Buying a car can often be an easy choice. With so many car manufacturers and models on offer, you are spoilt for choice. But a dilemma appears once have purchased your car. The dilemma is the matter if buying car insurance.
Everyone from your car dealer to your friendly insurance agent would all offer you car insurance plans. With so many choices and confusing terminology, picking the right car insurance can get overwhelming.
Here, we will decode some auto insurance jargon so you know exactly what your car dealer or insurance agent is offering you.
Third party insurance: All automobile owners are required to have a third party insurance for their vehicles. Auto insurance is validated as per the Indian Road Safety Act and Indian Motor Vehicles Act.
With third party insurance, any bodily injury that you may cause to a third party or any potential damages caused to that party’s vehicle are covered. Individuals, including co-passengers, pedestrians, and owner of the damaged vehicle are also covered under third party insurance.
Comprehensive insurance: Comprehensive insurance is optional and it offers a more widespread protective cover compared to third party insurance. Any damages caused to your vehicle as a driver plus any third party vehicles or individuals are all covered under a comprehensive auto insurance policy.
Insured Declared Value (IDV): Your car insurance premium and compensation are linked to the value of the vehicle. IDV, or Insured Declared Value, is the total compensation the insurance company will offer you as per the cost of your car when you opted for the insurance plan. IDV takes into account the depreciation value of the car as it uses an IRDA-approved chart for depreciation to reach to the IDV value.
Own Damage Premium (ODP): Own Damage Premium is the amount of money you pay towards your car insurance cover. With this cover in place, you secure your vehicle against losses from fire, explosion, earthquakes, floods, and other natural calamities.
Add-on Covers: Add-on covers increase the quantum of protection for your vehicle with specialized covers as per the add-on. A comprehensive car insurance along with essential add-ons make your automobile insurance complete. There are many types of auto insurance add-ons, each having a unique protective component. You can pick and choose the ones relevant and useful for you as an insurance seeker.
Types of add-on covers: Here are some of the popular add-on covers for an automobile insurance policy.
|Things to Know about Auto Insurance|
No depreciation cover: The cost of your automobile depreciates with time. Unless you have opted for a no depreciation cover, you will not get full cost of damaged parts. Depending on various parts of your automobile, the insurance company offers a fixed percentage as refund. With a no depreciation cover, you can bypass the depreciation percentage and get a full refund of your repair expenses.
NCB protection: No Claim Bonus (NCB) allows you an added discount if you did not make any insurance claims in the past. Even one small claim can nullify your NCB rights but with a NCB add-on, your NCB discounts remain valid as per the limit of the NCB add-on.
Engine and electronic circuit cover: Engine and electronic circuits are not covered under a normal comprehensive insurance plan. The engine and electronic circuit add-on therefore offers a specialized protection should your vehicles engine or associated circuit parts run into any trouble.
Return to invoice cover: Your vehicle cost does not end at the ex-showroom price. The road taxes, parking fee, registration charges etc. all add up to increase the final cost of your vehicle. With return to invoice add-on, you get a protection towards all these expenses even if you are claiming for a total loss of your vehicle.
Key replacement cover: Key replacement charges can be quite severe due to automated keys used by most vehicles. With a key replacement add-on cover, a small premium can save you from exorbitant charges for key replacement.
Quick road assistance: A quick road assistance add-on cover allows you to avail 24/7 help including any taxi, accommodation, fuel, and other essential benefits from the insurance company should you need it in any emergency situation.
Things to know before choosing auto insurance
Consider all avenues: Your car dealer may try and sell you insurance on the spot but you also have the option of comparing quotes from various insurers to get the best possible deal at the lowest premium costs.
Seek essential add-ons: Don’t opt for minimum premium policy and consider all add-ons that can help you save cost in the long run.
Opt for higher deductible: Deductible is the amount you pay from your own pocket before insurance company chips in. Opting for a higher deductible lowers the stake of the insurance company leading to a lower premium.