First question one would ask – Why pay for car insurance? The simple answer is the law requires it!
While you are driving on the road in India, you are required to have the following documents on you –
1) Insurance Certificate,
2) Registration Certificate (RC),
3) Valid Driver’s License, and
4) Pollution Under Control (PUC) Certificate.
Make sure to at least have the relevant copies to avoid unnecessary hassles with the traffic police.
Coming to insurance itself, in India we are mostly offered two kinds – comprehensive and third-party insurance (or liability). The law requires you to have at least the liability coverage.
What is the Third-Party Liability Coverage? If you cause injury or damage to another person or his/her property, you will be held accountable to pay for this. The insurance company steps in to assume that responsibility for you. Here, you (the policy holder) is the first-party; the insurance company that’s providing the policy is the second-party; and the person who you have caused damage to is the third-party.
The third-party coverage will cover for all the medical expenses of the third-party, accidental death, and all of their property damages will be covered as well.
What about the comprehensive? Comprehensive is a broader coverage and is inclusive of the third-party liability. It covers also any damages to the owner and his property
It’s preferable to go with a comprehensive coverage, more so if the car is still fairly new (less than 4-5 years old).
Some of the other details you’ll need to familiarize yourself with before you can choose a car insurance:
1) The Insured’s Declared Value (IDV) – It reflects the current marked value of your car. Obviously it’s a value that’ll keep decreasing every year by about 10-15%. If at all possible try to negotiate and have the IDV on the higher side. It would come handy when you have to claim a Total Loss on the car and during the time of resale. Keep in mind though that a higher IDV would mean a higher premium.
2) No Claim Bonus (NCB) – In the event that you are renewing your car insurance, you are entitles to a NCB that’s typically about 20% the first year and increases every subsequent year. This is only valid if you haven’t made any insurance claim the year prior to the renewal.
3) Personal Accident Cover – Provides compensation to the injured unnamed passengers of the insured car.
4) Deprecation Cover – If you need to make a claim, sometimes (actually most times!) you’ll find yourself paying a portion of final amount! Turns out, there’s depreciation for parts, glass, paint, polymers,…If you need the insurance to pay all of that, you’ll need to take this 0% depreciation cover. However, some of the insurance providers will only throw in the 0% Dep for only two claims per renewal year.
5) Compulsory Deductible (or Excess) – This is the amount that you always have to pay on each and every claim. Currently it stands at Rs. 1000 for private vehicles under 1500cc and Rs. 2000 for vehicles over 1500cc.
6) Voluntary Deductible (or Excess) – In order to lower your premium, you can choose to bear a certain amount on every claim.
7) Additional Features – Some of the features that can be added to your policy include on-road minor repairs, towing to the nearest garage, changing flat tyre, lost key replace/assistance, emergency fuel, hotel reimbursements,…
Here’s what a typical renewal process entail – go to a site that enables you to get a broad idea and comparison of premiums (policybazar.com, for instance). Following this, go to the individual websites of the insurance providers (Bajaj Allianz, Bharti Axa, ICICI Lombard, TATA AIG, L&T, National, Oriental,…). Get an estimate from them all online. Most likely, all of them will followup with respective representatives calling you. Talk to them nicely. Explain your needs accurately. Get the maximum discounts (NCB, anthi-theft,…) you can for the highest possible IDV. At this point you’ll have a really good consolidated collection of highly relevant information. Tell them all, very politely, that you need time to process the information and make your decision. In case needed, you’ll call them back. Make sure to take down their names and contact information.
Next stop is online forums (like team-bhp). Check on the typical reviews and experience people have had with various insurance providers. For instance, when speaking to folks and different agents I received many negative reviews on TATA-AIG. Supposedly, as far as Bangalore is concerned, they have a bad rep. with various garages and also their claim settlement ratio is rather on the low side. But then, you’ll also find people who have had amazing hassle-free experiences with TATA-AIG.
Personally, I loved their policy and found it so much better on paper compared to others I spoke to. But had to let the go in favor of Bharti-Axa.