Personal Finance

Insure your wheels with the best deal

Arvind Jayaram | Updated on March 10, 2018

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Don’t just go with the standard car insurance policy offered by your dealer

A car involves huge spends. So getting adequate protection for it from the hazards of daily driving is essential.

Many of us often opt for the first cover that is presented by the salesman when we purchase a car, since we perceive some additional value from bundling of the insurance package with our car sale.

But oftentimes, succumbing to this convenience can cost you, as there may be better plans in the market. So if you are willing to put in the effort, how should you go about it?

Shop around

Insurance companies have their own set of metrics to determine the premium to be paid for insuring each vehicle.

The motor insurance cover has two parts — cover against damage to your own vehicle in the case of an accident and cover against third party liability.

While premiums on third party liability are fixed by the regulator, insurers have discretion to decide on the premium they charge you for ‘own damage’ cover.

This could be based on the insurer’s internal assessment of a vehicle’s safety record, your own claim history and so on.

Therefore, shopping online you may be able to compare and obtain good deals.

More than money

When zeroing in on a policy you should take into account a company’s track record when it comes to settling claims.

It also makes sense to determine how a company responds to a claim.

Add-ons

If you go online and do a quick search of the companies you are considering, you should be able to get a good idea of the level of customer satisfaction in their services.

Depending on your personal needs, it may make sense to opt for add-ons to your insurance cover, which could help you save money in the long run.

Some of the popular add-ons include a zero depreciation cover that allows you to have some parts replaced at their actual value and not at a depreciated rate.

You can also ask for a no-claims bonus protection, which helps you retain your no claims discount even after making a claim during a year.

Usually, the policy covers only the declared price, but there are some products that cover the full invoice price of the vehicle including taxes.

Based on requirements, motor insurers tag on some useful extras such as compensation for loss of your keys, damage in the case of flooding, personal accident cover, and so on. These can have some fine print too. For instance the zero depreciation benefit may be available only for a certain number of years. Though motor insurance policies are usually standardised, make it a point to read the fine print.

This will give you the details of the exclusions under the policy, which are the circumstances in which you will not be able to lodge a claim.

This will ensure that you are not in for a rude shock later on. Finally, if you’re making premium payments through an intermediary, ensure that he is authorised to do so and always collect a signed receipt.

Those taking a motor insurance cover should also note that the rules relating to such insurance are likely to undergo significant changes with the passage of the new Road Transport and Safety Bill India.

The Bill plans to cap the third party liability for motor insurers at ₹15 lakh.

The Bill also plans to tighten rules for licensing, permits and levy heavier penalties for driving rule violations.

Once this bill takes effect, insurers will also be able to tailor vehicle policies and premiums to the individual safety and driving records of vehicle owners.

So you may finally get to control the premiums you pay on your car insurance.

Published on March 22, 2015

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