Car insurance is an insurance plan that offers the needful financial cover to the vehicle against different forms of damages, theft, stolen and the third party liability as well. While having a valid car policy is must, one should be mindful before buying it.
Here are key factors to consider before buying a car insurance policy:
Different insurance products offer different coverage. Hence, one must carefully study the coverage before opting for a plan, according to Rakesh Goyal, director Probus Insurance, Insurtech Broking Company.
It is important to understand the car’s needs and probability of risks well in advance. This will help the customer in the process of finding the right premium amount.
“Also, comparing the quotes of various insurers online will help them in taking the right choice as per the needs and affordability,” explains Goyal.
Insured Declared Value (IDV)
The car’s current market value calculated by eliminating the depreciation amount is termed as Insured Declared Value (IDV). It is vital to consider this factor, as it is critical in deciding the compensation amount.
According to Goyal, there are certain additional insurance guidelines along with the general guidelines, which differ from state-to-state. This factor should be taken into consideration before one is opting for a car insurance policy.
No Claim Bonus (NCB)
No claim bonus (NCB) is availed at the time of renewal of the new policy and is a percentage that is offered for every claim-free year with certain limits.
This kind of bonus is applicable only for new cars; the used cars do not come with such benefits owing to the change in the ownership. One must consider this before buying a plan, as it may help in reducing the total renewed premium, according to Goyal.
Another important factor is to check the insurer’s market image from whom the customer s are planning to buy the insurance plan. This research will help customers in understanding the reliability of the company and acquaint them with the insurer’s claim settlement background.
Exclusions are specific factors/situations that are not covered under insurance plan. It is important to go through the policy documents well in advance before buying one, to avoid any unpleasant surprise during the claim process.
According to Goyal, some of the common exclusions are breakdowns, consequential loss, wear and tear, the loss incurred while driving under the influence of alcohol, etc.
According to Ankit Agarwal, managing director at Alankit Ltd, customers should also look for add-on coverages which can protect car owner against any financial loss.
“In case of any miss happening or any unforeseen event, additional benefits such as zero dep coverage, consumables, engine protection, key and tyre protection, and RTI (return to invoice) can be considered,” he added.
Claim Settlement Ratio (CSR)
Customers should also check the company’s record and claim settlement ratio. CSR is defined as the percentage of insurance claims settled by an insurer compared to the total number of claims received.
“An insurance company with a bad claims ratio is not advisable when buying a vehicle insurance policy,” says Naval Goel, chief exceutive officer and founder of PolicyX.
The aim of buying a car insurance policy is to protect customers from any financial emergency in case of any damage/loss of vehicle.
“Most online companies provide cashless services only if the vehicle was repaired in a network garage. Therefore, look for insurers with maximum network garages present in their list,” suggests Goel.