Auto Insurance Coverage and The Important Factors to think about when selecting It for Your Automobi
Insurance is unavoidable for every automobile owner, for commercial or personal use. If you are purchasing a new vehicle, you need to take insurance before bringing your vehicle on the road. This is not just a legal obligation but a safety measure for yourself and the public in the traffic. Let’s understand the concept of auto insurance and the important factors to consider while buying the insurance for your vehicle.
Concept of Auto Insurance-
Auto Insurance is also referred to as Motor Insurance or Car Insurance. Let’s see how the Insurance Information Institute defines it.
What is auto insurance?
It is an agreement between insurance company and you, protecting you against financial loss happened because of theft or accident. The insurance company agrees to pay your losses as mentioned in your policy as you are supposed to pay premium in return.
It is insurance for all the road vehicles, including mainly the motorcycles, cars and trucks. It is primarily intended to provide financial protection against theft and damage or physical injury due to traffic collisions and against the vehicle's liability that might arise from some incidents.
How it works-
The insurance provider agrees to pay for your losses as specified in your policy in exchange for your premium. There are some standard policies, and some are customized policies. The pricing for these policies is done individually so that you can customize the coverage amounts according to your specific needs and budget.
These policies are renewable within 12 months timeframe. The insurance provider notifies you when your policy needs to be renewed and the premium to be paid.
During the period of cover, if you come across any accident or other issues covered under your policy, you can claim for the same to the insurance policy. If nothing goes wrong in the period of cover, then some insurance providers allow No-Claim Bonus (NCB) for your policy.
Coverage under Auto Insurance-
When you purchase a new vehicle and buy auto insurance for the same, the important part of the policy is the Coverage you get from that policy. Let’s understand what is covered and what is not covered under the auto insurance policy.
What is covered under Auto Insurance-
The damage caused by natural or man-made calamities to the automobile or its parts is primarily covered under auto insurance.
- Loss or damage by fire, lightning, external explosion, self-ignition, accident, theft or housebreaking, burglary, malicious act.
- Third-party insurance is a mandatory part of India under the Motor Vehicles Act, 1988. Liability towards third-party injury/death and property, liability towards the paid driver, is covered.
- If an appropriate additional premium is paid, damage/loss to electronic/electrical accessories is covered.
What is not covered under Auto Insurance-
Auto Insurance does not cover the following things-
- Electrical and mechanical breakdown, depreciation, breakage or failure and consequential loss.
- Use of vehicle outside the specified geographical area.
- Drunken driving of the vehicle, nuclear perils of war.
Important Factors for selecting Auto Insurance for Your Automobile-
Now, we have understood the concept of auto insurance and how it works. Let’s discuss the Important Factors to consider while buying Auto Insurance.
Understanding Your Requirements-Even if you are not an expert in risk assessment, you can still have an idea about the possible risks in the surroundings. The risk of flood in your area, the frequency of accidents on your daily travel route, number of thefts happening in your area is some issues that you are aware of. Do some introspection and decide your basic requirements from the insurance provider.
- Considering the Brand Reputation-
Even if you are a person who is merely brand conscious, you will think of the brand of the vehicle while buying a new vehicle. The same logic is applicable in the case of insurance. You must consider the Brand Reputation of the insurance provider. The promises made by the brand and what it offers do matter when buying insurance.
- Comprehensive Coverage under the policy-
As discussed earlier, Coverage is an important factor when buying an insurance policy for your vehicle. The provider must give you comprehensive coverage and the third party cover, which is mandatory. The policy should cover damages to the vehicle, personal accident cover, theft and legal liability to a third party.
- Network Garages for your vehicle-
The insurance providers have their network of garages for vehicle repair services to the customers as specified in the policy up to the cover limit. You must get the information about the provider’s network garages before buying insurance. If the network is wide and strong, you will get better service.
- Insured Declared Value (IDV)& Premium-
Insured declared value is nothing but the approximate current value of the vehicle in the market. If the new vehicle’s value is Rs. 10 lakhs, then its value after 2 years will become Rs. 8 lakhs because of the natural wear and tear. When the relation between IDV and premium is- More the IDV, Higher will be the premium charged for insuring the vehicle.
- Customer Service from the Provider-
The insurance provider must treat the customer’s needs as their priority. The company should deliver Customer-friendly service. The insurance sector is service-based. Proper customer support and service are a must in this industry.
- No Claim Bonus (NCB)-
The reward in the form of a discount given to the customer for not doing any claim during the year of insurance cover at the time of renewal of the policy is called NCB. Always check for NCB while buying a policy for your vehicle. The more years without a claim more will be the NCB.
- Ad-On Covers from the Provider-
You can buy some additional covers apart from the basic cover offered by the provider in the policy, which is also referred to as riders. Zero depreciation cover, return to invoice cover, and roadside assistance is commonly purchased add-on covers. These covers are purchased for specific needs to customize the policy.
- Check for the Costing as per your Budget-
The third-party policies can be bought at low prices, which give relatively less Coverage. The best plan should be the one that gives comprehensive cover at affordable prices. You can buy add-on covers as per your needs.
- Knowing the Policy Basics & Terminologies-
The basic policy is always a third-party insurance cover, which is mandatory. You must buy add-on covers for your particular needs. Apart from this, you must read and understand the terms and conditions in the policy for all future procedures.
- Cash-less Insurance Facility-
The cashless policy is when you need not pay the money upfront to settle the claims. The insurance provider pays the majority of the claim amount to the garage, and you have to pay the balance amount for your vehicle.
- Online Comparison of Available Alternatives-
You must compare the available options for insurance before buying one, just the way you do for your online shopping. The only thing you need to do is compare the policies, which are similar in offerings and other parameters.
- Compulsory &Voluntary Deductibles-
The customer's minimum cost for every claim is called a compulsory deductible, whereas the part of the claim cost paid voluntarily by the customer is called a voluntary deductible. Voluntary deductibles allow the customer a reduced premium cost.
- Customer Reviews & Claims Settlement Ratio-
Referring to the customer reviews and the claim settlement ratio of the insurance providers is a better way to compare them and choose a better option for yourself. You can get this data on the website of IRDAI.
- Anti-Theft Devices and discounts-
Some anti-theft devices are available that are certified by the ARAI, such as locks, trackers, and alarms. The insurance providers allow some discounts if you are using such devices to reduce the risk for your vehicle. Apart from this, there are some discounts for the Automobile Association of India members.
- Dealer-Insurer Tie-Ups-
Nowadays, vehicle dealers have done tie-ups with insurance providers. You need to check the Coverage offered and whether it suits your requirements. If it does not fit your needs, you can buy insurance from other providers.
- Portability of Insurance Policy-
We all know the concept of portability in the case of mobile network providers. The insurance industry also has the same concept. You can switch between the insurance providers at the time of renewal of the policy.
- Availability of Online Insurance-
Even if you are not a pro in online things, remember that buying insurance online is more advantageous than traditional. It is better in the various aspects such as pricing, services and convenience.
- Stress-free Claims Procedure-
The claim procedure is the most important part of any insurance policy. This must be a stress-free process for the customer. Only lower pricing is not enough. Online insurers are good at providing stress-free claims.
Now we are aware of the important actions when buying insurance for vehicles. Make sure you do a good choice for yourself while buying policy after considering the above-mentioned points.