Buying Car For First Time? Five Insurance Related Matters You Must Understand

Buying your first car is exciting. It is a major financial achievement in most Indian homes. People often spend weeks finalising the model, colour and features that they want. However, one aspect that gets slightly lower attention is understanding the insurance plan. Many buyers tend to go with the insurance being offered by the dealer as it seems less cumbersome. Since the insurance and other services are bundled together, it can seem like the simplest option.

Still, as a buyer you need to understand that there are different types of cover, prices and a lot of small details that you must check before getting a car insurance. 

Here are five simple things you should understand about car insurance.

• Third-party vs comprehensive cover: Third-party insurance is a mandatory requirement under Indian laws. It only covers damage to other people, their vehicles, or property. Comprehensive insurance covers this and also protects your own car from accidents, theft, fire, and natural disasters. For a new car, comprehensive is usually the better choice. You should check with your dealer about the types of plans they offer and compare premiums and claim settlement ratios across the industry.
• Insured Declared Value (IDV): IDV is the maximum financial compensation that your insurer will pay if your car is stolen or suffers a total loss (usually more than 75%). A higher IDV means a higher premium. So, whether you want more IDV or are ok with a lower potential payout in exchange for lower premium should be carefully considered.

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• No Claim Bonus (NCB): If you do not make any claim in a year, you get a discount on next year's premium. This discount can grow over the years, but usually has a maximum cap. This is why you must check whether your plan comes with this feature. In case of small damages, you will also need to decide if you wish to use the insurance or accumulate the bonus.
• Add-ons: These are extra covers you can buy, such as zero depreciation, engine protection, and roadside assistance. They cost more, but they can save a lot during a claim. Before deciding, you should compare the add on services and pick based on your needs and vehicle utility.
• Understanding deductibles: This is the amount you may have to pay from your own pocket when you make a claim. A lower deductible can sometimes mean a higher premium. So you will need to choose accordingly. You should also check aspects such as number of cashless garages available near your home or workplace, claim procedure and other aspects before buying a car insurance.

Vehicle insurance remains an essential aspect of your car buying journey. Understanding its terms and conditions can save you from a lot of trouble later. A little research before buying can help you choose a policy that suits your needs and budget, allowing you to enjoy your car journeys smoothly.

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