Planning to buy a car? Five things to KNOW before picking the right Auto Insurance policy

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It is that time of the year when people are looking at fulfilling those long-chalked-out goals. If buying a car is on the cards, it could be an exciting and equally daunting experience with all the research, planning, and saving up, well in advance. Further, to safeguard the newly bought car, a motor insurance policy becomes imperative. It not only ensures the overall protection of the vehicle from unwanted events but also assures complete peace of mind. While the awareness and adoption of insurance have taken a spike given the mandatory third-party insurance for vehicles in India, however, people often consider the purchase only as a formality and seldom pay attention to the multiple features that could be availed at the time of picking a policy.

Insurance is not just about a lower premium but about selecting the right features and add-ons, and a direct insurer who can make the claim settlement easy and hassle-free. If buying a car is on your Wishlist too, do not forget to checkmark these five points for the right motor policy:

Understand the need for insurance 

Owning a car in India is still considered a luxury and individuals take utmost care to protect and maintain it. Given the road conditions, traffic menace, and often road rage that follows due to accidents, it is only advisable to insure your vehicle with the right plan. Besides, the Indian Motor Vehicles Act and the Indian Road Safety Act mandates all car owners to carry their Own Damage insurance for one year and third-party insurance for three years, avoiding which can result in a hefty fine. The Own Damage insurance policy acts as a shield against expenses incurred if the car gets damaged in an accident, natural calamities, man-made calamities, fire, etc. 

Therefore, comparing different policies and understanding the key features is crucial while picking the right cover. Quick online research will open up a host of insurers with comprehensive coverage for injuries, breakdowns, and fatalities. 

Listen to the dealer, but do your homework

It is an age-old norm in India that car dealers sell insurance along with the car. The cost of insurance is sometimes added to the car's overall price, or customers are made to believe that this is how the system works. 

Fortunately, this is a myth, and no law in the country mandates one to buy insurance from the dealer. In today’s digital age, there are a host of insurers who often provide comprehensive cover with the right add-ons, basis the requirements at hand. Buying directly from an insurer ensures that the policyholder does not pay for the unnecessary tenets in the coverage and guarantees saving up to 20% in premium costs. Besides, new-age insurers work with a digital-first approach, and hence, there is no paperwork and the end-to-end process is hassle-free. 

Know about the Claim Settlement Ratio

The claim settlement ratio is an important yardstick to measure the trustworthiness of an insurance company. It helps understand the likelihood of the insurer compensating for the loss and track the insurer’s past performance. Insurance Regulatory and Development Authority releases data on the insurance companies claim settlement ratio. Using this ratio, one can determine the company's capacity to resolve disputes. 

Check the Insured Declared Value (IDV)

Insured Declared Value (IDV) is the amount that the insurer pays in case of a vehicle theft or severe damage beyond repair to the vehicle. The IDV must not be confused with the market value of the automobile; it is just the maximum amount that the insurance will pay in light of any uncertainties. The IDV is declared by the owner of the asset while insuring it. Therefore, it directly impacts the payable premium — the higher the IDV, the higher the premium.

Claim Settlement Process

The most important aspect of having an insurance policy is the fact that in distressing times, it guarantees support. One can rest assured that the damage will be covered by the insurer and the experience will be hassle-free and convenient. New-age insurers use technology to stay in touch with the customers at every stage of the claim settlement and make sure no time and energy is wasted in this process. Insurtechs today are betting heavily on technology to mitigate the gaps customers face when it comes to settling their claims.

To round it up

Purchasing a car is always a special moment and equal importance should be given to purchasing an auto insurance as is given to the vehicle. Hence, before making a purchase decision, it is imperative to understand the need for car insurance and other features that are associated with the policy to ensure the best purchase decision.

This article is authored by Mayank Gupta, Vice President – Auto Insurance, ACKO. All views are personal.