Things You Need To Know Before Buying Car Insurance
May 12th, 2011 by Harjot
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Buying a car insurance is as important as buying a car. Your vehicle needs to be insured against any possible mishap before you hit the road in your newly acquired prized possession. There are few important factors that needed to be thought upon before deciding on any one insurer. These can be as follows…
- OD is not compulsory: Standard car insurance consists of third-party liability insurance and own damage insurance. Third party liability insurance is compulsory for all vehicles under Motor Vehicles Act; whereas ‘Own Damage’ insurance is not compulsory. When you are out to buy a car, dealer would always try to sell you both. He may even try to convince to the extent that you feel that both of these insurance come in the category of mandatory insurances. But this is not a case. You can politely turn down the offer after buying only third-party liability, shop around for a complete policy that is most suited to your needs and then buy OD insurance. If you are getting a good package (third-party + OD), you can also cancel your original third party liability insurance.
- Car insurance is portable: One can get third-party liability plus own damage insurance shifted form one insurer to another as these are standard policies applicable and these insurances are portable ones.
- Different terms rule new, old and rollover insurance: Separate terms and conditions are applicable on the insurance of new cars, used cars and rollover of existing insurance. Hence, it is good to find out the discounts and additional benefits, in each case, from different insurers before zeroing on insurer.
- IDV decided by insurer: The sum assured of your vehicle depends upon the IDV (Insurers declared value) of your vehicle, which is decided by the dealer on the basis of basic factor like cubic capacity of the engine. These basic factors should be studied and understood before buying a policy.
- Claims are settled on depreciated value: Car insurance claims are settled after considering the depreciation of the vehicle. Here, the depreciation rates are fixed. For instance, 20 per cent depreciation is applicable on 2nd year of the vehicle. In case of an accident, let’s say, one of the doors of car needs to be replaced, which costs Rs 20,000. But here, the insurer will only consider and pay the depreciated value of the door. In this case, you will be reimbursed with Rs 16000 [20000*20% = 16,000]. Hence, a loss of 4,000 has to be take care by the insured. The loss in such cases will keep on increasing with the age of the vehicle. To cater to this shortcoming, the insurers have come up with a concept of ‘Zero Depreciation’. Under this, on payment of additional premium, you would get the benefit of getting your car counted as new always, which means no depreciation will be applicable ever. An important point here to be considered is that zero depreciation is applicable only in case of metals and, that too, at higher premium cost.
- No depreciation is considered on RTI: Another variant or add-on to the standard policy comes in the form of Return To Invoice (RTI). In RTI, in the case of total loss of the vehicle in accident, no depreciation is considered and you will be reimbursed with entire sum assured. This facility also comes by paying additional premium. In both zero depreciation and RTI, it is a good idea to shop around and compare the different premiums from different insurance companies.
- Roadside assistance an added advantage: Apart from zero depreciation and RTI, Road Side Assistance (RSA) is another important aspect to be looked into. Under this, insurers tie-up with different assistance companies and try to assist you in cases of breakdown. These assistance companies help with breakdown tow-away, mechanical fault, battery default, emergency lockout, flat tyres and even help you with fuel delivery to get your vehicle running. Hence, if required, you can also find out various Road Side Assistance services provided by different insurers before finalizing on one insurer.
Buying an insurance policy after considering all these factors would never let you go wrong in your selection.
Happy insuring….!!!
Published on May 12, 2011 · Filed under: General Articles; Tagged as: car insurance, depriciation, IDV, motor insurance, own damage, road assistance, third-party insurance
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