Car Insurance Basics You Need to Know
Car owners certainly have their cars insured. But, do they really understand the insurance policy? You must have had certain intentions in mind while taking the policy, but are you sure that your car will be protected against those risks? So, here are the basics you ought to know about car insurance that will help you make a smart decision.
Is Car Insurance a Must?
The Indian law says that any vehicle on the Indian road needs to have a valid insurance policy that at least covers the cost of damage that the vehicle may cause to other people or vehicles.
In case of any damage covered under the terms of the insurance contract (and as long as there is no fraud involved), the insurer will bear the amount rather than you having to pay from your pocket. In most cases, an insurance policy covers costs caused by accident damage, theft, fire and natural calamities like floods, earthquakes or cyclones.
Forget the compulsion; even without it, it is advisable to have your new car insured. It’s not always the neighbour who gets hurt; your car too could meet with an accident. It is truly worth spending some amount on car insurance. Auto insurance policies need to be renewed on an annual basis.
Types of Car Insurance
Third Party Insurance
This type of insurance covers the damage caused by your car to a third party. It is the minimum that you need to have as per the Indian law, so that, if another individual or vehicle is damaged as a result of your driving, the third party needs to be compensated for it. For example, if you meet with an accident while driving, the insurer will pay for the damage caused to the other vehicle and individuals in that car. However, you or your car will not be covered under this policy.
The premium here is calculated based on your car’s engine capacity. As this policy covers only third party damage, the premium is relatively less when compared to a complete coverage policy.
The name explains it; it is comprehensive. This auto insurance policy covers the damage caused to you as well as to the third party. In met with an accident, medical expenditure of you, passengers in your car as well as the other party’s medical expenditure gets covered. The insurer also takes care of expenses caused to both your car and the other vehicle.
As per this policy, the insurer also pays for any damage suffered by your vehicle in case of any natural calamity, theft, burglary, terrorist activity or any repair in transit. There are insurers who even cover car accessories like the music system and A/C in your car.
The premium here is calculated based on the insurable value of your vehicle. The premium comprehensive auto insurance is usually higher as the coverage is wide compared to a third party policy.
Tips on How to Get the Best Car Insurance Quotes
In most countries it is compulsory for car owners to get insurance for their vehicle. The law does not differentiate between the make and model of the car owned. Even if you have a car that has little or no salvage value, you are required by law to get your car insured. However, if the car you own is old and does not have resale value, you can get the minimum possible insurance cover. When insuring these vehicles, your goal must be to get the cheapest insurance deal.
When you approach an insurance company, they will ask you for the make and model of the car. Most insurance companies will have a general base rate for each model of car. The premium that you pay will depend on the general base rate of your model. The insurance company will then ask for your pin code. This will help them decide the country that you live in. If you live in area that has a high crime rate, you will be asked to pay higher premiums to insure your car.
Installing safety devices, such as burglar alarms, in your car will help you in reducing your insurance premium. Cars that have these safety devices are difficult to steal. This reduces the risk of the insurance companies and that is reflected in the premium charged by them. If you have a GPS tracking device installed in your car, mention it when getting an insurance policy. This will help you get a discount when taking out a car insurance policy.
The place where you park your car will also have an impact on the premium that you pay. Most insurance companies will give you good discounts if your car is parked in a locked garage. If you are unable to find a locked garage, you can still get a discount by parking the car on your property that has locked gates. Make sure you provide the insurance company with correct details. If you provide them with wrong information, the insurance company may not honour your claim.