Nowadays, with several car insurance policies available online, it can be pretty confusing for any first-time buyer. Each plan offers different benefits, coverage limits, and exclusions, making it difficult to decide what matters most to you.
And, that is why you have to be aware of the terms and jargon related to car insurance policies; this will make sure you choose a policy that aptly covers your car, not at the initial purchase time but through the whole life of your vehicle.
Essential Things to Know when Buying Car Insurance for the First Time
Every first-time car insurance buyer must need to go over all the key information to select the best car insurance policy that will help in protecting their car financially. Here are the key points that one must understand before buying a car insurance policy:
Types of Car Insurance
Majorly, there are two types of car insurance available in the market, and knowing them in detail will help you get the one that is best for your car:
1. Third-party Car Insurance
As per the Motor Vehicles Act, the car owner needs to have third-party car insurance to compensate for the damages caused to any other third-party vehicle, person, or property. This is the most convenient option, which gives you legal compliance as well as protection from financial liabilities caused by accidents.
It is a simple but vital protection for all car owners. However, such car insurance is not able to provide financial protection in case of damage to your own car.
2. Comprehensive Car Insurance
A comprehensive car insurance policy provides complete protection by covering third-party liabilities, as well as damages to your own vehicle. It is a broad, all-inclusive car insurance that offers wide coverage far beyond what a basic third-party policy offers.
Moreover, it is a basic need since it offers greater security against eventual damage due to accidents, natural events, third parties, or theft.
- Claim Settlement Ratio
The claim settlement ratio is the percentage of claims a company has settled out of total claims that it received in any given year. Another critical factor is that you should always go for an insurer with a higher claim settlement ratio since it speaks about an insurance company’s reputation regarding hassle-free claim settlement. This offers you better coverage and peace of mind.
- Insured Declared Value (IDV)
The IDV is the current market value of your car. It’s the maximum value an insurance company will compensate in case your car gets stolen or is damaged beyond repair. When you opt for a higher IDV, you get better financial protection, but the amount of your premium would increase accordingly.
So, it’s best to choose the IDV that actually reflects your car’s real value. You will be adequately protected while not overspending on insurance premiums for coverage.
- Premiums and Coverage
Premium is the amount that you pay to your insurer on a regular basis for keeping your policy active, and coverage is the amount you will receive in case of any sudden damage to your vehicle.
Normally, a lower premium is recommended, but other factors should be considered in selecting an ideal premium to suit your needs. You need to show a balance between the amount of premium and the level of coverage to arrive at the best insurance policy.
- Add-on Covers
Add-on covers are additional benefits you can add to your policy for broader coverage. You can tag the required add-ons to your policy to personalize it as per your needs. Research the add-on cover carefully; these vary among insurers.
- Voluntary Deductibles
A voluntary deductible is the amount that you select while purchasing the policy, which means the amount you pay out of pocket in case of a claim before the insurance company pays your claim.
You may be able to cut your premium by choosing a higher deductible-but be aware of how much you can comfortably pay when filing a claim.
- No Claim Bonus (NCB)
No claim bonus is the discount provided on your car insurance premium in case you do not raise a claim in a particular policy year. It can be beneficial to avail of the premium discount if you do not file any claim under the given annual plan.
Choose the policy that provides a high NCB to avail the discounts up to 50%.
- Exclusions
Exclusions are events not covered under the insurance policy. Going through the exclusions ensures that your policy covers everything that you want because it can hamper the claim settlement later. For example, some insurers exclude damage to the vehicle if it is caused under the influence of alcohol or intoxicants.
- Network of Cashless Garages
Many insurers have partnered with garages that offer cashless repair services through their network. Therefore, it is a good idea to pick an insurer that offers a wide network of cashless garages to enjoy repair benefits at lower costs.
- Customer Support
The reputation of an insurer is dependent on its system for customer support. An efficient system will resolve your queries effectively during emergencies. It will provide peace of mind so you can handle other problems arising from the damage.
Choose an insurance company that will give you clarity with quick responses, indicating accountability and transparency in their dealings to meet customer needs. The customer support service can be learned from reading online reviews and testimonials concerning the company offering insurance.
- Terms and Conditions
Read the terms and conditions in the policy document to be informed about its details. You must be aware of all the important terms, inclusions, exclusions, premiums payable, coverage, and claim settlement. Refer to the company or a specialist for the meaning of jargon used in the insurance document.
- Compliance
Keep in mind that one should always stay compliant with the respective insurance policy; otherwise, one may face problems at the time of claim settlement. Having a proper car insurance policy will keep you at ease while driving, as your car will be prepared for any accidental expenses.
Understanding the basics of car insurance is very important as a first buyer. Ensure you understand some key insurance terms and conditions that will help you grasp what the policy offers. If you do not consider the details of various policies available in the market, you might choose the wrong policy.
Hence, secure your car financially against accidents or damage by choosing a suitable car insurance policy.
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