When buying insurance for a new vehicle, we look at comparative pricing offered by various insurance companies. Though it is an important decision parameter, it is also critical to understand the right coverage before making your final choice. Following is a checklist to better understand your coverage
- Comprehensive Plan - Covers both "own damage" and "third party liability", subject to depreciation on various parts as mentioned in the document. Some additional checks you can do is whether you are covered for
- Personal belongings that are in the car
- Coverage on parts like Car stereo, navigation system, windscreen damage, loss or theft of keys (especially the smart keys), andVehicle recovery or accident transport
- Will I get a courtesy car while my car is being repaired? If yes for how many days?
- Can I add additional drivers who can drive under the same policy?
- Third Party Liability - Only covers damage to a third party. This plan is a mandatory requirement for all vehicles plying on public roads in India
- Zero Depreciation - Certain plastic & rubber parts are only partly covered in a typical insurance policy. A nil depreciation policy provides the full cover. A buyer is only liable for certain adminstration charges.
- Personnel Cover - You should always check if the plan also covers additional car users with a valid driving license. While most of the comprehenseive policies already cover this, it is always good to confirm it
- Cashless or not - Check if the policy allows for cashless transaction or not. It is always better to go for one which allows cashless transaction
- Coverage - Understand the coverage. Whether it is limited only to dealers or even third party workshops. If yes, what kind and how many workshops are covered
- Incurred Claim Ratio - You can refer to IRDA website to check for this ratio. It is the ratio Of All Paid Claims Vs All Paid Premiums of an Insurance Policy Issued. The ratio gives you a good idea of how good the coverage is
- Settlement Time - How fast the claims are settled. The faster the better
- No Claim Bonus - Insurer offers you "No Claim Bonus" in case you don't make any claims in a year. This should also reflect in the form of discount you get in case you continue the policy next year with the same insurer
- Cars with enhanced security - features like immobilizers, anti-theft alarms may attract lower premium as probability of theft of these cars reduces
- Lapse of Policy - In case of policy lapse, you run the risk of driving a car without insurance. You will also lose out on benefits like lower premiums or discounts.
- Value of the car - In order to buy a policy with lower premium, people often reduce the IDV or 'insured declared value' of the car. Though this might save few bucks in short term, in an unfortunate situation of accident, it might affect the payout by insurer. Choose a policy that offers you the IDV at current market price of your vehicle, even if it means a slightly higher premium.
"You can avail of the NCB facility if you change the insurer on renewal. You would have to produce proof of the NCB earned by way of renewal notice from the current insurer. Alternately, you can produce your original, expiring policy along with a certification that you have lodged no claims on the expiring policy. For this the proof can be in the form of a renewal notice or a letter confirming the NCB entitlement from the previous insurer" -IRDA
Even while selling the car, ensure that ownership is transferred. You can get a NCB letter which can be availed on your next purchase