Things To Consider Before Buying A Motor Insurance Policy

Buying your own car is a feeling that is often difficult to put to words. Importantly, the delight will last longer should you promptly secure your car with a motor insurance policy. However, don’t be in a tearing hurry just yet; it is wise to know the basics first.

Why buy a motor insurance policy?

In India, car insurance, besides being mandatory, is a necessary financial tool designed to protect your car against a host of perils, including theft, accidental damages, and losses resulting from natural and man-induced disasters. It follows that purchasing motor insurance in India warrants due diligence.

The process can be more challenging, particularly if you are a first-timer. With that in mind, a list of crucial factors has been curated and stated below to help you navigate your way better.

Read on to make an informed purchase of your car insurance policy:

Types of car insurance

Before you go ahead with the purchase, you must understand the different types of motor insurance on offer, as well as the coverage provided by them. Primarily, car insurance is categorized as under:

  • Comprehensive car insurance

With this all-inclusive policy type, you get access to wider coverage as opposed to a Third-party Liability Only policy.

Besides the basic third-party cover, you get a financial safeguard against the Own Damage component (damages to the insured car or damages to the owner of such an insured car) as well. 

Further, this kind of a cover comprises theft, loss and accidental damages resulting from fire, self-ignition, and a host of natural and man-made calamities. 

  • Third-party Liability Insurance

This type is mandated by the Motor Vehicles Act, 1988. Simply put, it is the most basic form of coverage that is deemed mandatory should you want to drive your car on Indian roads.

However, coverage, in this case, is only limited to third-party liabilities. It does not secure your car against any damage or loss.

Policy terms

It is imperative that you read the motor insurance policy document carefully to get a fair idea of what it covers (inclusions) and what it doesn’t (exclusions).

Keep off the mistake of only reading up policy benefits without knowing the exact circumstances when coverage would kick in.

Being thorough with motor insurance policy terms will help you make an informed purchase.

Add-on covers

Once you buy a comprehensive car insurance policy, you can make its coverage more exhaustive with the help of add-on covers.

Also called riders, these can be purchased upon paying a nominally higher premium. Therefore, before you buy one, make sure you know how add-on covers function.

Here is a list:

  • Zero Depreciation: With time, the value of your car will reduce as a result of depreciation. However, with this add-on cover, the insurer would not consider depreciation while settling your claim.
  • Roadside Assistance: You can avail on-road facilities, including towing, refuelling, minor repairs and battery jumpstart.
  • NCB Protect: This helps to retain your No Claim Bonus (NCB) despite filing a claim within the policy year. 
  • Return to Invoice: In case your car sustains absolute damages, you would be recompensed its invoice value in full.

IDV

Understanding your car’s insured declared value (IDV) is essential, considering car insurance policy premium is calculated basis its IDV.

IDV refers to the maximum amount that you will be able to claim in case of absolute losses sustained by your car. In simple terms, it is the car’s current market value.

The IDV keeps on reducing with time, implying that a brand new car will have a higher IDV as compared to an older one of the same model. 

NCB

A No Claim Bonus (NCB) is offered should you (owner of the insured car) not file a single claim within a policy period. With NCB, you will be eligible for a discounted premium the next time you want to renew your car insurance policy.

Remember that an NCB can be carried forward. 

  • Procedure for filing a claim

Be well-versed with the claims process when you sign up for a particular motor insurance policy.

Also, probe into your insurer’s claim settlement ratio – a figure that will tell you about the number of claims settled by your insurer from the total pile of claims received. 

Tip: Before you decide on a particular product, don’t forget to compare car insurance policies online.

Once you are certain about the kind of policy (comprehensive or third-party), make sure you compare products of similar coverage type, basis the features offered. The trick is to shop around before settling for a specific car insurance policy.

At Bajaj Finserv, you can buy the best motor insurance in India at an affordable premium.

You can club this with add-on covers from the firm’s Pocket Insurance and Subscriptions category, and get a high coverage by paying a nominal one-time premium.

These insurance plans are short-term policies that are designed to address the daily insurance needs of the policyholders.

Aryan Singh

Aryan Singh is an experienced Financial Consultant and Tech Reviewer who has 6+ years of experience in the field of finance, business, and technology. He is very passionate to write about Finance, Business, Technology, Gadgets, Digital Marketing, Guest Posting, Fashion, Lifestyle, etc.

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