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How to Choose the Right Car Insurance Policy in India

Owning a car has become a necessity in today’s world. It is also a big investment, and so is an enormous responsibility to keep the vehicle safe from any kind of damage. The notion of car insurance arises from the very necessity to keep your car safe, since, driving a car on Indian roads can be a difficult task.

Car insurance is a contract between the owner of the car and an insurance company that serves to protect your vehicle from numerous unforeseen risks. It is a security shield against numerous financial damages that may incur to your car because of theft, accident, fire, man-made or natural disasters, and any subsequent third-party liabilities.

You may also purchase car insurance online, and the range of coverage can be extended to you, the vehicle under insurance, the insured party, and third parties. 

There are various car insurance policies available in the market nowadays.

In order to choose the right car insurance policy for your vehicle, you should check out the below points and make the right decision accordingly. 

1. Understand your Requirement

The very first thing to check before you start looking for the right car insurance policy and the right insurance provider is to assess your car insurance requirement and understand the type of policy you want. In India, the two main types of car insurance policies are as follows:

Comprehensive Car Insurance

A comprehensive car insurance policy is a type of insurance that offers all-around protection against damages caused to both parties involved in an accident as well as damage to their own vehicle in unforeseen events.

It is an extensive form of motor insurance policy that covers damages due to accidents, theft, fire, natural disasters like tornados, earthquakes, and man-made disasters such as riots, vandalism, civil unrest, etc. A comprehensive car insurance policy often includes third-party liability and own damage covers. 

Third-Party Car Insurance

Third-party car insurance offers coverage against any damage or injury caused by the policyholder’s car to another person or property. It covers any kind of legal liability arising due to the involvement of your car with a third-party vehicle, person, or property. This type of car insurance policy is compulsory in India under the Motor Vehicles Act, of 1988. 

2. Compare Online

One can easily find abundant car insurance policies online. Hence, it becomes challenging to choose from a myriad of car insurance policies from several car insurance companies offering various plans. This can confuse you while arriving at a decision. Your confusion can be solved with the help of online insurance comparison; all you have to do is compare insurance plans from various providers and get insurance quotes from them at neutral financial websites.

The insurance aggregator websites offer this feature completely free of additional charges. You can easily evaluate the amount of coverage and tally it with the premium quote for each plan in the market. In this way, you can identify the plan that offers maximum value for the premium paid.

3. Right Insured Declared Value

Insured Declared Value or IDV is the current market value of your car, and it also decides the rate of premium of your car insurance policy. It can also be described as the maximum amount you can claim in case of total loss or theft of your car within your policy period, and it is the highest sum payable by the insurer. While choosing the right car insurance policy it is very crucial to ensure the premium charged is correct because most of the time, the lower the IDV, the lower would be the rate of premium.

In case your IDV is stated incorrectly in your policy document, you might have to pay out a lot from your own pocket in case your car needs repairs. Before choosing a car insurance policy, discuss and understand the Insured Declared Value of your car with your insurer.

4. No claim bonus

No Claim Bonus or NCB is the bonus given to a policyholder by the insurance provider for not claiming the insurance in the policy year. This simply means that you get rewarded by your insurer for taking good care of your car and driving safely. Also, NCB gradually increases over the period of claimless years.

For example, if you do not make any car insurance claims in the policy year, your insurance company gives you a considerable discount on your premium when you renew the policy next year. No-claim bonus is given to the policyholder and not the vehicle, which means, you will get this benefit, even if you switch your cars. Your no-claim bonus stays intact even when you change insurance providers.

The discount given increases with every claim-free year, and you can accumulate a maximum of 50% discount on premiums with five consecutive claim-free years. So, when you choose a car insurance policy, make sure that your insurer offers a no-claim bonus feature.

5. Claim Settlement Ratio

When you are looking for the right car insurance policy, it is crucial that you also choose the right insurance provider. It is important that you buy a car insurance policy from an insurance provider who has a good claim settlement ratio.

The claim settlement ratio refers to the number of car insurance claims received by a company and the number of claims settled by them in a year. Make sure you purchase a car insurance policy from an insurance provider who has a good claim settlement ratio.

Meaning that the number of claims settled is more than the number of unsettled claims. This lowers your chances of getting your claim rejected by the insurance provider. 

The above points are the various parameters and features you need to look for in a car insurance policy in India in order to choose the right one for you and your car. 

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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