About Car Insurance
Car insurance provides the financial security to the car owners from the different risks to vehicles. Car insurance is the financial safety against bodily injury or physical damage arising from traffic collisions and against the liability that can arise from there of. In some cases, the car or vehicle insurance offer additional financial protection against the vehicle damage or theft arising from damage by colliding with a stationary object. The Indian law makes it mandatory for the new car buyers to purchase the insurance coverage against the third parties in the case of claims that arise from death or accidental injury.
Importance of Car Insurance
Car insurance is mandatory after a buying a car as it pays for the damages caused by accidents and lowers your liability and stress thereof. Here are the reasons why buying a car insurance is a must.
- Payment of Car Repairs: With an insurance coverage you need not bother about costly car repairs that can take place due to accidents.
- Lowers Liability: Opting for the ‘Third Party Liability (TPL)’ car insurance is essential as it protects you from the legal repercussions of an accident you are responsible for, such as damages caused by you to another person’s property and the physical injuries to a pedestrian or driver.
- Payment for Hospitalisation: Many accidents cause fractures and severe injuries that require hospitalization. With an insurance coverage, you do not have to worry about any financial drain on your bank account as your insurance company would take care of all your treatment and hospital costs.
- Compensates for Your Family’s Financial Loss: After the death of the insurer, the insurance company pays the expenses of the insurer’s family.
- Cheap Online Premium: When car insurance is bought online, you can enjoy a cheaper premium on the vehicle insurance. The other benefits of purchasing a car insurance online are, easy renewal of the car insurance and paying the premium without laborious paperwork
Best Car Insurance Policies in India by Top Insurance Company
- ICICI Lombard Car Insurance
- Oriental Car Insurance
- New India Car Insurance
- Tata AIG Car Insurance
- Royal Sundaram Car Insurance
- Reliance Car Insurance
- HDFC Ergo car Insurance
- IFFCO Tokio Car Insurance
Types of Car Insurance Policies or Plans
The validity of the car insurance policies is for a year and requires renewal annually. The car insurance policies are categorized into two kinds, that is the third party and the comprehensive insurance plans. The plans differ in the extent of the coverage offered by them.
- Third Party Liability Insurance - This insurance plan covers the property damage, third party injury, and accidental death. It is a mandatory requirement for the vehicles on the Indian roads.
- Comprehensive Plan: It is a popular insurance plan as it covers the ‘legal liability’ of the third party as well as ‘own damage.’ It covers theft or the damage brought about by natural calamities such as earthquake, cyclone, fire explosion etc.
Car Insurance Buying Tips
Buying the car insurance is a challenging task but you can sail through the process by keeping certain factors in mind. It is advisable to compare the quotes from the various insurance providers for getting the best deal. Go through the checklist to make sure you get the best car insurance policy.
- Choosing the Right Insurance: The general insurance providers offer two types of insurance, that is the comprehensive plan and the third party liability insurance. Depending on your requirement purchase your car insurance.
- Add-Ons: Get all the information on the add-ons that are available for being incorporated into your insurance policy to help you get additional coverage.
- Discount for the Security Features: Some cars are available with improved security systems that are inbuilt such as immobilizers and anti-theft alarms. These cars have a less chance of being stolen and you can insure them for a low premium. The devices approved by the ‘Automotive Research Association of India would get a discount of 2.5% on the premium.
- Bonus for No Claim: You can lower the premium rate by fifty percent if you do not claim any insurance on your car. The insurance companies provide the benefit of the no-claim bonus as a record of good driving every year. Even if you sell your car, the ‘no-claim bonus’ benefit would be transferred to the insurance policy of the new car and you would avail a low premium payout rate.
- Voluntary Deductibles: Excesses or the deductibles are the amounts above which the claim can be paid by the insurance provider. If you decide to settle the petty claims for the small damages out of your pocket, you can reduce the premium on your car insurance by 30%.
- Avoid Lowering IDV: For buying a car insurance policy with a low premium payout, many people lower the car’s ‘insured declared value (IDV)’ but if an accident occurs, the car would be treated as a write-off. It is wise to choose a car policy that provides maximum IDV on a vehicle, even if that means a higher premium.
- On time Renewal: You should renew your vehicle insurance within the stipulated period. In the case of lapse of your car insurance policy, you would be at the risk of driving your car without an insurance cover. Moreover, by renewing the insurance within the decided time period would help you in getting a low premium on your insurance.
What Factors Determine the Premium for the Vehicle Insurance?
The factors that affect the premium calculation depend on the risks that an insurance company would be underwriting. It can be classified into four categories.>
- Vehicle Associated Risks:The cubic capacity, model, and the fuel type are few factors that determine car insurance’s premium. Generally, SUVs and commercial vehicle’s have high premium rates. At the time of renewal of insurance, the vehicle age and depreciation determines the premium rate.
- Location Associated Risks: The premium rates are high for those living in the urban areas, such as near the highways or the densely populated regions. In a region of high theft, the premium is high.
- History of Claims Associated Risks: If you claim insurance for your car, the premium would go up the forthcoming year.
- The Driver Associated Risks: In the case of multiple drivers, depending on the age of the drivers premium goes up
Key Advantage and Features of Car Insurance
The car insurance policy or plan provides the following benefits:
- It offers coverage against damage or loss to an insured vehicle.
- It provides coverage against the damage or loss of your car due to theft, explosion, accident, fire, lightning, self-ignition, strikes, riots, natural calamities, acts etc.
- It offers coverage against the financial liability brought about by damage to property or death or injury of the third party.
Beneficial Add-ons that Increase Premium But Are Worth It
- Nil Depreciation Insurance: With this type of policy you can claim for the cost of the plastic and the rubber parts. The insurance companies pay 50% of these valuable car parts that tear and wear with time. With the nil-depreciation insurance policy the premium goes up but it is worth it as it would save a lot of your money in the repair costs.
- Personal Cover: A comprehensive cover includes the ‘personal accident coverage’ for the car owner but with a small fee additional drivers with a driving license can also be included in the comprehensive insurance cover and this can prove to be beneficial for the owner.