Purchasing a new car is always exciting. However, amidst checking out the latest models and choosing the perfect colour, the importance of getting car insurance often gets overlooked by first-time car owners. This can prove to be a costly mistake down the line.
Securing car insurance should be the first item on your checklist when getting a new vehicle. Not only is third-party insurance mandatory by law, but having comprehensive coverage protects your assets and provides financial security. By understanding the various policy types, claims processes, and ways to reduce premiums, you can make an informed choice.
Why car insurance is crucial?
Car insurance shields you and your car from many different dangers. If your insured car is damaged or stolen, it helps you avoid major financial troubles. Your policy, especially if it's from reputed insurance providers like the ACKO website, allows you to make a claim for repair or replacement of parts or for covering injury or property damage liability. As a result, you won’t have to pay too much out of your own money in emergencies.
Besides, car insurance makes it easier to follow motor vehicle laws. It is a legal requirement in the Motor Vehicles Act that liability policies pay for injuries inflicted on others in a car accident.
Keeping your car insurance active by renewals ahead of time will ensure you stay compliant and enjoy uninterrupted benefits.
Overview of car insurance plans
In India, car insurance plans are broadly categorized into three types:
1. Third-party liability insurance
This covers legal liabilities arising out of accidents involving the insured car. You get protection from financial costs associated with third-party injury and property damage. However, own damage losses are excluded. This policy is mandatory for all vehicles plying on public roads.
2. Standalone own damage insurance
As the name suggests, this policy covers only damages suffered by your car. This includes costs for repair, replacement of parts, or total loss in case of theft or accidents. Protection against third-party liabilities is absent.
3. Comprehensive insurance
A combination of both own damage and third-party liability coverage is provided under this. This ensures complete protection for you and your car, along with covering mandatory legal requirements. Due to extensive coverage, premiums are higher than other policy types.
Add-On Covers to Enhance Protection
Apart from core covers, insurers offer various supplementary add-ons. By paying a marginal extra premium, the scope of protection can be widened. Useful car insurance riders include:
● Zero depreciation cover - The cost of replaced parts is recovered without accounting for depreciation deductions. This is useful for new cars.
● Consumable cover - Small car parts like nuts, bolts, engine oil, etc., are covered. Generally excluded even in own damage policies.
● Engine protector - Overheating or lubrication damages leading to seizure of the engine/parts are included.
● Return to invoice - IDV is retained at the original purchase value for up to 5 years from first purchase. Ensures higher claim settlement.
● Roadside assistance - Provides towing facility and on-spot repairs during breakdowns.
● Personal accident cover for passengers - Provides compensation for injuries or death of occupants.
Insured Declared Value and Premium Calculations
A key factor governing claim settlement and premium outgo is the Insured Declared Value, or IDV. This represents the car’s market value at the time of policy purchase. Based on this Sum Insured, the maximum claim amount is decided. Higher IDVs give access to better claim amounts but are costlier.
IDV is derived from the manufacturer’s listed selling price, factoring in depreciation as per age. Customisations or accessories installed subsequently can also be incorporated. Online IDV calculators simplify this estimation process.
The final premium is derived from the IDV and applicable tariffs set by the insurance regulator IRDAI. Other aspects like make/model, cubic capacity, geographical zone, discounts, etc., also impact premium pricing. Higher capacities, newer cars in metro cities attract steeper pricing. Add-ons also increase overall premiums but offer a wider safety net.
Driving smart, stay protected
Purchasing suitable car insurance is an integral aspect before driving a new vehicle off the showroom. Comparing offerings based on policy inclusions, add-ons, premiums and claims processes allows new buyers to make informed choices. Opting for adequate covers based on the value of the asset, location and driving habits ensures complete financial protection. Being aware of appropriate IDV calculations, No Claim Bonus retention and premium saving avenues helps secure coverage at optimal costs.
However, while chasing lower premiums, policy buyers must ensure they do not compromise on the adequacy of risk protection. Finding the right balance between premium savings and sufficient coverage enables new car owners to enjoy a heightened sense of financial security and peace of mind.