Motor insurance or car insurance provides cover in case you face the situation of your car getting stolen or damaged (like in accident). The premium of the policy is determined by the Insured Declare Value (IDV) of the vehicle.
If you increase the IDV, the premium increases, and if you decrease the IDV, the premium is lowered. Before going for a policy renewal or selecting a new car insurance policy, one must compare various available options.
Benefits of Car Insurance:
Following benefits are offered by car insurance plan:
- Coverage for loss or damage of the vehicle that is insured.
- Coverage against specific situations like damage or loss caused by theft, explosion, accident, fire, lightning, self ignition, riots, strikes by terrorists, natural calamities, etc.
Types of Car Insurance:
According to Motor Vehicle’s Act, 1988, it is mandatory for all car owners to get proper vehicle insurance while buying a car in the country. It dictates that all cars must be insured for third party risk. There are two options of car insurance available to buyers:
- Third Party Insurance: It covers the damages that the policyholder might have to incur in case of disability/ death of a third party. According to Indian law, it is compulsory for all cars to have third party insurance. But this cover excludes damages to you, your co-passenger or your cars.
- Comprehensive Insurance: This safety cover provides compensation for the losses- you, your co-passenger and your car incur, in addition to third party cover.
Of the two, comprehensive cover is more desirable as it has a wider coverage.
How Do You Obtain Car Insurance?
You must provide your insurer all important details like history of your driving, who are the users of the vehicle, details about vehicle and locations where the car has been driven. After perusing these details, the insurer will suggest the best insurance plan for your vehicle. People, who don’t provide correct information, run the risk of getting their insurance plans discarded.
Why Are Premiums Different?
Every insurance company has its own methodology and criteria to calculate the premiums. They are usually designed to attract more and more customers. Every insurer comes out with its own premium calculation and consumers can select the policies according to their need.
What Factors Determine Premium Amounts?
Before deciding premium, every insurer takes the following details into consideration:
- Make and model of the car
- Current showroom price
- Place of registration
- Nature of client: Corporate or individual owner.
Price of the vehicle determines the amount insured, and thus, the premium.
For customers seeking renewal of policy, they consider:
- Record of compensation claims by the policyholder
- If policyholder has made few claims in the past, his premium amount is lowered.
- If policyholder has not made a single claim within a time frame, he is awarded a ‘No Claim Bonus’. The time frame is typically, five years.
Anyone can buy a policy on behalf of any other person. Policy renewal can also be done online. For e.g., Maruti Suzuki car insurance online renewal is totally valid.
Author’s Bio: He is an insurance agent for reliancegeneral. He has several years experience in various companies for selling insurance plans to customers. As he is familiar with the insurance procedures of the country, he provides informative articles to the website.