Choosing the best car insurance policy is a difficult task for an individual today. This is mainly due to an increase in several car insurance service providers and complicated policy features. One should consider several things before buying a car insurance policy. If you are planning to buy a 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 a 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 the market, two types of policies are available third-party and comprehensive.
(1) Third Party – Any injury/death of the third person or damage to third-party property on account of an accident caused by your vehicle is covered 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.
For instance, compulsory third-party or CTP insurance is required to register your vehicle as it covers your liability for injuries caused to others in a traffic accident. The primary purpose of CTP insurance is to provide financial coverage for the vehicle owner against liabilities arising from injuries caused to other people (but not to the insured person) in a traffic accident.
By covering the costs associated with injuries to others, CTP insurance protects the insured from significant out-of-pocket expenses that could arise if they were found liable for an accident. This can prevent financial hardship as a result of being sued for damages.
(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.
Comprehensive insurance covers vehicle repairs or replacement and other parties. It covers damage resulting from theft, fire, vandalism, natural disasters like floods or hail, and collisions with objects or animals.
Moreover, comprehensive insurance includes roadside assistance, coverage for personal belongings inside the vehicle, and rental car costs if your car is inoperable due to a covered incident. This level of coverage provides a broad safety net, allowing for greater peace of mind compared to more limited insurance policies. It’s particularly recommended for newer or higher-value vehicles, where potential repair or replacement costs could be significant.
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Premium
The second factor in choosing the right car insurance policy is a premium. You may find some of the car insurance policy at competitive rates. However, a lower premium does not mean that it is a 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 it for you, you should opt for the same. Your insurance premium is determined by multiple factors like the type of vehicle, model, capacity, age, fuel type, modification made, etc.
Customer Support & Convenience
Customer support and convenience are other factors you should consider before buying a car insurance policy. The company should be well established and must have a 24×7 customer support center to solve your query.
In addition to the above, the Insurance company should have a large garage network for the repairs. Online facility and claim logging by using a mobile app is a plus point.
Cashless claims
Cashless claims is a new offering by many insurance companies nowadays. You can avail cashless facility if your vehicle is repaired by the authorized garage of the insurer. It is preferable to take an 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 make any claim in the previous year you will be given a discount on the 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 that is good in settling a claim. Avoid purchasing policies with a bad claim settlement ratio. You can get information about the claim settlement ratio from the IRDA website. IRDA releases a report every year that contains details about the claim settlement ratio.
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Customer Review
You should also seek an opinion from your friends and relatives about customer services offered by an insurance company. Please also check the online review, which will help you to prove the credibility of the insurer.
Car Insurance Riders
In addition to the above, you should consider car insurance riders available with the insurer. Select a plan with the appropriate rider. The car insurance company generally provides the following riders.
- Engine Coverage Rider – The 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-passengers. This will cost you extra money so take this coverage if it is absolutely required.
- Zero Depreciation Cover – Zero Depreciation cover guarantees full claim settlement with zero deduction. Under a normal plan without this rider, your insurer may not cover the entire cost or damage to the vehicle as IDV is low.
- Ambulance & Medical Expense Rider – This rider covers the expense of Ambulance and Medical costs up to 10,000 Rs at the time of an accident.
- Rental Reimbursement – Under this rider you will be paid the rental amount until the time your vehicle gets repaired.
- Road Side Assistance – Some companies provide an additional benefit of roadside assistance and towing arrangements.
How to choose a car insurance policy?
Suppose you are confused and unable to decide how to choose the best car insurance policy. I have made a simple process chart that will help you to decide the best 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.
