Car insurance price is an incredible way of creating a solid monetary backup. But the basic concepts can occasionally be perplexing. For example, legal terms such as coverages, or exclusions, can be misleading. So, the best way to understand buying a suitable policy is by asking the right questions. It will help you get a better hold on the concept of car insurance, leading you to buying online car insurance upon your next renewal or purchase.
Buying Car Insurance? Know the Basics for a Better Drive
Buying online car insurance, especially, a third-party car insurance is mandatory in India. To choose the most suitable car insurance price per your requirement, it’s essential first to know the types before buying online car insurance offered by insurance companies. Let’s have a look at the different kinds before you buy car insurance offered in India:
- Third-party Car Insurance: Third-party insurance is mandated by law. If you encounter an accident, a third-party car insurance policy takes care of the expenses incurred to the car you dashed into. The other party will get restitution for the damage, and you will be rescued from a financial disaster.
- Buying Online Car Insurance (Comprehensive): As the name suggests, a complete insurance policy offers holistic coverage that not only offers the scope of third-party insurance but also provides protection for your vehicle. This type of policy offers the most extensive coverage and is highly recommended by us.
How is Car Insurance Premium Payable Calculated?
There are many things in the fine print of our insurance policies- the Terms and Conditions, the Exclusions, the Special Case but the premium is always told to us upfront. So often, however, we tend to hear just a number, never really understanding how that number was arrived at or what the calculation process truly entailed. So, for example, the car insurance price relies on the ensuing aspects:
- Third-Party Cover
Third-Party Liability (TPL) covers any damage to a person or property by your insured vehicle that results in financial loss or loss of life to the said person but does not cover expenses you bear for any repairs.
- Own Damage (OD) Cover
The OD cover is optional but highly beneficial when you want to buy car insurance. It reimburses your expenditure if your car is damaged due to natural events such as earthquakes, fires, storms, etc., or an accident. In addition, as your car grows older, the IDV decreases.
- Personal Accident Cover
Before buying online car insurance, you must understand that this component of your car insurance premium goes beyond your car and safeguards you against accidents and mishaps leading to a disability.
Car Insurance Premium for New Cars
Car insurance price has always been an expensive investment because it is a financial product that is expensive to maintain and cover. Car insurance price is based on the risks covered by an insurance policy that covers you and your car and protects your liability for damage or injury to other people, damage to other cars, and even the loss of your vehicle.
Car Insurance Premium for Used Cars
Old Car Insurance is only car insurance for older cars that have depreciated value over the past few years. It is important to buy car insurance for older cars is crucial due to the limited availability of spare parts and the high risk of breakdown.
- Three car insurance policies are available in India; however, only third-party car insurance is mandatory.
- The sum insured by a car insurance policy primarily depends on the vehicle’s Insured Declared Value (IDV).
- The car insurance price is calculated by considering your vehicle type, geographical location, and other factors.
Did You Know?
In India, 78.4% of accidents are caused due to driver negligence, with the primary reason being driving under the influence of drugs or alcohol. Additionally, 67% of road accidents occur between 9 AM to 9 PM, and the 18-to-35-year age group is most affected!
Factor Which Determines Car Insurance Premium Calculation
The car insurance premium is essential when you renew or buy car insurance. To ensure that you buy an affordable policy with adequate coverage, you should be aware of the following factors determining your car insurance price:
- Fuel Type
There can be a contrast in the car insurance price depending upon the kind of fuel your car is running on.
- Value of The Car
A car’s insured Declared Value (IDV) is a primary component for calculating before buying online car insurance. Thus, if a car costs more, the cost of getting it insured will be more.
Specific associations enable members to enjoy a small discount when they buy car insurance premiums.
- Driving History
Driving history will not impact if you before buying online car insurance. However, the car insurance price will increase for those who have raised a car insurance claim against their policy.
How to Reduce Car Insurance Premium?
When you buy a car, the convenience comes at a price. Besides maintenance, you also pay for the car’s insurance. Is there any way to reduce this financial liability, or are the premiums fixed? Yes, you can bring down the premium of your comprehensive insurance by customizing your cover and being aware of several other factors.
- Get a Pay-as-you-drive Insurance
This has been a relatively new and usage-based offering, wherein the insurer charges a premium only for the number of kilometres fixed at the policy’s inception.
- Don’t opt for several upgrades or modifications
Modifications increase the chance of theft. For example, if you alter your car, installing a CNG kit or an electronic device, you must inform the insurer as it may impact the premium. If you don’t notify, your claim may be rejected later.
- Avoid small claims
If your car suffers minor damage like scratches or small dents, you should avoid claiming because you will not be eligible for a no-claim bonus (NCB) at the next renewal.
- Install anti-theft devices in your car
Lower the risk of having your car stolen—the more the safety, the lower your car insurance price.
Word to Remember
A car’s depreciation value is the difference between the buying and selling costs of the vehicle. It calculates a car’s Insured Declared Value (IDV).
How to Compare Car Insurance Prices Online?
A suitable insurance plan can serve as a monetary lifeline in tumultuous times. Since many firms now provide car insurance schemes, comparing car insurance and buying online car insurance is the best and easy. Before you buy car insurance, make sure you compare car insurance and purchase the policy online, so you can save costs and may also get discounts.
Add-on Covers That Can Affect Car Insurance Premium
A base cover covers not every damage. Add-ons help increases the scope of your comprehensive cover and raises your premium. You must pick the add-ons based on your requirement. Several add-ons are less critical but cost the same as others. So, you can easily forgo some of them.
Points to Consider When Buying Car Insurance Online
Buying online car insurance ensures that you follow the law and financial cushioning concerning expenses incurred towards car repairs. Are you wondering what to look for when renew or buy car insurance? Here, take a look –
- Consider the Brand
Even if you are not that brand conscious, you must have thought about the car’s brand while purchasing the four-wheeler. Similarly, it would be best if you also spent some time thinking about the insurer’s brand.
- Range of the Cover
You can either purchase insurance to tick the compulsory insurance box or purchase it to save money in case of accidents and meet legal conditions.
- Add-on Covers
It would be best if you were practical while buying add-on covers. In addition, each add-on has its price, which can differ from one insurer to another. Thus, do not go on a shopping spree regarding add-ons.
- Policy Terminology
You must try to read the fine print by going through it before purchasing a policy or raising a claim. After all, insurance is a contract, and the terms of an agreement are always important.
- Cashless Facility
In insurance, the word ‘cashless’ means you do not have to pay money upfront when settling claims. An insurer with a vast network of garages can offer the cashless facility efficiently.
Now that we’ve told you everything about car insurance policies, it’s time to get out there and start browsing plans before buying online car insurance. But remember, it’s essential to choose the right approach and car insurance price, so you don’t end up burning a hole in your pocket!
If you renew the policy after the extended expiry date, the cost of the premium will also increase.
The third-party car insurance price is less than the total insurance price due to its lower extent of coverage. Therefore, the First Party insurance is more cost-effective.
A cashless facility allows the insured access to garages where they do not have to pay upfront for the damages covered by insurance.
Insured Declared Value (IDV) is the greatest sum guaranteed by the insurer, provided for theft or complete loss of the insured car. IDV is the existing market value of the car. If the car suffers an absolute loss, IDV is the payment the insurer will provide to the policyholder.
It started at an average of about INR 2400 per year but is now around INR 4000-5000 per year.
Also Read: Comprehensive Insurance