The concept of insurance in India has been seen as a complicated one over the years. People often tend to shy away from buying insurance without help from a third-party (like agents) or give up buying insurance altogether. However, buying car insurance is mandatory in India under the Motor Vehicles Act, 1988. One has to buy car insurance in order to get the car registered at the regional transport office. It is illegal to drive an unregistered car in India.
What is not common knowledge is that buying car insurance is very simple nowadays, thanks to the easy availability of information on the internet. Car insurance has been digitized i.e. many of the processes like buying, selling, and availing after-sales services related to car insurance can be done online.
To simplify car insurance even further, let’s take a look at the aspect of car insurance premium. In this article, we will discuss how your car type plays a role in deducing the final amount of the insurance premium you pay.
The Relation Between Car Type And Insurance Premium:
Understanding the relationship between car type and its insurance premium is quite simple. Remember it this way – higher the cost of your car, higher will be the insurance premium. You must be aware that four-wheeler can broadly be divided into 3 types.
- Sports Utility Vehicle (SUV)
Other types of car are crossovers between these 3 main categories. For example, a car will have features from two different categories like hatchback and SUV (Maruti Suzuki S-Cross).
A hatchback type of car costs less than Sedan and SUV. Thus, its ex-showroom price will be lower than the other two categories. This implies that its value is lesser. In turn, you will be paying less insurance premium for getting a hatchback insured.
Other factors affecting car insurance premium:
1. Type of car insurance:
Car insurance can be of two types. Third-party liability insurance or comprehensive insurance. Buying long term third party insurance for your new car is mandatory by law. However, a comprehensive insurance policy is more beneficial as it offers coverage against damages to your car as well.
Since a comprehensive policy offers more coverage it costs more than liability-only insurance cover and the premium will be higher.
IDV stands for Insured Declared Value of a car. It is nothing but the value of the car that the insurance company will pay in case of a major accident or theft. IDV can be set by the policyholder while buying car insurance. If you cannot decide the amount of IDV for your car, simply select a number approximately equal to its current market value.
Remember that setting a higher IDV will unnecessarily increase your car insurance premium and setting a lower amount will decrease your claim amount in case of theft or when your car is declared as damaged beyond repair.
NCB is the No Claim Bonus of a comprehensive car insurance policy. It begins upon the first renewal of a new car insurance policy if no claim were raised in the previous policy year. It is a discount that keeps on increasing and can reach up to 50% of the car insurance premium. However, when a claim is raised it drops down to zero. Thus, it is imperative to drive safely and follow all traffic rules while driving your insured vehicle.
One can buy the NCB protection add-on along with a comprehensive car insurance policy. It allows up to 2 claims in a policy period without resetting the NCB value.
4. Security devices:
Your car insurance company may allow you a discount for installing certain ARAI (Automotive Research Association of India) certified security devices. This discount is a way of showing gratitude for decreasing the chances of a theft claim and taking proactive efforts to protect your car.
Add-ons are nothing but additional coverages that may strengthen your car insurance policy. Buying suitable add-ons can prove to be highly beneficial for a policyholder. For example, buying a Zero Depreciation add-on with your new car insurance will help you get the maximum claim amount.
The Roadside Assistance add-on will provide the much-needed support in case you experience a car breakdown in the middle of the road. However remember to buy only those add-ons that are useful to your needs. Add-ons increase the cost of a car insurance policy.
Buying car insurance online:
As mentioned earlier, you can buy a car insurance policy all by yourself. Here, buying car insurance online will be helpful as you can easily find suitable policies and compare them using the internet.
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