Car Insurance 101 – A Beginner’s Guide
Car insurance is the first step of responsibility after purchasing a car. Once you have chosen the car you want to purchase, ensure that you look into different aspects of purchasing a suitable car insurance policy.
Here is a beginner’s guide that will help you understand more and take this step confidently.
What is car insurance?
Car insurance is where the owner of the car and the insurance company sign a contract between them. This agreement enables the owner to protect against any kind of losses or damage to the car by agreeing to pay an insurance premium amount to the insurance company. In return, the insurance company agrees to pay the costs associated and covered under the particular policy and its terms.
Is car insurance necessary in India?
Yes. The Government of India has made it compulsory for every car owner to obtain car insurance in India.
According to The Motor Vehicle Act of 1998, getting a car insurance policy is mandatory before they can ply the road. Driving on roads without a car insurance policy in India is illegal.
In case of an accident without a valid car insurance policy, 2 types of cases will be filed against you. One will be the criminal case (for negligent driving). The second one will be to get the claim you would have to give compensation to the family of the deceased.
Two Types of Car Insurance Policies:
Third-party Car Insurance Policy: Third party Car insurance policy is a basic and mandatory car insurance policy in India. It covers financial losses that occur like bodily injuries, and losses caused to any third-party property/ vehicle by the insured car.
Comprehensive Car Insurance Policy: This type of car insurance policy provides a lot of coverage which includes car thefts, losses to a third party, damages to the vehicle due to accidents, personal injuries or death caused in an accident, damages to the car caused by fire, or due to any other natural damages.
How to choose the right car insurance in India?
- Know your requirement from the car insurance policy.
- Know your insurer and their credibility in the market.
- Know the key terms used in the insurance industry. For example Insured Declare Value, No Claim Bonus Compare the plans online to choose the most suitable option.
- Complete check of policies and terms & conditions to avoid any future tensions and shocks.
- Check the claim process for a better understanding.
- Ask about add-ons & including them in the policy if required.
- Know about the claim settlement ratio of the insurer.
- Purchase online for a hassle-free process.
- Easy renewal process available online.
Car insurance is designed to financially protect you if you’re involved in an accident or if your vehicle is damaged. Do not forget to consider the deductibles and premiums as well as driving experience and track records when choosing an insurer. Look at the key terms like the IDV value, No Claim Bonus, etc before diving into the purchase decision of an insurance policy. Make sure you evaluate your needs and then make the best suitable decision for your care.
To read more about the car insurance policy offered at Chola MS, click here.
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.