Having car insurance is a boon
To begin with, having third-party car insurance is mandatory by law. So not only is it important to purchase insurance, but it is equally important to keep it active through timely renewal.
With both the number of vehicles on the road and accidents having increased, it is essential to have car insurance. Car insurance safeguards you against financial losses due to accidents, natural/man-made disasters, theft, and other unforeseen situations.
The challenge, however, is to find a balance between wide coverage and an affordable premium. So, read on to know all the information about car insurance you need to make a wise choice while buying the right coverage for your vehicle.
Let us look at some of the key points that you must keep in mind while buying a car insurance policy:
1. Coverages that you can choose from
You can choose from – third-party car insurance (mandatory by law) and comprehensive car insurance. A third-party insurance plan comes with basic coverage benefits that cover you against any third-party liability in case of accidental damage.
The other type of plan is a comprehensive car insurance plan. This is a combination of an own damage plan that covers your car and third-party liability that covers any damages caused by your car to a third party. Additionally, comprehensive car insurance offers a host of add-on covers that you can choose to enhance your coverage. It is up to you to choose which one is suitable for you and your car.
2. Set the right Insured Declared Value (IDV)
IDV calculator is a term that you will hear very frequently when it comes to car insurance. Short for Insured Declared Value, it is the maximum amount that the insurer will pay in case of irreparable damages or theft of your car. It is important to note here that the IDV is not the resale value of your vehicle but more like a reference point for its current value. Also, keep in mind that you can only select the IDV range when you buy a comprehensive policy.
How IDV works: In case your car gets stolen or meets with a major accident where it is damaged beyond repair, the car is then deemed as a ‘total loss’. This is where IDV comes into the picture. Your insurance company will then compensate you with the approximate IDV amount that you had set while purchasing the car insurance policy. Thus, it is very important to set the right IDV of your vehicle.
IDV is also directly proportionate to the coverage you get and the premium you will pay. So, the higher the IDV, the higher will be your coverage and premium.
3. Deductibles and how deductibles work
A deductible, as the name suggests, is the amount that is paid by the policyholder at the time of claim settlement. Hence, ‘deducted’ from the claim amount that the insurer will pay. There are two types of deductibles in car insurance – compulsory and voluntary. For compulsory deductibles – it is mandatory that you pay a certain amount that is pre-decided in the policy. In voluntary deductibles, you have the option to choose the amount you wish to pay at the time of claim.
4. Buy useful riders/add-ons only
The option for add-on cover comes when you are buying a comprehensive car insurance policy. You can select from a wide range of add-ons like No Claim Bonus (NCB) Cover, zero depreciation, Return to Invoice cover, engine protection, roadside assistance cover, etc. Note that each add-on is to be purchased separately. Add-ons enhance your coverage, but they also add up to the cost of your policy. Hence, it is important that you choose add-ons that are in line with your usage and needs.
5. Timely renewal to retain your NCB
While purchasing a car insurance policy is important, it is equally important to keep it active through timely renewal. In case your policy lapses, you will not have coverage against any expenses arising out of accidents or damage. Not only that, you may lose out on the accumulated No Claim Bonus (NCB) if you fail to renew the policy before the expiry due date.
No Claim Bonus (NCB) is the reward one gets for every claim-free year. It is usually a discount on your premium during renewal. Since this discount percentage can be as high as 50% for five consecutive claim-free years, you need to renew the policy in time to retain it. Not renewing in time will lead to loss of the NCB benefit and you could also end up paying a higher premium amount while renewing.
Now that you know about some of the most important elements pertaining to car insurance, make an informed decision when you make a purchase. To keep it simple, you can buy your policy from the Bajaj Finance Insurance Mall, where you get the option to compare policies and buy car insurance plans offered by leading insurance companies. View product features, compare prices, and enjoy a fully digital, zero-paperwork buying experience at Bajaj Finance Insurance Mall.
Disclaimer : *T&C Apply. Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Limited, ICICI Lombard General Insurance Company Limited, HDFC ERGO General Insurance Company Limited, Tata AIG General Insurance Company Limited, Niva Bupa Health Insurance Company Limited , Aditya Birla Health Insurance Company Limited, Manipal Cigna Health Insurance Company Limited and Care Health Insurance Company Limited under the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer’s website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. URN No. BFL/Advt./23-24/203
Disclaimer: This article is a paid publication and does not have journalistic/editorial involvement of Hindustan Times. Hindustan Times does not endorse/subscribe to the content(s) of the article/advertisement and/or view(s) expressed herein. Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the view(s), opinion(s), announcement(s), declaration(s), affirmation(s) etc., stated/featured in the same. This information does not constitute a financial advice.
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Updated: 01 Dec 2023, 06:14 PM IST
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.