One of the most important aspects of buying a car is finding the right car insurance. Good insurance protects you and your vehicle from any damages and losses. It is of utmost importance to find a policy that fits your needs and budget. Car insurance can seem a bit complicated if you are new to it. The best way to go about it is to research and understand how it works. You can start with understanding the basics of car insurance. Here we have put together 5 things that every beginner should know about car insurance.
Find the One: One of the unspoken and golden rules of car insurance is to find the right policy that suits your needs and requirements perfectly. You can either buy a basic and mandatory third-party policy that protects you against any liabilities or buy the comprehensive policy, which protects you from both your own damage and third-party liabilities.
Choose the Right IDV: IDV or the Insured Declared Value is the maximum amount you can get your insurance company to pay you, in case of a claim. It is the existing market value of your car, which is set by the policyholder when you opt for a comprehensive policy. Your IDV is an important factor that will affect your premium and claim amount. A higher IDV will increase your premium and a lower IDV will decrease your claim amount. So, choose wisely.
Handle Deductibles with Care: When it comes to car insurance, the policyholders are expected to pay a certain minimum amount, in case of a claim. This amount is called the deductible. It is chosen by the policyholder at the time of policy purchase. You can either go for the lowest amount under compulsory deductible or opt for a higher deductible under the voluntary deductible. Choosing a higher deductible will decrease your premium and your claim amount. This option is ideal only for safe drivers driving in no-accident-prone areas.
Add the Right Add-Ons: One of the common mistakes that most beginners make is to over insure their cars by opting for all the add-ons. Add-ons in car insurance are the options for extra coverage which can be taken when you buy the comprehensive policy. Some of the common add-ons are zero-depreciation cover, return to invoice, roadside assistance, no-claim bonus (NCB), etc. This will both increase your policy’s price and its coverage. While the add-ons may be useful, it is best to buy them only if you think you definitely need them.
The No-Claim Bonus: A no-claim bonus or the NCB is a reward given to policyholders who have not made any claims during their policy period. It is given in the form of a 10% discount on your next premium. The NCB can be carried forward up to 5 years i.e., 50% discount, and can be transferred to other insurers, if you choose to switch to a new insurer. However, if you do not renew your policy on time, you will not only lose your coverage but also your NCB.