How to Buy the Right Car Insurance Policy for Your Family

Wendy Stokesby:

Cars

If you are planning to drive a car on the Indian road, you are mandated to possess car insurance. It is a cover that insulates you and your car from financial losses in the event of unforeseen incidents. Recently, IRDAI has stipulated long term insurance policies with 3-year tenure for cars and 5 years for a two-wheeler for all new purchases from 1st September 2018 onwards. It is important to understand the mechanism that governs the car insurance business, to enable you to purchase a policy that best suits your needs at an affordable cost. This will help you not only to comply with the legal formalities but also help to protect you from financial liabilities for damage both to self and others and their property. Of the many insurance providers in India, HDFC Ergo Insurance is a pioneer in the general insurance business. Their design and policy features can be a benchmark for opting for the right car insurance policy.

The types of car insurance policies:

Car insurance policies have been broken up into two basic types to cover you for a gamut of liabilities.HDFC Ergo Insurance Company has styled their policies thus:

1. Liability Only or Third Party Policy: Cover is provided to the cars or property of other individuals from damages caused by your car in an accident. According to the Motor Vehicles Act, 1988, this policy is compulsory for all cars on the road.

2. Package or Comprehensive Policy: It covers you for own damage in an accident, theft, vandalism, flood, fire, storm, earthquake etc., in addition to the third party cover in the package. You can enhance your cover further by specific add-ons.

Img source:wiseinsurancegroup.com

What are add-ons?

These are provided against additional premium to enhance the cover of your policy for specific purposes that may suit an individual’s preferences. Some of the types are:

  • Invoice cover: It is, in other words, nil depreciation cover, protecting you for the invoice price of your car in the event of damages.
  • Personnel cover: In addition to the normal personal accident cover to the owner, it extends cover to the others in the car as well.
  • Electrical and Electronics cover: Components that are not part of the car but fitted, attracts 4% of its cost as a premiumforHDFC Ergocar Insurance.
  • Engine protector
  • Consumable cover
  • Round the clock roadside assistance
  • Key and lock protection

How is the car insurance premium determined?

Several factors account for the amount of premium that you need to pay for your car insurance. The primary ones are:

  • Make, Model and Variant of your car
  • The volumetric capacity of the engine
  • Year of Purchase
  • Age of the driver.
  • Fuel: CNG or LPG using cars attract an additional 4% on the price of such a kit.
  • Location of registration: In urban locations, the premium is higher.
  • Insured Declared Value (IDV): For renewal of policies, the IDV is reduced based on depreciation for cars up to 5 years old. But for cars which are older, the IDV is dependent on the market value.

Rear-side view of a luxury car on sunset

Factors that reduce premium:

You can reduce the burden of premium with the following tips, of which some are specific to HDFC Ergo Car Insurance:

  • Anti TheftDevices: A discount of 2.5% on the Own Damage component of the premium provided for ARAI, Pune approved safety gadgets.
  • No Claim Bonus: Claim free previous years reduces the premium by as much as 20 to 50%.
  • AAI Membership: As a member, you are entitled to 5% discount on Own Damage component of premium.
  • Quantum of deductibles: If you volunteer to pay a higher amount of deductibles in your claim, the premium will be lower.

Best way to purchase car insurance

The usual practice in India is that the dealer bundles the insurance policy along with the purchase of your car and continues to service every year by helping to renew it. While this is convenient, it is always beneficial to go in for online purchase of insurance and choose a cover that is perfect for your needs within budget. The key benefits are:

  • Multiple Offers: The aggregators and portals facilitate deals from multiple insurers that enable you to compare car insurance online and the type of cover extended.
  • Multiple quotes: The multiple quotes available online gives you the opportunity to land a good deal.
  • Convenience: You can purchase a policy from the comfort of your home, in a safe mode where you directly deal with the insurer.
  • Discounts: Online purchase of policy ensures the lowest possible premium as it is devoid of intermediaries and their commission. Since the overheads are lesser, you get the benefit in the form of a lower premium.

Img source: king-insurance.com

Bottom Line

The key to a successful purchase of the right car insurance depends on your informed choice. You ensure it by selecting a suitable plan by comprehending the fine print of the policy from the right insurer. HDFC Ergocar Insurance can eminently fit your bill by the Company’s penetration throughout India with over 1300 offices that boast of over 1 crore satisfied policyholders. Compare car insurance online at their robust portal and buy the perfect policy to satisfy your needs.

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