Auto insurance: What to look for when buying a policy?

Auto insurance is a type of insurance that protects drivers financially in the event of an accident. In India, having auto insurance is mandatory as per the Motor Vehicles Act, 1988. It is essential for anyone who owns a car to have an auto insurance policy to avoid legal and financial repercussions. However, choosing the right auto insurance policy can be a daunting task, especially for those who are new to the process. In this essay, we will discuss what to look for when buying an auto insurance policy in India.

Coverage Options

The first thing to consider when buying auto insurance is the coverage options that are available. In India, there are two types of auto insurance policies – third-party liability insurance and comprehensive insurance. Third-party liability insurance covers the damage caused to a third-party vehicle or property in the event of an accident. On the other hand, comprehensive insurance covers the damage caused to the insured vehicle as well as third-party vehicles or property.

While third-party liability insurance is mandatory, comprehensive insurance is optional. However, it is recommended to opt for a comprehensive insurance policy as it provides wider coverage. It covers the damage caused to the insured vehicle due to natural disasters, theft, fire, and accidents, among other things. It also provides personal accident cover for the driver and passengers in the insured vehicle.

Premium

The premium is the amount of money that the policyholder pays to the insurance company to avail of the policy. The premium for an auto insurance policy depends on several factors, such as the make and model of the car, the age of the car, the location of the policyholder, the coverage options selected, and the policyholder’s driving history.

When buying an auto insurance policy, it is essential to compare the premiums offered by different insurance companies. It is also important to check if the insurance company offers any discounts or offers that can help reduce the premium amount. For instance, some insurance companies offer a discount on the premium if the policyholder has installed anti-theft devices in the car.

Add-ons

Add-ons are additional coverage options that can be added to an auto insurance policy to provide wider coverage. Some common add-ons include zero depreciation cover, engine protection cover, roadside assistance cover, and personal accident cover for passengers.

When buying an auto insurance policy, it is essential to check the add-ons offered by the insurance company. While some add-ons may be necessary, others may not be relevant for the policyholder. It is important to weigh the benefits of each add-on against the additional cost.

Network Garages 

In the event of an accident, the policyholder needs to get their car repaired at a garage. Insurance companies have tie-ups with network garages, where the policyholder can get their car repaired without paying any money upfront. The insurance company settles the repair cost directly with the garage.

When buying an auto insurance policy, it is essential to check if the insurance company has tie-ups with network garages in the policyholder’s area. It is also important to check the reputation and quality of the network garages.

Claim Settlement Ratio

The claim settlement ratio is the percentage of claims settled by an insurance company in a financial year. It is a crucial factor to consider when buying an auto insurance policy. A high claim settlement ratio indicates that the insurance company settles claims promptly and efficiently. On the other hand, a low claim settlement ratio may indicate that the insurance company has a poor track record in settling claims.

When buying an auto insurance policy, it is essential to check the claim settlement ratio of the insurance company. The Insurance Regulatory and Development Authority of India (IRDAI) publishes the claim settlement ratio of all insurance companies in India. Policyholders can check the claim settlement ratio of insurance companies on the IRDAI website.

Customer Service

Customer service is an important factor to consider when buying an auto insurance policy. It is essential to choose an insurance company that provides prompt and efficient customer service. This is particularly important in the event of an accident or when making a claim.

When buying an auto insurance policy, it is essential to check the customer service offered by the insurance company. This includes the availability of customer support channels such as phone, email, and chat. It also includes the responsiveness of the customer support team.

Exclusions

An auto insurance policy comes with certain exclusions, which are situations or events that are not covered by the policy. It is essential to read the policy documents carefully and understand the exclusions before buying the policy. Some common exclusions include damage caused due to driving under the influence of drugs or alcohol, intentional damage to the car, and damage caused due to war or nuclear risk.

When buying an auto insurance policy, it is essential to check the exclusions of the policy. It is also important to understand the conditions under which the policy may be voided.

Renewal Process

An auto insurance policy is typically valid for one year and needs to be renewed annually. When buying an auto insurance policy, it is essential to check the renewal process of the policy. This includes the renewal premium, the renewal period, and the renewal procedure.

It is important to renew the auto insurance policy on time to avoid any legal and financial repercussions. Some insurance companies offer a grace period for policyholders to renew their policy. However, it is recommended to renew the policy before it expires to avoid any hassles.

Conclusion

Buying an auto insurance policy is a crucial decision that requires careful consideration. It is important to choose the right coverage options, compare the premiums offered by different insurance companies, and check the add-ons and exclusions of the policy. It is also important to check the claim settlement ratio, customer service, and network garages of the insurance company. By keeping these factors in mind, policyholders can choose the right auto insurance policy that provides adequate coverage and financial protection in the event of an accident.