Why Vehicle Insurance ?
Buying vehicle is probably not that difficult than keeping it safe from any untoward happening that may occur at any time. One cannot buy another car, in case the vehicle gets damaged because of accident or for any other reason. Some times the repair cost becomes so high, that hurts the individual to get it repaird if for any reason, the vehicle is not insured. Vehicle Insurance, therefore is necessary to take care of your vehicle's repair in such an eventuality.As per the traffic rules also, it is mandatory to have your vehicle insured.
Types of Vehicle Insurance Policies:
Generally plans offered by general insurance providers can be broadly classified under two categories:-
Third-party liability is an insurance policy purchased to pay the damages caused to another (a third) party by the insured's own fault. This plan is mandatory for vehicles.
Generally, this plan is bought by the vehicle owner as it covers both your own and third party vehicle. It also covers theft or damage caused by unforeseen perils like cyclone, earthquake, fire explosion etc.
Factors that affect the premium for vehicle insurance:
Insurance company calculates the premium of the vehicle based on the risks that insurance company will be underwriting and these can be grouped under following categories:
Insurance of vehicle mainly depends on following factors:
N.B.: Vehicles, older than 5 years are generally not accepted by the Insruance companies for Insurance.
Locality, where you live affects premium calculation. Some Insurance companies ask for higher premium, if you live in urban area, near highways or densely populated area or the chances of theft is high in the area.
If Insurance claim for your vehicle is frequent, then insurance premium can go up for the year.
The age and profession of the driver is also taken into account. If the vehicle is self driven or single handedly driven, then premium is lower, but if multiple drivers are driving the vehicle then the premium goes up.
Tips to reduce the cost of your vehicle insurance:
If you are not claiming for petty expenses, when you are claiming the insurance, it may reduce your premium. This comes under voluntary deductibles.
No Claim bonus is always taken positively by the Insurance companies. If you don't claim insurance on your vehicle during the year then premium may get reduced substantially. Insurance companies give the benefit of no claim bonus as record of your good driving year after year. If you sell your vehicle, this no-claim bonus can be transferred to your new insurance policy for the new vehicle and avail lower premium payout.
Most of the car makers have started fixing robust security system, which are built in like anti-theft alarms, immobilizers etc. With these security fixtures chances of any type of burgalary becomes difficult. Such vehicles generally ask for lower premiums.
Add-ons that increase the premium but are useful:
Most of the companies pay only fifty per cent of value for rubber and plastic parts. One may go for nil depreciation policy, that covers for complete claim for rubber and plastic parts. In case of a claim it may help you reduce amount (plastic and rubber part replacement) that you will have to pay in your repair bill. Yes, you may have to pay little extra premium for that.
A normal comprehensive insurance cover will include personal accident coverage for the owner of the car. For a small fee, additional users who possess a valid driving license and are using the car can also be covered under the insurance policy. By default, most companies include this cover in their comprehensive insurance policies.
Key areas where you may go wrong when choosing a cover:
In order to buy a policy with a lower premium payout, often people reduce the IDV or 'insured declared value' of the car. This kind of act may backfire, because in case of an accident the insurance company will pay the claim accordingly and you may not get the full repair cost. Some times the car may be treated as total write off. It is therefore recommended that always choose a policy that offers you the maximum IDV on your vehicle, even if it means a slightly higher premium.
In case of lapse of policy, insurance provider may give a grace period of usually a week. After , it is the individual's risk if runs the car without insurance. You may also stand to lose out on benefits like lower premiums or discounts for vehicle insurance.
While there are so many types of coverage as mentioned above, let us also be clear as to what is not covered in Vehicle insurance policy.These are:
N.B.: Please carefully study/understand all the options/offerings/benefits made by the Insurance Company, before deciding to go for it.