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Motor Insurance Renewal Doubts?

It’s that time of the year again when you must be receiving calls from various insurance companies to renew your car insurance. Besides being bothersome, they generally seed a number of questions in your mind like what is the right plan for me? Where can I find the lowest premium? Which insurer should I go with? Are all plans the same in terms of premium and cost? 

The answer to all your queries is right here. 

First and foremost YES! Premiums differ among insurance companies because each company evaluates the perceived risk differently. Therefore comparing your motor insurance renewal is a must. Do this and you can save up to 55% on your renewal premium. 

Now the next big question that worries a vehicle driver is where to buy their motor insurance. It isn’t uncommon to hear car dealers threaten not to honor the claim if the policy is not purchased from him. The truth is all authorized service centers have a tie up at the corporate level.

If a service center X offers cashless claim from an insurer Y, then irrespective of where you buy, the cashless claim would be honored by insurer Y. However do remember to check the details of this tie up before lodging a claim as the list keeps changing with time. 

Coming to which plan to go for, before we answer this, let’s first understand what types of plans are available:

Liability Only Policy:

This policy covers only third party liability, meaning if your car gets damaged you would have to bear all expenses. A liability only policy is mandated by law and only covers you from the risk of hurting someone or damaging someone else’s property.  The premium of this is fixed by the insurance regulator IRDA and is based on the cubic capacity of the car.

Comprehensive Policy:

This policy covers both your car and third party liability. However in the case of a car getting damaged, the insurance company does not cover the entire repair charges. It applies depreciation depending on the age and type of parts being replaced.

Add ons:

These are extra covers the customer can opt for in addition to the comprehensive policy.  Let’s look at the difference types of cover

    a. Zero Dep/Bumper to Bumper :

Various names are available for this cover but it primarily has the same features. This cover ensures no depreciation is charged on the replaced part. Customers often ask if taking this cover means paying nothing in case of damage. This is not the case. A vehicle owner will still have to bear the cost of consumables and salvage value of the part replaced. The part replaced can be sold to scrap dealer to cover the salvage cost which typically is your job.

    b. Consumables:

This helps cover the cost of the parts which get consumed over time or are not part of the parts being replaced for e.g. nuts, bolts, rubber biddings etc.

    c. Road Side Assistance (RSA) :

This add on has many nomenclatures like RSA, 24X7 spot assistance, emergency cover and the features covered under each are also very different. However the most basis features include towing facility, flat tyre assistance and fuel assistance. The plans covers only the basis cost of providing the service. The parts used, consumed have to be paid for by the vehicle driver. For example, if your car runs out of fuel the company will send assistance with fuel where the cost of fuel has to be borne by the customer. Additional features that certain plan offer are:

    i. Cab facility: In case your car has to be repaired and it would require more that 24 hours.   

    ii. Hotel Stay: In case the car requires major repair and you are outside your home city.

    iii. Lost/Lock/Duplicate Key: If a set of new key is required insurer will arrange for the key however the cost to be borne by the customer.

    d. Engine Protection/Hydrostatic cover:

This covers the engine from breakdown due to water ingression or oil leakage. This cover is very essential especially for people who drive cars in areas which are prone to heavy rains.

    e. No Claim Bonus Protection:

This cover enables the customer to protect his NCB incase of single claim during the policy tenure with extra conditions like only repair, or only glass damage.

Remember, many companies club the plans together and offer package policies rather than offering individual add-ons. Opt for an add-on completely depends on the risk the customer is going to be most prone to. 

Let’s consider a scenario here. You have a Volkswagen Vento car which is 2 years old and have zero NCB. While driving some one hits the car from behind and your tail light, rear bumper gets damaged. Now if you do not have a zero depreciation add on cover, chances are you would first go the showroom and understand the expected cost which has to be borne by you and compare this cost with road side garage cost.

The other thing you consider is if you get this car repaired from a road side garage and not claim you car insurance. You will probably end up earning a 20% NCB which will help reduce your premium for next year. You end up spending a lot of time weighing your options without a zero depreciation cover, but with it, all you need to take the car to the authorized garage and give it for repair. You don’t have to worry about the expenses as they are negligible.