Most of us end up feeling incompetent while choosing an insurance policy for ourselves, and more so if it’s for our car. Driving is a major part of adult life, but is it good “adulating” to drive around without proper car insurance? And what do I mean when I say “proper”?
I mean a kind of insurance policy which fits you like a tailored pair of gloves.
Choosing an Insurance policy for our motorcars isn’t very easy, mostly because there is a lot about it which we do not understand.
So here are 7 tips which shall help you comprehend car insurance policies better:
First thing first! There are usually 4 types of insurance policies available in the market.
You can find a detailed description about the types of car insurance available in the market here.
1) Third-Party Insurance
Third-Party insurance is compulsory insurance in most of the states, and the government deems it mandatory to have your Third Party insurance cover in order before you can take out your car on the road.
And no matter how uncomfortable you feel about paying premiums for covering the damages you might cause to another person, it is a smart move to have your Third Party insurance in order. It saves you a lot of hassle. You might feel it to be useless because you are a very safe driver, but you must remember, accidents (often resulting in severe damage to life and property) are very common than you may believe. There are often lawsuits involved, which can get hideous and are definitely expensive no matter which part of the world you stay in.
I highly recommend that you choose a very vivid and thorough Third Party insurance scheme.
Once you have sorted out the most important aspect of your insurance policy, there comes the other factors you should consider before purchasing your car insurance.
2) Location and Risk Profile
These two factors are very much related. You might often wonder why you and your friend pay different premium amounts for the same coverage of the exact same model of car. It is because and only because of the Risk Profile involved.
Urban areas are prone to more road accidents, compared to rural areas. So you will have to pay a higher rate of premium for the same model of the car if you live in a city compared to what you might have to pay if you lived in a suburb. Similarly, if you stay in a less safe part of a metropolitan city where thefts and road accidents are common, you may have to pay more premium compared to what you might have to pay if you stayed in the safer parts.
Some insurance companies even consider your driving test scores (if available). And again, car insurance premiums are linked to location and cubic capacity of the vehicle, which means it takes into account the cubic capacity of your car’s engine along with your geographical location.
So, before you pick an insurance policy, be well aware of the risk profile, though you may have to pay more premium amount, it may save you a lot of deductibles while you put forth a claim.
3) Voluntary Deductibles
Firstly, what is Voluntary Deductible?
Voluntary Deductible is the volunteered amount that a car owner agrees to pay at the time of claim repairs. Personally, I find it to be one of the best ways to reduce your car insurance premiums.
Truth be told, no driving score can tell you how exactly are your driving skills, better than your own self. Therefore, paying a high insurance premium every time seems not very pocket friendly. So, depending on your personal capacity, agree to a number of Voluntary Deductibles with your insurance agent to get some discount in your premium amounts. However, do remember that even though you may feel the higher the amount of Voluntary Deductible, the better discount offers you get, it is not always true. Since there are costs due to the depreciable parts that are not completely paid by an insurance company, you may need to shell out more than the amount agreed upon, along with Compulsory Deductibles.
Always opt for a Voluntary Deductible within your budget. Because, the idea is to save yourself from paying extra, but definitely not at the cost of your reputation and safety.
4) Know the Insured Declared Value of your car
Insured Declared Value refers to the maximum claim your insurer will pay in case of total loss and damage, or if the car is stolen. It is often the current market value of your car at the time of purchasing the insurance policy.
IDV is calculated based on the invoice of your car minus the depreciation in its value and it’s the amount the insurer will pay in case if your vehicle is completely damaged or stolen. Therefore, the insurer calculates the premium based on the IDV. Thus, there’s a fair chance of your premium decreasing each year with the depreciation in the value of your car.
5) No Claim Bonuses
Just as what the name suggests, No Claim Bonuses are rewards for the insurer for not making any claims in the preceding year. NCB is a discount on your insurance premium that you can avail when you renew your policy. If you do not make any claims for a few years consecutively, you can accumulate up to a 50% discount on premiums!
What’s even more interesting is the fact that NCB belongs to the owner of the car, and not to the car itself. So, if you’ve earned NCB discounts, and you decide to buy another car, you can transfer the benefits to the new car.
However, keep in mind NCB discount isn’t applicable for third-party liability insurance premium, which is the basic cover mandatory by law (mostly everywhere).
6) Simple Claim Procedures
Always and always opt for insurance policies that offer painless claim procedures. No matter how less your premium and how great the insurance coverage, you wouldn’t want to be stuck in a situation where your insurance agent doesn’t contact you as soon as possible. Look for companies that have a good number of garages and service centers and offer a quick response. Before purchasing your insurance policy, check the market reputation of your insurance providing company thoroughly.
7) Bundled Car Insurance Policies
This is a great facility for people who own over one car, or for people who pay for the insurance of over one car. In case you are getting your insurance policy from an insurer from whom you have got the insurance of your other properties like your house or another car, you can definitely ask for special discounts. And you needn’t feel awkward about asking for a discount, because most insurance companies provide discounts in such cases on their own accord.
And finally, here’s a PRO tip, never overlook before buying a car insurance scheme:
Always! I repeat, ALWAYS take consideration of your budget before buying car insurance, and read the policy documents VERY carefully.
And never shy away from raising questions to your insurance agent or dealer about anything and everything regarding the insurance policy, which you do not understand.