Everyone tries to save their hard-earned money. Most of us prefer to buy things at an affordable price instead of going for the most expensive option to save money. That’s wise given the fact that you can find good quality products at a lower or affordable rate. But this concept does not apply to car insurance policies. As per motor insurance experts, buying the lowest-priced car insurance policy for your car is not a good idea. Let’s read on to understand why.
Car insurance is a safety tool that ensures the financial protection of your car in case it suffers from any loss or damages. As per India’s motor laws, it is compulsory for every car to be covered under a car insurance policy with a minimum of third party cover. Thus, the whole idea of buying car insurance is to stay covered against any financial losses arising out of your car and abide by the motor laws.
The motor insurance market offers car insurance plans in abundance. You may be tempted to opt for the most affordable car insurance plan to save your hard-earned money. Surely, it will save you some money by reducing your car insurance cost but it may turn out to be more expensive in the long run. This will happen because not all car insurance plans come with the same level of coverage or benefits and a lower-priced plan may strip you of some essential benefits.
Take a look at some of the reasons why you should not buy the lowest-priced car insurance for your four wheeler:
All car insurance policies provide financial coverage to the policyholder’s car. However, the coverage level may differ from one policy to another. This is where the cost of the car insurance policy comes into play. The cost of a car insurance policy depends largely on the level of coverage it offers. Usually, a lower premium in motor insurance means lower policy coverage. An affordable car insurance policy is affordable only because they may offer basic coverage i.e. third party insurance. Since third party insurance covers you only for third party liabilities, you may incur major financial losses if an accident leads to loss or damages to your car. Your car can get all-round protection only with a comprehensive insurance policy, which will come for a higher car insurance premium.
Moreover, it is always better to cushion your car with adequate coverage to eliminate the chances of any financial losses with the help of a comprehensive insurance cover. There is no point of buying insurance which would not come to your rescue in the event of an adversity. Your aim should be to buy a comprehensive insurance policy for your car that provides financial safety against all damages. This won’t be possible with the lowest-priced car insurance and thus, you must not go for it.
A car insurance policy is a combination of crucial coverage and benefits offered by the motor insurance company. Although there is no hard-and-fast rule to confirm that expensive insurance plans provide better coverage benefits, lower-priced policies do come with fewer benefits. The insurers lower car insurance premium by reducing the coverage benefits. What is important here is to determine that an affordable policy does not strip you of crucial coverage benefits. If a comprehensive insurance policy provides you with essential coverage for an affordable price, you should not think twice before buying it. However, if the lowest-priced car insurance policy does not cover you for even an accident, it may result in major financial losses.
For example, a lower-priced policy may offer personal accident cover only for the owner of the car and not the paid driver or passengers. You may have to buy this cover for the passengers and paid drivers as an add-on cover, which will increase the premium. But if a policy offers personal accident cover for owner-driver as well as passengers for a slightly higher premium, it would be wiser to purchase it.
Therefore, it is important to compare various car insurance policies and do a cost-benefit analysis. It will help you determine whether an affordable car insurance policy comes at the cost of essential benefits or not. If it does, it is wiser to choose a policy that provides crucial coverage benefits even if it comes for a slightly higher insurance premium.
Another drawback of buying the lowest-priced car insurance policy is that it comes with higher deductibles. For the unversed, a deductible is a share of the claim amount that the policyholder/ car owner pays at the time of claim settlement. You are required to pay your deductible amount first and then your motor insurance company will pay its share of the claim amount. The higher the deductible amount is, the lower will be the burden on the insurer towards the claim amount. Hence, insurance companies offer car insurance plans for lower premiums if the deductibles are higher.
Thus, it is crucial to check the deductible amount that you will be required to pay before buying an affordable car insurance policy. If an affordable policy comes with a higher deductible, you may have to pay less at the moment but will end up paying a lot more during claim settlement. Hence, make sure to opt for a deductible amount that you can afford to pay at the time of settlement of claims. If you cannot, it is better to buy a higher-priced comprehensive insurance policy that comes with lower deductibles.
One of the best things that the motor insurance industry offers is cashless claims facility. Car insurance policies with cashless claims allow the car owner to get their four wheeler repaired at a network garage of the insurer. Under this type of claims, you are not required to pay any money towards the repair of your car as the bill is directly paid by your insurance provider. Hence, it saves you from shelling out any money from your pockets.
However, if your car is being repaired at a non-network garage, you cannot make cashless claims and will have to raise a reimbursement claim. When it comes to affordable car insurance policies, you may only get the option of reimbursement claims. There are chances of not getting cashless claims facility and paying for the repair of your car from your own pockets in case of lower-priced car insurance plans. Therefore, you must ensure that the car insurance policy you buy comes with the cashless claim facility for better convenience.
When it comes to the motor insurance industry, everything comes for a cost. An expensive car insurance plan may come with comprehensive coverage, wider benefits and efficient customer service. On the contrary, a lower-priced car insurance plan might offer only the basic coverage, fewer benefits and poor customer services. The insurer may not provide you even with the essential services and may have a laid back customer support system.
For example, a motor insurer that provides roadside assistance service to all its policyholders may charge a higher car insurance premium. Roadside assistance services, such as towing, flat tyre change, etc are beneficial for the car owner’s if their vehicle breaks down in the middle of the road. Paying a slightly higher premium for this service may not pinch your pocket. But if you opt for a lower-priced policy, chances are that you won’t get roadside assistance services and may incur multiple expenses if your car breaks down.
Moreover, a lower-priced car insurance policy may have a lower claim settlement ratio or take ages to settle your claims. Hence, you must go through the existing customer feedback and check the available customer services offered by the insurer before buying an affordable car insurance policy. If customer feedback for a motor insurance company is not good and they are known for poor customer services, it is better to buy a higher-priced insurance policy.
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Take a look at a few tips to reduce your car insurance policy premiums:
Summing It Up
Buying a lowest-priced car insurance policy is not always in the best interest of your four wheeler. In the motor insurance industry, lower car insurance premiums may mean lesser coverage, benefits and customer services. Besides, it may also result in higher deductibles, which may turn out expensive in the future. Hence, you should not always pick the most affordable car insurance policy and instead opt for a comprehensive insurance plan that provides your ideal coverage for an affordable price.
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