines your insured amount. The insurer based on the vehicle's IDV calculates the amount to be insured under your policy. Always provide the declare the correct IDV of your vehicle in order to get the insured amount you deserve. Sometimes, people declare a lower IDV in order to pay a lower insurance premium. This causes them financial stress at the time of a mishap when covering liabilities. Declaring a higher IDV than the original value will result in problem for the policyholder at the time of mishap, when the claim request will be denied by the insurer on the grounds of providing incorrect information.

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