How to Choose Car Insurance Policy – Key factors and Riders

car insurance

Choosing a best car insurance policy is a difficult task for an individual today. This is mainly due to increase in a number of car insurance service providers and complicated policy features. One should consider a number of things before buying car insurance policy. If you are planning to buy new car insurance policy or planning to switch over from your existing car insurance policy here is a complete guide explaining key factors, riders, and steps to follow before purchasing car insurance policy.

Key Factors to Look for Car Insurance

Type of Car Insurance

The first factor in buying any car insurance policy is policy type. In market two types of policies are available third party and comprehensive.

(1) Third Party – Any injury/death of third person or damage to third party property on account of any accident caused by your vehicle is cover under this plan. However, it does not cover any damage to your vehicle. It is mandatory to take third party insurance for every vehicle owner.

(2) Comprehensive – Comprehensive plan provides both coverages third party as well as your own vehicle. It is always advisable to buy a comprehensive insurance policy for your car.

Premium
The second factor in choosing right car insurance policy is a premium. You may find some of the car insurance policy at competitive rates. However, lower premium does not mean that it is better policy. You need to take a holistic view in terms of features and benefits before buying car insurance. If some extra benefits cost more money and it is really worth for you, you should opt for the same. Your insurance premium is determined by multiple factors like type of vehicle, model, capacity, age, fuel type, a modification made etc.

Customer Support & Convenience
Customer support and convenience is another factor you should consider before buying car insurance policy. The company should be well established and must have 24×7 customer support center to solve your query.
In addition to above Insurance company should have large garage network for the repairs. Online facility and claim logging by using a mobile app is a plus point.

Cash less claims
Cash less claims is a new offering by many insurance companies now a day. You can avail cash less facility if your vehicle is repaired by authorized garage of the insurer. It is preferable to take insurance policy where this type of facility is available.

No Claim Bonus
No claim bonus is another important factor you should look for while buying car insurance. No claim bonus facility will bring huge saving in your premium year on year. NCB (No claim bonus) means if you are not making any claim in the previous year you will be given a discount on premium next year. This discount keeps on increasing and may reach up to 50%. So, you must consider NCB as one of the critical factors before buying car insurance.

Claim Settlement
You should purchase a policy which is good in settling a claim. Avoid purchasing policy with bad claim settlement ratio. You can get information about claim settlement ratio from IRDA website. IRDA releases report every year which contains detail about claim settlement ratio.

Customer Review
You should also seek an opinion from your friends and relatives about customer services offered by an insurance company. Please also check online review, which will help you to prove the credibility of the insurer.

Car Insurance Riders
In addition to above, you should consider car insurance riders available with the insurer. Select a plan with the appropriate rider. Car insurance company generally provides following riders.

  • Engine Coverage Rider – Engine coverage rider provides coverage of engine repair in case of oil leakage or water slippage etc.
  • Personal Accident Cover – You can get additional personal accident cover up to 2 lacs under this rider. Some company also offers accident cover to co-passenger. This will cost you extra money so take this coverage if it is absolutely required.
  • Zero Depreciation Cover – Zero Depreciation cover guarantee full claim settlement with zero deduction. Under normal plan without this rider, your insurer may not cover entire cost or damage to the vehicle as IDV is low.
  • Ambulance & Medical Expense Rider – This rider covers the expense of Ambulance and Medical cost up to 10,000 Rs at the time of an accident.
  • Rental Reimbursement – Under this rider you will be paid rental amount until the time your vehicle gets repaired.
  • Road Side Assistance – Some companies provide an additional benefit of roadside assistance and towing arrangement.

How to choose car insurance policy?

If you are confused and unable to decide how to choose best car insurance policy. I have made a simple process chart that will help you to decide best car insurance policy.

car insurance policy

Remember to look beyond the premium and know exactly what you are paying for. Follow the steps above to ensure that your car insurance needs are met the way you want them to be.

Article by Raviraj

Hi, I am Raviraj. I am passionate about money matters and finance. I have 10 years of rich experience in the field of financial planning, Investments & Insurance. I have written 850+ article on this blog. If you like my efforts kindly subscribe to this blog and also let your friends know about this website by sharing.

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