Before purchasing an auto insurance plan, it is important to understand the features and benefits of auto insurance policy.
With the increase in the demand for vehicles in the country, the auto insurance industry is also witnessing significant growth. Under the Motor Vehicles Act 1988, it is compulsory for every vehicle owner to have at least one motor vehicle liability insurance policy. Failure to produce an auto insurance certificate, when requested, may result in penalties or other serious consequences.
However, before purchasing a car insurance plan, it is important to understand the features and benefits of the car insurance policy. Choose an auto insurance policy that offers the most benefits at a competitive rate.
Here are the 5 benefits you can look for in a good car insurance policy.
1) Financial coverage
The main purpose of auto insurance coverage is to protect you from financial obligations resulting from unfortunate incidents. A car insurance policy provides much-needed financial protection in the event of property damage or bodily injury due to an accident. A car insurance policy also provides coverage against natural and man-made disasters such as earthquakes, storms, floods, riots or theft. There are two main types of car insurance in India: third party car insurance and comprehensive car insurance.
Automobile liability insurance: Here, the car insurer offers compensation for bodily injury or death of the third party, as well as for any damage to the third party’s vehicle. It also gives you personal accident coverage if you are the owner or the driver. However, motor vehicle liability insurance does not cover damage to the insured’s vehicle. Third-party automobile insurance is the minimum level of coverage required by the Automobile Insurance Act.
Complete car insurance: It offers extended coverage as opposed to third party car insurance coverage. In addition to offering the benefits of automobile liability insurance, you can also benefit from coverage for damage to your vehicle.
2) Network of cashless garages
This is one of the most important aspects to look out for when buying a car insurance policy. Some auto insurance companies are connected to a network of auto repair shops, where your damaged car can be repaired. In cashless car insurance, you may not have to pay for vehicle repairs. The automobile insurer settles all invoices directly with the network’s repair shops.
However, you must pay the amount of the difference to the mechanic/garage as directed by the auto insurance company‘s claims handler.
Also, the amount of depreciation is your responsibility as per the rate given in the compulsory deductibles section of the Indian car tariff. One of the biggest benefits of cashless auto insurance is that you don’t have to put up with the stress of filing a claim and having to follow up with the auto insurance company on a regular basis. Since the car insurance company handles the expenses directly, you can simply get your car repaired without any hassle.
Opting for deductibles significantly reduces the amount of your auto insurance premium. A deductible is a reimbursable expense payable when making an auto insurance claim. For example, if you opt for an excess of Rs. 5,000, and the repair costs are around Rs. 20,000, you only have to pay the initial amount of Rs. car insurance pays the rest. While it’s true that deductibles lower your auto insurance premium, don’t go for a deductible that’s higher than you can comfortably afford. Otherwise, it may defeat the purpose of buying a car insurance policy.
4) No Claim Bonus (NCB)
A good car insurance policy offers the benefit of a bonus-malus (NCB). NCB is a premium discount offered by the car insurance company if you do not make a single claim during the policy period. It acts as a reward for the careful use of vehicles. Knowing the PNE discount percentage helps you determine how much you could save on your next car insurance renewal. For the first claim-free year, the NCB rebate offered is 20%, increasing to 25%, 35%, 45% and a maximum of 50% for the second, third, fourth and fifth consecutive claim-free years respectively.
Remember that NCB corresponds to the automobile policyholder and not to the vehicle. This means that you can transfer the NCB benefit to your new vehicle and from one car insurer to another car insurer. The benefit of the AON is only available on the renewal of multi-risk auto insurance policies and not on third-party auto insurance guarantees. Thus, you cannot benefit from the BCN on your automobile civil liability insurance even if you have not made any claims in recent years.
5) Customization via add-ons
A good auto insurance plan should allow for customization by riders. These endorsements, also called add-ons, provide additional coverage over the base auto insurance plan for an additional fee. It improves the level of coverage through various value-added features. Here are some common jumper options you can explore:
Zero amortization: The auto insurance provider is required to bear the full cost of repairing auto parts, regardless of the depreciation factor.
Motor protection: It provides financial coverage for engine damage due to lubricating oil leakage, engine malfunction, and water infiltration, among others.
Roadside Assistance: This offers assistance in the event of a breakdown of your vehicle. Services may include provision of fuel, provision of alternative modes of transport and accommodation facilities.
Improved Owner’s Personal Accident: It offers financial protection against accidental events such as temporary or permanent partial disability, temporary or permanent total disability and death.
NCB protect: It allows you to take advantage of PNE benefits even if you have applied.
Some other rider options available in the market include vehicle replacement, ambulance and medical charges, and consumables rider.
Your vehicle is a high utility asset and an expensive investment for you. It is therefore important that you adequately protect it against risks by investing in a good car insurance policy.
(By Vijay Sinha – MD and CEO of COCO by DHFL GI)
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