5 Important Tips For A Car Insurance Beginner

Looking to purchase a car insurance policy for your beloved new car, but don't know how to go about it? We are here to help! Take a look at this car insurance guide for beginners to know about a few important things before buying insurance for your four-wheeler for the first time.

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5 Tips to Know As A Beginner in Car Insurance

Before getting a motor insurance policy for your new car, it becomes essential to be aware of different aspects of car insurance. Once you are well informed about these things, you will be able to easily make a wise purchasing decision. Given below are the 5 important things to know about car insurance for beginners.

1. Understand the Coverage Offered

One of the most important aspects of car insurance for beginners is the coverage offered by the policy. A motor insurance policy in India offers two major types of coverage, namely third-party liability only and comprehensive coverage.

A third-party liability car policy will compensate you against any third party accidental liability arising due to your car. These liabilities include death, injury or property damage of the third party. Moreover, this policy coverage is legally mandatory for every car owner in India. However, a third party liability cover will not cover your car against any damage.

On the other hand, a comprehensive car policy will compensate you against the damages sustained by your car due to any unanticipated event like a road accident. This policy will also provide coverage against third party liabilities arising from your car. It is not a mandatory cover but is recommended as it offers extensive coverage. Thus, before choosing a motor insurance policy make sure to know about the kind of coverage you want.

2. Premium vs IDV

You must have come across premium and IDV while choosing an insurance policy for your four-wheeler. Both these terms can be confusing for a beginner as you may mistake them to be similar but they are poles apart.

A premium is a price that you will pay when you purchase a car insurance policy. It is the amount that you pay to the insurance company in exchange for the coverage it offers against damages resulting from your car. You can also lower your premium by opting for different discounts offered by the insurer.

An IDV or Insured Declared Value of your car is the current market value of the insured car. It is the value that your insurance company agrees to compensate in case of the total loss of the insured car. To calculate the IDV, the current selling price and the depreciation borne by the car over years are taken into consideration. Thus, before purchasing a motor insurance policy, understand both these terms and choose your policy wisely.

3. Understand No Claim Bonus

Before purchasing a motor insurance policy, you must also understand the concept of the No Claim Bonus as it is an essential tool to reduce your premium. A No Claim Bonus (NCB) is a discount that you receive on policy renewal premium for not making a claim during the policy year. You can use the NCB to reduce your premium while renewing your motor policy.

Moreover, for not making a claim for 5 consecutive years, you can receive an NCB discount of up to 50% on your renewal premium. Thus, before purchasing a four-wheeler insurance policy, make sure to understand the concept of the No Claim Bonus clearly.

4. Buy Add-ons for Enhanced Coverage

There are certain damages that are not covered in a comprehensive motor insurance policy. For example, the cost of repairing non-accidental damages to your car’s tyres are not covered by standard car insurance. However, you can purchase add-on covers from your insurer to cover these damages by paying an extra premium. If you have a brand new car, you can opt for add-on covers, such as tyre cover, engine cover, NCB protector, return to invoice cover, etc. in your car insurance policy.

However, being a beginner in motor insurance, you can end up purchasing all the add-ons offered by your insurer even if you don’t need them. Doing so will, ultimately, increase the cost of your four-wheeler insurance policy. Therefore, make sure to only buy those add-ons that you find useful for your new car.

5. Understand Voluntary Deductibles

Another important thing to know about car insurance for beginners is voluntary deductibles. A motor insurance deductible refers to the part of the claim amount that you as a policyholder agree to pay at the time of claim settlement. If you are opting for a zero voluntary deductible, your insurer will pay the whole claim amount and thus, will charge a higher premium.

But if you agree to pay a certain amount as deductible, the rest will be paid by the insurance company. By opting for a higher voluntary deductible, you can reduce the premium of your four-wheeler insurance policy substantially.

However, it can also be a burden for you at the time of the claim process as it will lead to a lower claim amount. Therefore, be cautious while choosing an amount as voluntary deductible at the time of purchasing a motor insurance policy for your car.

Wrapping Up!

This car insurance guide for beginners can be really useful if you have bought a car for the first time and are looking to purchase a motor insurance policy. Knowing the above-mentioned aspects of vehicle insurance can help you in purchasing the most economical car insurance policy. Furthermore, you can also compare car insurance prices on websites like Policybazaar.com and choose the right motor policy for your new car.

Written By: PolicyBazaar - Updated: 01 April 2022
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