10 points to remember while choosing car insurance

Buying car insurance can be quite a battle in itself. When it comes time to renew your insurance, if your car is under five-years old, expect a barrage of phone calls with insurance salesmen trying to outdo each other to get your premium cheque.

However, you need to read through the fine print carefully, and insurance policies are the very definition of fine print! CarToq tries to sift through some of that and we’ve got some pointers to make sure you’re getting a good deal on your car insurance cover.

It’s always good to get quotes from multiple insurance firms to see who is offering you the best deal. At the same time, here are 10 points to consider when buying car insurance:

Premium payable

The maximum possible premium payable on a car insurance policy is usually a maximum of 4% of the invoice value of the vehicle. If you bargain hard, you can also get a premium that is just about 3% of the value of your vehicle. Yearly premium payout will normally drop from year to year, based on the depreciated value of your vehicle (usually about 10% to 15% per year). However, if you make an insurance claim, then the premium can go up the following year. Some vehicles like SUVs and those that also have commercial applications, also often need higher premium payouts due to poor track records or large number of claims being made on such vehicles with insurance firms. Some insurance companies “load” the premium for such vehicles. Generally diesel vehicles have a 10%to 15% higher premium than petrol cars. SUVs have a higher premium than an equally priced sedan.

Value of the car

There are ways in which insurance agents will sometimes try and sell you a policy with a lower premium payout. One way is by reducing the IDV or ‘insured declared value’ of the car. Don’t do this, because in case you have an accident and the car is a total write off, you won’t get much for it. Always try and choose a policy that offers you the maximum IDV on your vehicle, even if it means a slightly higher premium.

No claim bonus

Of course, you can reduce your premium payout by nearly 50% each year, if you don’t claim insurance on your vehicle. This no-claim bonus is a record of your good driving year-on-year. When you sell your vehicle, you can transfer this no-claim bonus to your new insurance policy on a new vehicle and enjoy lower premium payout from day one.

Zero-dep insurance

A zero-depreciation policy is a useful policy to have. This kind of policy also covers 100% insurance claim payout for rubber and plastic parts. Normally an insurer will pay only 50% of the value for these parts claiming normal wear and tear on them. In modern cars, with a lot of plastic and rubber components, it is better to buy a zero dep policy, although the premium would be about 10% to 20% higher, but it can knock a lot off a repair bill.

Coverage for electric accessories

If you are buying a car that does not come with a factory fitted stereo for instance and you get an expensive aftermarket system installed, make sure you add coverage for this in your renewal policy. This is an add-on to the normal premium, but is worth it if your accessories such as fog lamps, music systems, GPS devices etc are quite expensive.

Coverage for non-electrical accessories

Non-electrical accessories will attract another 5% or so increase in your premium payout, but is worth paying for. Expensive alloy wheels, leather upholstery, spoilers and body kit can be covered under this.

 Discount for security features

Cars which come with built-in security features such as immobilizers, anti-theft alarms and steering locks are eligible for a discount on the premium as there is lower likelihood of theft. Not all aftermarket security features can be covered under this – such as gear locks, trackers and immobilizers that are installed aftermarket. Only ARAI approved security devices can get these discounts – such as Maruti’s iCATs system or Mahindra’s key-chip immobilizer.

Personnel cover

A normal comprehensive insurance cover will include personal accident coverage for the owner of the car. For a small fee, additional users who possess a valid driving license and are using the car can also be covered under the insurance policy. By default, most companies include this cover in their comprehensive insurance policies.

Cashless coverage

Some insurance companies offer cashless insurance coverage. What this means is, at the time of making a claim if you’ve had an accident, the estimate and final bill that the workshop submits will be directly settled by the insurance company without you having to fork out any cash. Under normal policies, you will have to pay the workshop’s bill and then send the bill and claim to the insurance company to get it reimbursed.

Age of the car

There comes a point in a car’s life, when insurance premiums will not go down any further and in fact will start going up slightly. This is usually around the 7-10 year mark depending on the popularity of the car in the market. It’s at this age that a car would have depreciated almost completely, and what you are paying for won’t cover much. At this point in time, it is better to just opt for third party coverage for your car to save some cash. Third-party cover is mandatory by law, as it covers claims against your car by others.

Do share any more tips and pointers you have on choosing car insurance with the CarToq community.