20 Things to Consider When Buying Car Insurance in India

Buying Comprehensive Insurance in India is a wise decision. It not only ensures that you follow the law but also results in financial cushioning concerning expenses incurred towards car repairs. Buying car insurance has evolved over the years and has become customer-friendly. You can insure a car under 180 seconds via the insurer’s website or their app. However, you must keep certain things in mind while insuring your car. This article is all about these points. Read ahead to know 20 things to consider when buying a car policy in India.

Things to Consider While Buying Car Insurance:

Wondering what to look for when buying/renewing car insurance? Here’s a detailed list of twenty points to assist you in your decision-making process.

1) Understand Requirements

It is okay if you are not an expert when it comes to risk assessment. However, you can still gauge basic risks, right? For example, you should reflect upon questions like is your locality flood-prone, have there been instances of car theft lately in the neighbourhood, and is your regular travel route accident-free? Switch on your introspection mode for a few minutes and you will get an idea as to how to proceed with buying a proper car insurance cover.

2) Consider the Brand

Even if you are not that brand conscious, you must have given some thought about the car’s brand while purchasing the four-wheeler. Similarly, spend some time thinking about the insurer’s brand as well. If you like what the brand promises, shake hands (virtually!), and embark on a new partnership by insuring your car with the company.

3) Range of the Cover

You can either buy insurance just to tick the mandatory insurance box or buy it with the intent to save money in case of mishaps and meet legal requirements. The second option is better in most cases. When you buy a wide-ranging cover in the form of a Comprehensive Plan, you not only adhere to the law but also ensure insurance coverage for the inclusions mentioned in the policy. Plus, add-ons can help to further expand the coverage.

4) Add-on Covers

You should be practical while buying add-on covers. They can be understood as small covers that can be tagged along with a Comprehensive Plan. Each add-on has its own price, which can differ from one insurer to another. Thus, do not go on a shopping spree when it comes to add-ons. Select only those that are important to you. Otherwise, your insurance bill might give you a shock.

5) Know the Basic Plan

The mandatory part of a car insurance policy is known as the Third-party Car Insurance Cover. As per this cover, the insurer will help you out if your car injures/damages third-party person/property.

6) Policy Terminology

Modern-day insurers are dedicated towards simplifying insurance. Thanks to responsive websites, friendly apps, and helpful executives, policy seekers and policyholders are less intimidated when it comes to buying or renewing car insurance online. However, you must try to read the fine print by going through it before buying a policy or raising a claim. After all, insurance is a contract and the terms of a contract are always important.

7) Cashless Facility

In insurance, the word ‘cashless’ means you do not have to pay money upfront when it comes to settling claims. For example, consider the repair bill for your damaged car that came to INR 10,000. The insurer, after calculating everything, offers a settlement of INR 8,000. Here, the insurer will pay INR 8000 to the garage while you will have to pay the balance INR 2000. The insurer can make the payment directly to the garage because they have a tie-up and the garage is known to enable Cashless Claim Settlement. Thus, an insurer with a wide network of garages can offer the cashless facility efficiently.

8) IDV and Premium Relation

The IDV of a vehicle or the Insured Declared Value of a vehicle is roughly like the car’s current value in the market. For example, if the car was purchased a year ago for INR 7 lakhs, its IDV after two years would be 5 lakhs because of natural wear and tear. It’s not the resale value. Digital insurers allow you to select the to-be insured car’s IDV from a given range. If you choose a lower IDV, you have to pay a comparatively lower premium to insure the car as compared to paying more premium to insure a car with a higher IDV. This relation can be understood as: more the value of an asset, higher the premium payable to insure it.

9) Comparing Quotes Online

The golden rule of online shopping is to compare car insurance before buying. The same applies while insuring your car online as well. However, you need to make sure that you are comparing right. This means you have to ensure that you are comparing policies that offer the same or similar coverage. If you want to check out premium rates across three insurers, ensure that you do so keeping the cover as a constant. For example, finalise the coverage as a Comprehensive Plan + Zero Depreciation Cover Add-on, and then compare. Also, consider the insurer’s online reviews and overall service quotient.

10) Voluntary Deductibles

If you tell the insurance company that you are willing to share the risk of insuring the vehicle, the insurer might consider reducing the premium. This is exactly what the Voluntary Deductible does. You volunteer to pay a certain percentage/amount of the claim and in return, the insurer reduces the premium as the insurer’s risk liability is also reduced.

11) Claim Settlement Ratio and Reviews

The Insurance Regulatory and Development Authority of India periodically publishes the Claim Settlement Ratio of insurance companies on its website. This is the ratio of the number of claims raised and the number of claims settled. It can be a good guideline to gauge the insurer’s ability to settle claims. However, it should not be the sole guideline as the number of settled claims can be impacted by fraudulent claims and lack of documentation. Online reviews, testimonials, and peer feedback about the brand must also be taken into consideration.

12) Anti-theft Devices

Anti-theft devices such as alarms, locks, trackers, etc. add a layer of protection on the car and can be helpful on two fronts. One, to reduce the chances of car theft. Two, to reduce the insurance premium. Installing an anti-theft device reduces the theft risk and therefore results in a reduction of the insurance premium. But be sure to install an anti-theft device that is certified by the Automotive Research Association of India (ARAI).

13) Dealer-offered Insurance

Most car dealers have a tie-up with an insurance company. Make sure to have a word with your car dealer about the extent of coverage offered by the policy. If you want, ask for changes. You can also opt to insure your car with another insurer and not go with the option provided by the car dealer.

14) Portability of Policy

People usually associate the term ‘portability’ with mobile network providers. In that context, portability means seamlessly switching between network providers. The same concept is applicable when it comes to car insurance providers as well. You have the option to switch to a different insurer if you do not like the services or find a better plan. Thus, while buying the policy, remember that you are not making a lifelong commitment. You can part ways with the insurer easily while renewing the plan.

15) Discounts

Who doesn’t like discounts? Pay less, get more, superb! However, discounts do not apply to Third-party Plans. Discounts in the form of anti-theft, deductibles, offers, etc. are only available on Comprehensive Plan. This is because the rates for third-party policies are standardised. They are decided by the Insurance Regulatory and Development Authority of India. Whereas the premium for a Comprehensive Policy is decided by the company offering the plan.

16) Online Insurance

Even if you are an old-school person, buying insurance online is more beneficial. It scores over the traditional offline method when it comes to pricing, convenience, and services. Online insurance companies do not have as much infrastructure, physical office space, and number of employees as compared to traditional players. This reduces their operational cost to a great extent. That is one of the prominent reasons why they can offer policies at a lower rate without cutting down on the coverage.

17) Stress-free Claims

Low-priced policies are not enough. The insurer should also be known for stress-free claims. What is the point of buying a policy at an affordable rate but not being able to raise a claim in a timely manner due to a tedious claim process? Online insurers have an edge here as well. For example, ACKO offers superior claim services where your car is picked, repaired, and delivered home in three days (conditions apply).

18) Service Quotient

Overall, the services offered by the insurer must be customer-friendly. The brand must put the customer’s needs first in every aspect. Be it customer support while buying the plan, answering queries post-purchase, or ensuring transparent claim settlement, the insurer’s service quotient should be high. This is an intangible component and thus difficult to measure. However, you can gauge this by checking the brand’s social media profiles and speaking with peers.

19) Budgeting

If you are a generous spender, consider keeping a tight budget when it comes to car insurance expenses. A limited budget will help you to pick only essential add-ons rather than buying all kinds of coverages.

20) Modifications

If you have made modifications to your car then you must state them to your insurer. The insurer might want to inspect your car in this case. If the insurer is not informed about modifications prior to the claim application, the insurer might reject the claim if it is pertaining to the modified parts.

Why You Should Look Beyond Premium While Buying Car Insurance

India is a country where customers usually prefer value for money products. Although “low-cost” doesn’t necessarily always translate to “low-quality”. In the context of car insurance, it could mean losing out on crucial coverage. That is why, when selecting car insurance, it is important to carefully evaluate the benefit-cost ratio before buying a policy. To help you out, we share guidelines you can follow to choose a cost-effective car insurance policy.

What does premium refer to in car insurance?

In car insurance, premium refers to the fee that you pay your insurer, periodically, in exchange for protection against expenses arising from accidents to your insured car. The scope of the coverage offered by the car insurance depends upon the type of plan you choose.

Pitfalls of opting for low-priced car insurance policies

Buying the most inexpensive car insurance policy available might be tempting. But, below are some of the negative consequences of doing so.

1. Inadequate coverage

The basic Third-party Car Insurance Plan covers only third-party liabilities. So, in the event of an accident, the policy will only cover property damages or physical injury or death to the third party. The damages to your vehicle and yourself will have to be borne by you.

2. High deductibles

The higher deductibles you opt for, the lower your premium will be. But in the event of an accident, it can be extremely financially draining. Having high deductibles on a car insurance means that you will have to bear most of the costs for the damages to your vehicle. 

3. Poor after-sales support

Insurers offering low-priced car insurance may not have the best after-sales support. Also, their claim settlement ratio might not be up to the mark either. This can impact you greatly when trying to settle claims.

Key guidelines for choosing cost-effective car insurance

It is important to buy car insurance that offers adequate coverage and also fits your budget. Below are three guidelines that will help you shortlist the most cost-effective car insurance policy.

1. Don’t opt for only Third-party coverage

As discussed earlier, there are low-cost car insurance policies that offer coverage only for third-party liabilities. That means in the event of an accident, the insurer will only cover property damages or physical injury or death to the third party. Damages to your vehicle and yourself will have to be borne by you. 

That is why it is recommended to buy a Comprehensive Car Insurance Policy, which offers coverage for own damages, in addition to third-party liabilities. It also offers coverage for loss or damages due to theft, natural and man-made calamities, explosion or firebreak, etc. It may cost more, but it will definitely pay off in the event of an accident.

2. Compare insurance plans online

Buying your insurance online will allow you to compare the benefits offered by multiple plans. Some of the factors considered by insurers while determining insurance premium include the age, make and Insured Declared Value (IDV) of a vehicle. You can use this criteria to compare plans and choose the most cost-effective plan for your car. Also, ensure that the IDV of your car is set at its current market value.

3. Choose add-ons to extend coverage

Usually insurance providers offer attractive add-ons to compensate for exclusions in their regular car insurance policy. These add-ons will help extend coverage and you can choose relevant add-ons according to your needs. They come at affordable costs and will save you a huge financial burden in time of need. Some of the common add-ons for car insurance include Zero Depreciation Cover, Engine Protection Cover, Roadside Assistance Cover, etc.

Additional tips

Here are some additional cost-saving tips.

• If you can avoid raising claims, you can earn a No Claim Bonus (NCB) and avail a discount on the premium during policy renewal. The maximum discount you can avail is 50% of the total premium, after the completion of five consecutive claim-free years.

• Evaluate the cost-to-feature ratio of a plan before making a purchase. This will give you a better estimate of the value for money the policy offers.

• Opt for ACKO’ car insurance, as it is more cost-effective than the offline alternative. This is because there are no middlemen involved and so, less operational costs. This enables ACKO to offer lower policy premiums.

• Make sure your insurer has a wide network of cashless garages. This will save you the hassle of paying for repairs upfront.

Bottom Line

Now that you are aware of things to consider when buying car insurance in India, make an informed decision and purchase a best-suited plan. Do not fall for mere gimmicks. Know the policy in and out. Call customer support if needed.

Frequently Asked Questions:

This concluding section is all about answering common queries. If you still have doubts after going through the following frequently asked questions and answers, feel free to call the insurer’s customer support team. But do not blindly buy if you have concerns. Buy once your concerns are taken care of.

Is it possible to buy a Third-party Plan online or do insurers only offer Comprehensive Plans on their website because I see a lot of advertisements for that?

Digital car insurance companies usually offer both Third-party and Comprehensive Plans online.

Do I need to courier my identity-related documents to the digital insurer’s office for buying the policy online?

Digital insurance companies do not require physical documentation. Mostly, you are not required to upload documents as well. You can insure your car on www.acko.com with Zero paperwork in minutes.

Will online insurers want to inspect my new car before quoting the premium?

Car inspection is not required for new cars while purchasing the policy online. If you renew your policy before it expires, the insurer might not inspect it then as well. The inspection usually happens when several days have passed after the policy’s expiry and the policyholder applies for car insurance policy renewal.

Can I choose a different car insurance provider while renewing the plan?

Yes, a policy is applicable till it expires. You can switch to a different plan or choose a different insurer altogether while renewing the policy.

Do I have to mandatorily buy the insurance cover offered by the car dealer or do I have a say in terms of the policy coverage?

You have the option to change the policy’s coverage and choose the insurer as well. It is not mandatory to insure your car from the car dealer.

Do I need to approach the Regional Transport Office (RTO) to file a car insurance claim?

No, the RTO is not involved in the claim settlement process directly. You need to approach your insurance company to raise a claim and not the RTO.

Is there a difference between motor insurance, vehicle insurance, and auto insurance?

These three terms usually mean the same thing. They are used interchangeably. All three terms usually mean insurance for vehicles.

Can I buy only add-on covers?

No, add-on covers cannot be purchased as standalone policies. The add-ons can only be bought along with a Comprehensive Plan.

Is renewing car insurance 10-days before expiry allowed?

Yes, you can renew the car insurance policy 10 days prior to policy expiry. Make it a point to renew the policy before it expires to ensure continuous coverage.

Can I raise a claim via the insurer’s website or do I have to visit the office?

Most digital insurers offer the feature to raise a claim online and there is no need to visit an office. You can confirm the same with your insurer.

Is it bad to purchase low-cost car insurance?

Opting for the most inexpensive car insurance may not offer your vehicle adequate coverage. That is why it is important to compare policies online and evaluate their cost-to-feature ratio before making a purchase decision. So, instead of searching for low-cost plans, look for cost-effective ones. It will help you arrive at a reasonably priced plan that fits your budget and needs.

Should I purchase third-party or comprehensive insurance?

As per The Motor Vehicles Act of 1988, it is compulsory for all vehicle owners to possess third-party insurance. It is also usually the lowest-priced insurance offered by insurers. It covers only damages to a third party and doesn’t offer coverage for damages to you or your vehicle. This is why it is recommended to purchase a Comprehensive Insurance Policy. Such a policy offers coverage for own damage, as well as third-party liabilities. Also, you can extend its coverage by purchasing add-ons according to your requirements.

Do insurers offer discounts on their policies?

There are various discounts that insurance providers offer their customers. Some insurers offer their policy at a lower premium if the customers have pre-installed anti-theft devices. Also, discounts are offered based on the profession of customers. Additionally, insurers provide loyalty discounts to customers who have been with them for a certain number of years. You can check with your insurance provider if you are eligible for any of these discounts.

How do I compare insurance policies?

As discussed in the above article, insurers consider the age, make and Insured Declared Value (IDV) of your car to determine the premium payable. You can use this criteria to compare plans and choose the most cost-effective plan for your requirements. Also, there are neutral financial websites that allow you to compare the cost-to-benefit ratio of multiple car insurance policies. This way you can choose the most suitable plan for your car.

Is it essential to buy add-ons for my car insurance?

No, car insurance add-ons are optional. You can opt for add-ons if you have specific requirements that are not already covered in your basic plan. If you are satisfied with the coverage offered by your basic insurance policy, you don’t need to additionally purchase add-ons.

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