Car insurance is often intimidating for new buyers. Considering the complex jargon used in describing insurance plans often can be an overwhelming experience. But as the Motor Vehicles Act makes it mandatory, all car buyers need to comply with this requirement. Understanding the basics of car insurance plans helps select a policy that checks all the right boxes. This article mentions various tricks that help in buying a car insurance plan, especially for first-time buyers.
- Selecting the right type of insurance plan
Car insurance plans are available in two types—third-party plans and comprehensive plans. Third-party plans, as the name suggests, cover legal liabilities that may arise due to an accident injuring a third person or causing property damage. In addition, such a third-party cover is the minimum required insurance coverage that a policyholder needs to have. Hence, all policyholders at the least must have one.
An alternative to third-party plans is comprehensive policies. Comprehensive plans offer a broader cover offering protection for damages to your car as well along with the standard third-party coverage. In addition, comprehensive plans include a personal accident plan that insures the policyholder’s life in the event of an injury. However, such a personal accident cover is available as an additional purchase in case you do not have one. *
- Setting the right IDV
IDV or insured declared value is a term that you might come across when buying a car insurance policy. It may confuse as to what it exactly means, but once you know it, it unlocks a whole different understanding of your insurance plan. IDV is the maximum amount that the insurance company pays in the event of complete damage. These situations of complete damage are known are defined as total loss situations and even include constructive total loss. Commonly misconstrued to mean the resale value of the car, IDV in fact is the current value of your car considering the depreciation thereon.
Setting the right IDV is essential as it determines how much compensation shall be paid in an extreme event of damage to the car. It also impacts the car insurance prices as it determines the risk coverage for the insurance company. With a comprehensive plan, you can alter the IDV within a specified range that has a direct bearing on the premium calculation. *
- Balancing deductibles in your policy
Every car insurance plan has a deductible component wherein you, the policyholder, are required to pay a specified amount before the claim is settled by the insurance company. Compulsory and voluntary are two types of deductibles in a policy. The compulsory deductible is determined by the Insurance Regulatory and Development Authority of India (IRDAI) and set based on the cubic capacity of the car. On the other hand, voluntary deductibles are defined by the insurance company and are in addition to the compulsory deductible. While you can opt for a voluntary deductible, remember that it increases the out-of-pocket expense while lowering the premium amount. You can use a car insurance premium calculator to determine how the premium changes when you opt for voluntary deductibles. You can visit the official website of IRDAI for further details. *
- Choosing only necessary add-ons
Add-ons are optional policy features that help to enhance the policy coverage of a standard comprehensive plan. While they provide additional cover, they impact the premium too. Hence, selecting only add-ons that truly add value to your policy coverage is essential.
With these nifty tricks, first-time car insurance buyers can seamlessly navigate the plethora of alternatives to choose a robust insurance cover. *
* Standard T&C Apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.
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