For newcomers, understanding car insurance might be somewhat complicated. First things first, you need to be familiar with some industry jargon. The fundamentals of new car insurance are described below to assist you in making an informed choice:
1) Policy protection:
There are two types of car insurance policies: third-party coverage and comprehensive coverage. According to Indian law, third-party insurance is required and only covers third-party liability, such as death, property damage, or injury to a third party. While a comprehensive policy also covers damages to your vehicle caused by unplanned accidents, theft, natural disasters, etc. A comprehensive policy offers broad coverage for your car as well as a third-party liability but is not required by law.
2) Premium and IDV:
To a novice, the phrases premium and IDV may appear to be very similar, yet they refer to two distinct facets of a car insurance policy. A premium is a cost you pay to your car insurance provider in exchange for the protection they offer against any damages to your vehicle or someone else. By embracing several discount offers from your insurance provider, you can lower the premium cost. The market value of the insured car is its Insured Declared Value or IDV. IDV is calculated using the vehicle’s ex-showroom price less its depreciation value over time. Your vehicle is considered a “total loss” if it has been stolen or is severely damaged and cannot be repaired. In this case, your insurance provider pays you the approximate IDV amount as compensation for your loss. The IDV is decided upon when you buy your car. A higher IDV results in a higher premium, whereas a lower IDV lowers the amount of the claim. Only if you choose a comprehensive insurance policy is IDV calculated.
3) Understanding Deductibles
Deductibles are a portion of the claim payment that the policyholder makes to the insurance provider. When there is no deductible, the insurance provider will cover the entire cost in exchange for a higher premium. When it comes to voluntary deductibles, you can decide how much to shell out when a claim is settled. While selecting a higher deductible is advantageous for cautious drivers, it also lowers the number of claims paid by the insurance provider.
4) No Claim Bonus:
As a beginning, it’s crucial to comprehend the no claim bonus since it affects your premium costs. A no-claims bonus is a reduction in your policy renewal premium that you receive for not filing any claims throughout the year. Moreover, the premium can be lowered by up to 50% by not filing any claims for five straight years.
5) Insurance policy add-ons:
If you decide to purchase a comprehensive insurance policy, you will have the option of adding on add-ons, or more coverage, to the policy. Numerous add-ons are available, including engine protection, zero depreciation, roadside assistance, no claim incentive, etc. These add-ons must be ordered separately and raise the price of your coverage. Therefore, it is wise to choose your add-ons based on your needs to prevent an unwarranted increase in the cost of the insurance policy.
You may buy more affordable new car insurance coverage by being aware of these fundamental features of a car insurance policy. With Acko Car Secure, Acko Insurance provides comprehensive coverage for your vehicle. However, if you are still unsure, see an expert to help you make a wiser choice.