Cars are often a prized possession for many buyers. While you might have several plans to enjoy your new ride in different ways, it is essential to get it registered and buy a suitable insurance cover from the start. While your vehicle dealer completes the registration formalities on your behalf, only a limited number of car insurance
plans are offered by the dealer. A plan among these limited alternatives may not always be right for you. Hence, you need to search for a suitable car insurance policy.
This process can especially get tricky for first-time buyers as the entire experience is new. If you are someone who is buying a car insurance policy for the first time, you have come to the right place.
Here are some things to make a note of when buying car insurance for the first time.
Type of Insurance Cover
The type of insurance plan is the first step in deciding upon the right car insurance cover. There are two broad categories of insurance plans — a third-party cover and a comprehensive policy. Among the two, a third-party plan is a minimum required insurance coverage by the Insurance Regulatory and Development Authority of India (IRDAI). Hence, it is mandatory to at least have third-party insurance coverage for your car. This third-party cover safeguards the policyholder against legal liabilities arising in case of an accident or a collision injuring a third person or causing damage to their property. For this reason, a third-party plan is also known as a liability-only cover. You can visit the official website of IRDAI for further details.
Comprehensive plans, on the other hand, are an optional upgrade from the minimum insurance cover. Comprehensive plans not only protect from third-party liabilities but also cover protection for any repairs that may be required to your car. Situations involving natural calamities or man-made events like riots and theft are covered therein. Additionally, comprehensive plans also include a personal accident cover that protects the policyholder from injuries. *
Setting Adequate IDV
Insured Declared Value or IDV is the approximate estimate of the current valuation of the car. Often confused with a vehicle’s resale value, it, is the current value of your car after accounting for depreciation. Hence, it is often used as a reference point to determine the resale value of a vehicle. When you purchase a comprehensive plan or make a car insurance renewal
, the insurance company allows you to modify such an IDV within a specified range.
IDV is the maximum amount that an insurance company would pay in the event of a total loss or damage. Thus, it is directly associated with the risk that the insurance company would underwrite. While lowering the IDV reduces the premium of your insurance cover, it does increase the loss that you might incur in a situation where your vehicle can no longer be repaired. *
Opting for Deductibles Wisely
A deductible is an amount that the policyholder is required to pay at the time of raising an insurance claim. Car insurance policies have two forms of deductible — standard and voluntary. The standard deductible is mandatory for all policies and is a nominal amount, whereas the voluntary deductible is in addition to the standard deductible and helps lower the burden of premium. Therefore, as a first-time buyer, you must be careful of opting for lower voluntary deductibles in your car insurance plan. *
Selection of Only Necessary Add-ons
Comprehensive insurance plans have the option of purchasing additional covers known as add-ons. These add-ons are preliminary ways to overcome any limitation of your insurance plan, but they increase the overall premium of your policy. Hence, when selecting add-ons, it is necessary to choose only those that enhance the value of your car insurance coverage. To know how these add-ons impact the premium calculation, you can make use of a car insurance calculator
, which is a free tool offered by insurance companies online. *
* Standard T&C Apply
These are some ways in which a first-time buyer of car insurance can select the right policy based on their requirements.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.