To buy the right car insurance policy, you have to act prudently. The habit of blindly following what others have bought could land you in a trouble. Here are the four questions that you should ask before you buy car insurance.

Q.1 What is the IDV of the car?

Usually, mis-selling happens when you buy the insurance via agents. If you negotiate well with the agent, he may lower the premium but at the cost of your car’s insured declared value (IDV). Let’s say, the premium of your car, valued at Rs 8 lakh, is Rs 25,000. If you negotiate with the agent, they may reduce your premium to Rs 23,000, but, simultaneously, may also lower the IDV of the car. Unfortunately, this fact will be noticed only at the time of a claim. Due to low IDV, the insured will get a low claim amount. To avoid such a situation, check your car’s IDV with the insurer.

Q.2 What is the voluntary deductible Limit?

Deductible is the out-of-pocket expenses that an insured pays before the insurance company foots in the claim amount. It can be further classified into voluntary and compulsory.

Let’s say, the IDV value of your Honda City (1.3 DX variant) is Rs 5,61,735. In case of ‘no deductible’, your premium would be Rs 12,448. However, if you are willing to contribute Rs 15,000 as the voluntary deductible, the premium rates will reduce to Rs 9,598.

Often the agent agrees to lower the premium quotes by increasing the voluntary deducible limit. When a loss happens, you have to cough up a huge amount— voluntary and compulsory deductible— from your pocket.  

Q.3 Should I disclose my previous claim history?

If you move to another insurer and do not disclose the details of previous claims, you may get a low premium from your new insurance company. However, the real problem arises when you make a claim. Your present insurer will contact the previous insurer to verify your claim history. Any discrepancy in the information could lead to claim rejection. While agents are quick to suggest ways to lower premium rates, it is the policyholder who suffers when the claim gets rejected.  

Q.4 Should I buy add-on covers?

At first, an agent will give a premium quote after factoring in the cost of add-on covers, such as personal accident cover for passengers, quick roadside assistance and loss of personal belongings. If you negotiate, the agent will remove add-on covers to lower the premium quotes. However, add-on covers such as roadside assistance, personal accident cover and loss of personal belongings are important; therefore, think twice before scrapping them out from your basic insurance policy.

The way the insurance sector is evolving, you will soon be able to get better discounts on the basis of various factors such as your driving track record, age, and so on; however, for now don’t commit into the deals and discounts blindly. Make sure you do a thorough comparison to avoid falling into a pit.

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