Buying a motor insurance policy is one of the few things that are essential after purchasing a new vehicle. It has several benefits like acting a financial safeguard against unpredictable perils like accidents, natural calamities as well as man-made perils, fires, earthquakes, etc.
Apart from that, the Motor Vehicles Act makes it mandatory to have an insurance policy for all vehicles registered in the country. The type of policy depends on the category of the vehicle; for example, a commercial vehicle is required to have commercial vehicle insurance. On the other hand, private vehicles need to have private vehicle insurance mandatorily.
In this article, we have compiled an exhaustive checklist for you to simplify the buying process of motor insurance –
1. Type of insurance policy
The starting point in selecting an insurance policy is knowing the types of insurance plans. It will help you make an informed choice considering your requirements.
A third-party policy is the one with limited coverage. As the name suggests, it covers only the liabilities that may be incurred by the insured during an accident or damage to a third person. On the other hand, a comprehensive policy has a broader scope and provides coverage for more events. It is a combination of third-party policy as well as the own-damage cover. Further, perils of nature, along with man-made disasters, are covered by a comprehensive plan.
2. Setting the right IDV
IDV or insured declared value is the maximum amount that the insurance company offers in case of a total loss or damage. Whether you buy motor insurance online or offline, you, the policyholder, have an option to fix the IDV for your vehicle between a particular range depending on the vehicle specifications. IDV has a direct impact on your premiums too. Setting a higher IDV will increase the premium, whereas a lower IDV will lower the premium but can have an adverse impact of financial loss at the time of claim.
3. Knowing the policy coverage
The coverage of your policy specifies what events are covered and which are specifically excluded by the insurance company. When buying a motor insurance policy, ensure you thoroughly read the policy document. Here you will find a mention about the inclusions and exclusions under your policy
These are optional features that can be added to your policy to enhance its coverage. Add-ons are available at a nominal price and significantly increase the scope of your policy. Thus, it is essential to consider add-ons when looking for a comprehensive insurance plan that offers all-round coverage. But make sure you do not purchase unnecessary add-ons as they might increase your premiums. There are a few essential add-ons like the zero-depreciation cover, engine protection cover, NCB cover, etc. that should not be missed.
5. Factors that impact your premiums
When buying an insurance policy, you should know of the various factors that impact your premiums like the no claim bonus, insured declared value, deductibles and more. Tracking these factors will help you keep the premiums in check and get insurance cover at an affordable cost. You can also make use of a motor insurance calculator that aids in the comparison of the plans along with considering its affordability.
6. Claim Settlement Ratio
Lastly, do not forget to check the claim settlement ratio of your insurer. It will help you get an idea about how many claims are settled as compared to the number of applications received.
Using the above points, you can ensure you not only get adequate coverage but also at an affordable cost.
Interesting related article: “What is Car Insurance?”