Buying your dream car is a moment of immense joy. People cherish this memorable moment, once they have earned after years of hard work and sacrifice. They look forward to sharing their joy with their friends and families, taking long drives and road trips in their dream vehicle.
But all of that can be endangered in seconds. An accident can change all of that and you might not be financially prepared to take the hit. That’s why car insurance is always a priority and should not be overlooked.
Car Insurance Guide That You Must Know
Understandably, insurance can seem vague and confusing. So, let’s break it down to help you understand how you can wade through these waters.
Insurance Declared Value (IDV)
When you request an insurance company to provide you with a policy, they don’t do it outright. While some companies mandate inspection for only pre-owned vehicles, others require it for both new and pre-owned vehicles. Based on this inspection, the IDV is determined. The IDV is the insured value of your car as determined by the insurance company. It’s also the amount up to which your car is insured. Under no circumstances, can your claim amount exceed the IDV.
The premium for your policy is determined by a number of factors. The type of car you own will dictate a certain amount of the choices you make for your car insurance. For example, it will dictate the IDV as determined by the company and accordingly your premium. Additionally, the location/city of your purchase and add-on covers also help decide the premium value of your insurance policy.
No Claims Bonus
No Claims Bonus (NCB) is a reward provided by insurance companies in the form of a discount on premium, after subsequent claim-free years. Now generally, people who are unaware of this will make claims for every small repair or scratches. While a single claim in a year is allowed by certain companies to be recognised as a claim-free year, repeated small claims will deny you the NCB concession.
Insurance is no longer the vast inaccessible mountain it once was. You do not need to go by hearsay and hang on to every word of your insurance advisor. Now you can compare car insurance quotes and features of various companies on sites like Coverfox.com to judge for yourself. This will help you leverage the best possible deal for your car.
Different Types of Car Insurance You Can Purchase
Car insurance in India is mandated by the Indian Motor Vehicles Act, 1988. The Government necessitates that any car, old or new, must at least have a third-party liability cover. But third-party liability offers very basic coverage and if you’re looking for a more wholesome financial protection, you need to look at comprehensive packages. So, what do these terms really mean? Let’s take a look.
Third-party liability (TPL)
In an insurance policy, the first party is referred to as the insurance company, while the second party is the policyholder. Any person, apart from these two parties, is noted as a third party. Now, when there are car accidents, the probability is someone might be injured. It might be a pedestrian, a passenger, or the driver. Anyone, other than the owner will need to be compensated by law for the damages, and the third party liability cover provides compensation to the policyholder for the same.
Unfortunately, this is a very basic and bare minimal form of car insurance. Other than the TPL, there are no other benefits or coverage in this policy. However, since the policy coverage is quite minimal, the premium of TPL policies is quite low.
In contrast to TPL policies, the comprehensive package offers a more wholesome financial coverage. The best car insurance plans offer financial protection for car repairs, third-party coverage, and add-on covers (zero depreciation cover, cashless hospitalisation, personal injury cover, etc.) As such, if you’re looking for a policy that provides a wide range of benefits, saves you the cost of treatment, and lets you get your car repaired without adjusting depreciation of spare parts, then you should be looking for a comprehensive package. Obviously, with added benefits, the cost of premium also increases.
Car insurance helps you keep your dream car on the road and your hard earned money in the bank. It saves you the cost of repairs, compensation, and even treatment resulting from accidents. As a result, your car insurance should always be a priority.