Do you have adequate car insurance cover?

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Before you give an answer to this question, look at the following horrifying figures:

In 2015, 28,610 injured and 1,19,037 lost their lives in car accidents in India.

When it comes to term insurance or a health insurance policy, we often get confused between how much cover we should buy. As per experts, the quantum of coverage depends on our needs, income, and medical inflation, respectively. But when it comes to car insurance, do we know how much coverage is sufficient?

As per the Motor Vehicles Act, it is mandatory to have a third-party insurance policy to ply a vehicle on Indian roads. This insurance policy covers losses or damages caused to the other vehicle or pedestrians or third-party property due to your car. In other words, it doesn’t cover your car and its losses/damages.

Then there is another concept of Insured Declared Value (IDV) that should be considered while deciding the car insurance coverage. The IDV is the market value that will be computed after adjusting the depreciation rate based on the age of a car and it would be based on this that your car would be insured. However, the IDV can be consideredonly if you go with a comprehensive car insurance.

To know whether you have an adequate car insurance cover or not, it is essential to know which policy you are holding—third-party liability or comprehensive cover. If for you, car insurance means, third-party only, then it is time to find the answers to the following questions:

  • Who would bear the repairing expenses in case your car meets with an accident?
  • What would happen if you get seriously injured in an accident?

In none of the above situations, your third-party car insurance will help you as it covers only third-party liability. Here, it makes sense to go with a comprehensive car insurance policy, which scores over a third-party liability insurance and offers the following benefits:

  • Cover your vehicle against natural calamities like fire, explosion, lightning, explosion, etc.
  • Cover your vehicle against man-made calamities like theft, burglary, riot, etc.
  • Offer coverage for the individual driver of the vehicle
  • Protection against third-party legal liability due to accidental damages

Along with a basic insurance cover, it would be good to add the following riders to your main insurance policy and expand your cover=

  • Engine Protect Rider- Also called hydrostatic cover, this rider covers engine repairing expenses if the damages are due to water stalling, oil leakage, etc.
  • Roadside Assistance (RSA)= It offers a wide range of services that could be of great help in case your car breaks down in the middle of a road or there is an accident. Some of the services covered under this rider are flat tyre change, battery jump start, fuel refilling, etc.
  • Zero Depreciation Cover= At the time of a claim settlement, the insurer considers the depreciation value of parts instead of their market rate. The depreciation rate depends on various parameters, like make, model and age of the vehicle, etc. You, thus, end up paying a substantial part of a claim from your pocket even when you have a policy. A zero depreciation cover, however, guarantees a full claim amount with zero depreciation deduction.
  • Personal Accident Cover= It secures your family’s future in the events like disability, death, etc. It offers coverage for up to Rs 2 lakhs for any damages caused to the driver while travelling, mounting, or dismounting from the vehicle. Some insurers offer optional personal accident covers to passengers as well.
  • Vehicle Replacement= In case the car is stolen or damaged beyond repair in an accident, the insurer considers it as a ‘total loss’, which means that the claim amount received under such situation will be less than the actual market value of a vehicle. Having a vehicle replacement cover will help you get the total value of a car and thus, allow you to replace your car with a new equivalent one.
  • Rental reimbursement= Once your car has been sent to the garage, managing without one can be extremely cumbersome. Either you would have to carpool or take public transport or rent a car for your daily commuting. However, having a rental reimbursement or a garage cover means that the insurer would pay you a fixed daily allowance to meet car rentals during this tenure.

Those, who like saving money on premium outgo and thus, go with only third-liability cover, should consider the following tips to buy a comprehensive insurance policy at easy premium rates:

  • Opt for a high voluntary deductible, i.e., the amount that you will be paying in case of a claim before the insurer kicks in
  • Install anti-theft devices, like gear lock, steering lock, etc.; in your vehicle and the insurer will cut your premium
  • Become a member of the Automotive Research Association of India
  • Buy your car insurance policy online because this way, the insurer will save on policy administration and cost issuance costs, which they will happily pass on to you in the form of cheap premium rates

Remember, the purpose of buying a car insurance policy is to get financial protection in case of a mishap. However, it will help you only if it is sufficient. With this logic, a comprehensive car insurance policy wins the debate hands down and you don’t have to spend a lot of time fussing over it.

Author Bio-

“Ruchir Chauhan is a creative story teller (because someone has to get their hands dirty) who has dispersed his words around topics like technology, travel, health, auto content and home improvement. His work reflects a grin of knowledge, imagination and a fun element. Lover of road trips, animals, pizza and peanut butter, he is often found reading on the beach while sipping his favourite drink.”
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