There was a time not so long ago when a four-wheeler was a luxury purchase accessible only to the privileged few. With cars becoming ubiquitous in every middle-class household, there is also an urgent need for educating Indians about the importance of car insurance.
A Quick Overview
For those who are new to car insurance alternatives available in India, they are broadly of two types:
- Third-party (Liability only): This coverage is mandated for every vehicle on the road in India as per the Motor Vehicles Act. It basically ensures financial protection for you in the event of any injury or loss to a third-party in an accident.
- Comprehensive: This coverage ensures that the insurance covers any damage to your car, including injury to you or the passengers in your car. This is, of course, in addition to the mandated third-party coverage.
So, what are some common pitfalls that car owners tend to overlook while purchasing insurance?
Lack of research
We spend days, weeks and probably months finding the car that we love. But when it comes to insuring that same car, we prefer a quick spin with an online car insurance calculator and purchase the first policy offering the bare minimum.
- Visit various websites and view policy coverage across various insurance companies and
compare their offerings.
- Once you shortlist a few, check their network of garages offering cashless claim settlement.
- Verify their claim processing and claim settlement ratio. Look for reviews from existing customers and see what they have to say about their customer service.
- Go to their website and gauge the effort put into ensuring their visitors have a smooth experience. See if they allow you to buy car insurance online.
Buying policies with the lowest premium
Buying the cheapest policy on offer seems tempting, but it may not be the right choice for many obvious reasons. While it may ensure basic coverage, it will be worth every precious penny exactly when you need it the most.
Ensure that your insurance –
- Offers the same comprehensive coverage to your car and your co-passengers as it does to that of the third-party
- Has add-on coverage that makes it more complete (No claim bonus retention, zero depreciation, daily cash allowance and more)
- Offers personal accident cover to provide a lump sum benefit to the insured in the event of serious injury
Providing false information
Never lie to your doctor or lawyer. Heard this before? Well let’s add one more to the list – Never lie to your insurance company either! It may seem like a very smart thing to do – hide your age, or pretend your car has central locking, just to lower your premium.
In the event of an actual claim against your policy, any deliberate untruths could cause your coverage to be declared null and void. Saving a few rupees now could cause significant financial misery later.
Keeping your deductible too high or too low
For the uninitiated, a deductible is an amount that you pay before the company’s claim payment kicks in. Understanding the balance here is very important. The lower your deductible, the higher your annual premium payments (and vice versa).
It is advisable initially to keep your deductibles relatively high and make a ‘No Claim Bonus’ during every renewal. This allows you to lower your premium payments and your deductibles over the years.
Buying policies offline
Insurance companies offer really competitive rates when you buy car insurance online or for car insurance renewal online. There are multiple reasons for this:
- Ability to reduce overhead costs
- Educated insurers who make informed decisions
- Removal of middle-men who work on commission
- Digitization of all paperwork, making administration simpler