Things to Know If You Are Renewing Your Car Insurance For The First Time
Has it been a year since you bought your new car? Your first anniversary of your car purchase is also the time you’d need to renew your car insurance for the first time. It is probably time to renew your car insurance. Like most of the car owners, if you had bought your car insurance through your car dealer, you need to relook your car insurance as many dealers try to sell car insurance plans that benefit them than the policyholder. You need to choose the right car insurance plan with a well thought out approach. Understand factors like coverage type, add-ons, cashless facility, deductibles, claim procedure, etc. Car owners even have the option of switching the insurer if they are not satisfied with the insurance company. Make sure to keep the following points in mind before renewing your car insurance.
Know Your Insurance Policy
Car insurance policies are categorized into two types: Third-party insurance and comprehensive insurance. Third-party insurance is a basic insurance that is mandatory by law. This insurance covers loss/damages caused to a third-party and does not cover own damage. On the other hand, a comprehensive insurance policy covers both third-party damages as well as own-damages.
Once you have narrowed down the policy you want to choose, the next step is to compare them based on the premium cost, coverage, claim to settlement ratio, etc. Given the digital age we live in, all the information is available at a click of a button. You can compare policies using one of the online insurance aggregator websites and then zero in on the policy that suits your requirements.
Pick The Right IDV
The Insured Declared Value (IDV) is the maximum amount the insurer will pay you if your car suffers a total loss or is stolen. The IDV is calculated based on the manufacturer’s listing price minus depreciation. The below table shows the depreciation percentage based on the car’s age.
|Age Of The Vehicle||Depreciation Percentage|
|Less than 6 months||5%|
|Greater than 6 months but less than 1 year||15%|
|Greater than 1 year but less than 2 years||20%|
|Greater than 2 years but less than 3 years||30%|
|Greater than 3 years but less than 4 years||40%|
|Greater than 4 years but less than 5 years||50%|
The IDV for vehicles above five years is fixed based on a mutual agreement between the policyholder and the insurer. A higher IDV will increase your premium and a lower IDV will affect your claim value. So it is vital to pick the right value that comes close to the market value of your car.
Choose The Right Add-ons
If you have picked comprehensive car insurance, you have the option to choose add-ons that provide additional coverage. While you may think they are unnecessary and cost you more money, there are some add-ons such as zero-depreciation cover, return to invoice cover, hydrostatic lock cover, etc. that can protect your car against uncertainties and save you money. It’s worth considering these add-ons while renewing your car insurance.
Deductibles are of two types, Compulsory deductibles and Voluntary deductibles. Compulsory deductibles are those that a policyholder must pay out of his pocket during a claim. This is done to avoid small and repeated claims. In the case of a voluntary deductible, the policyholder opts to co-pay a certain sum with the insurer. This will bring down the premium cost to a certain extent.
Cashless Network Garages
Today, many insurance companies offer cashless network garage facilities to their policyholders. If the insured vehicle suffers a breakdown or meets with an accident, the policyholder can get it repaired at the nearest network garage without paying any amount. Your insurance company will settle the bills once all the repairs are completed.
No-Claim Bonus (NCB)
If you have not made any claim during a policy year you are entitled to a discount in premium in the form of a no-claim bonus. Make sure the insurer includes the NCB component while calculating the premium.
This is the most important aspect of insurance. Claim processing and settlement can become tedious and taxing with some insurers. Choose the insurance company that has a high claim to settlement ratio and the option to submit claims digitally. This way you can stop running from pillar to post to get your claim approved.
Once you have considered all the options, buy your insurance online. It is simple, convenient and cost-effective.