Are you a car enthusiast who’s always on the lookout for their next purchase? Do you spend hours at night reading about the safety features of the car you’ve been eyeing? Do you sometimes lose sleep because you cannot decide which colour to buy?
Well, we’re with you on that one. But have you ever given this much thought to buying a car insurance policy? Since you’re here, we’re guessing you haven’t. But before we get into the details of car insurance, it’s best you know that having your vehicle insured is mandatory as per the Motor Vehicles Act, 1988.
- There are three types of car insurance policies in India, including third-party car insurance, own-damage car insurance, and comprehensive car insurance.
- As per the Motor Vehicles Act, 1988, having a third-party car insurance policy is mandatory in India.
- The Insured Declared Value (IDV) is the compensation amount a policyholder receives if their car suffers theft or complete damage.
- The claim amount and car quote depend on the vehicle’s IDV, which is decided by the insurance provider.
So, if you’re planning to buy a new car or already have one that isn’t insured, we’d suggest you start looking for car quotes right away. However, you must also know that the law is only applicable to third-party insurance policies. Are you wondering what that means? Third-party car insurance is a type of policy that offers coverage against third-party liabilities.
Still confused? Here’s an example:
Let’s say a 25-year-old individual, Rohit gets into a car accident, and the driver of the other vehicle (who is the third-party person in this case) sustains injuries. In such a situation, Rohit’s insurer will have to offer compensation to the third-party individual. To make it more clear for you, in the same situation, the insurer is the second party, whereas Rohit is the first party.
While the concept of third-party insurance does sound complicated at first, the primary reason is to offer every car owner (or driver) protection against potential risks. Additionally, insurance providers also offer two other types of policies, which are:
- Own-Damage Car Insurance Policy – This plan offers financial coverage for your car against accidental damages, theft, natural calamities, fire, etcetera.
- Comprehensive Car Insurance Policy – As the name suggests, this car insurance policy is extensive in nature. It includes the benefits of both own-damage and third-party car insurance.
Although you are now familiar with the basics of car insurance policies, there is still a lot more you should know, including how to get a car quote, what Insured Declared Valued (IDV) means, the factors that affect your premium, and much more. So, keep on reading!
How to Get a Car Insurance Quote?
As we discussed, buying (third-party) car insurance is mandatory in India, meaning that every car owner is legally required to purchase a policy. And to do this, the first step is to get a car quote (which is the total cost of buying the insurance plan) from an insurance provider of your choice.
The convenient part? You don’t necessarily need to visit the insurer’s office as you can easily get a car quote online. All you need is a working internet connection, a working smartphone or laptop, and you’re good to go!
Wondering how? Here are the quick steps to get car insurance quotes online:
Visit the official website of an insurance provider of your choice and look for the ‘Car Insurance’ or ‘Vehicle Insurance’ section.
Under the section, look for the ‘Get Quote/Quotation’ option and press select.
Select your vehicle type by choosing ‘Car’ and enter your registration number.
Note: If you don’t remember your registration number, you might be able to find another option that allows you to select your vehicle type, model, variant, etcetera to get the car quote.
Enter other personal details like your name, mobile number, and email ID.
Click on ‘Get Quote’ or ‘Submit’, and customized insurance quotations will appear on the screen.
While these are the standard steps to get car quotes online, the options might differ depending on which insurance provider you prefer. Also, you can proceed to buy the insurance policy online if you are satisfied with the insurance quotation.
However, if you wish to get a car quote offline, you can visit the insurer’s office and get in touch with an official. But we should tell you, buying car insurance policies offline is comparatively costlier, offers less transparency, involves a chunk of paperwork, and is simply not that convenient. So, we’d suggest you get a car quote online, but of course, it’s completely up to you!
Lastly, remember that it’s not always best to go for cheap car insurance quotes. Instead, look for a plan with comprehensive coverage and maximum inclusions.
What is Insured Declared Value?
When you look for car insurance quotes or proceed to buy a policy, you will probably come across the term ‘Insured Declared Value’, which is also known as IDV. In simple terms, the Insured Declared Value is your vehicle’s current market value. This is how IDV is calculated:
Insured Declared Value = The vehicle’s listed selling price – depreciation
But what does IDV have to do with your car quote or insurance policy? Well, the Insured Declared Value is the sum that you will receive if your car suffers theft or complete damage during the policy tenure.
However, the IDV is decided by the insurance provider during the time of policy purchase and the insurance and registration expenses are excluded. Additionally, if your car has any accessories that are not factory-fitted, the IDV will be calculated separately, provided that insurance is necessary for these accessories.
While you can fix your vehicle’s Insured Declared Value online, it is best to visit the insurer’s office if you’re unsure of how it works. Also, getting the right IDV is imperative as it can result in lower premiums and better car quotes.
Did You Know?
In 2019 alone, India reported close to 151 thousand fatalities as a result of car accidents despite accounting for only 1% of the world’s total vehicle population.
5 Big Things That Impact Your Car Insurance Premium
Now that you know how to get car insurance quotes let’s understand the factors that impact your insurance premium. This will help you choose the right policy while also making it easier for you to compare different auto quotes.
The Type of Car Insurance Plan
As we discussed earlier, there are three types of car insurance plans available in India, and each has different coverage features. However, the higher the coverage, the higher the car quote premium will be. For instance, if you purchase a comprehensive plan that offers 360-degree coverage, the premium will be comparatively costlier. But if you buy third-party car insurance, you might have to spend less on premiums.
Fuel or Engine Type
Another vital factor that impacts car quotes is the fuel/engine type of the vehicle. If your car runs on diesel, the premium will be slightly higher compared to the premium for petrol and CNG vehicles.
The Policyholder’s Personal Factors
Yes, you read that right. Personal factors, including your profession, are likely to affect your car quote. For example, if you are a cab driver or delivery executive, the premium will be much higher. This is because these professions have an increased risk of road accidents. Similarly, your age will also be a determining factor, and the younger you are, the higher the premium.
The Vehicle’s Safety Rating
If your car has a high safety rating, the insurance premium will typically be lower, as your chances of meeting an accident will be lower. So, if you’re yet to buy a car, you should definitely choose one with the maximum safety features.
Driving and Claim History
An individual who has previously been in a car accident or has already made an insurance claim in the past will have to pay a higher premium. While this might seem a bit unfair, it’s just how car insurance policies work.
The Effect of Used-Car Valuation on Insurance Premium
Although we have covered the 5 main factors that affect car insurance quotes, we would also like to shed some light on used-car valuation and its effect on insurance premiums. So, what does used-car valuation mean?
Used-car valuation is the process of determining the market value of a second-hand vehicle. It is the same as calculating the Insured Declared Value (IDV), but the only difference is that, in this case, the vehicle is second-hand or used. But how does this affect the insurance premium?
As we discussed, a vehicle’s IDV is the total sum insured that the insurance provider will offer if your car suffers theft or total damage. But the higher the IDV or used-car valuation is, the higher the sum insured, which would then result in a higher insurance premium.
If you have a second-hand vehicle that you wish to get insured, you can calculate its used-car valuation by using an online calculator. Or you can even visit an insurance agent if you want a detailed breakdown of the car quote.
Word to Remember
Used-car valuation is the market value (or Insured Declared Value) of a second-hand value, and it is a significant factor that impacts car insurance quotes and premiums.
Now that we’re at the end of this article, we’d like to think we did a good job explaining the essentials of car insurance policies in India. So, what are you waiting for? Get a car insurance plan today.
But wait! Don’t forget to compare car quotes, premiums, and coverage features, so you know you’re investing in the right policy.
Yes, it is mandatory to buy a car insurance policy in India as per the Motor Vehicles Act, 1988. However, this is only applicable to third-party car insurance.
Today, you can easily compare car quotes and buy insurance policies online. You can visit the website of an insurance provider of your choice and look for car insurance plans.
While there is no limit on how many claims you can make in one year, it will impact your premium and No Claim Bonus (NCB).
No, you cannot add riders to your third-party insurance policy. The option is only available for comprehensive car insurance plans.
Yes, car insurance is mandatory for all vehicles, including electric cars.