How to Choose a Suitable Cover for Your Vehicle Insurance

Insurance never comes easy, and to choose the most suitable insurance for car or house etc. you must really read through and know well the policy and how it works. There are several cases to getting your vehicle the right insurance and has many nuances to it. So, either you should be well versed with insurance policies or should make sure that you go through the fine print of the policy document in detail.

To further help you choose a suitable car insurance policy, read through a few points that we’ve compiled together and might be of some help:

What is a Vehicle Insurance?

Vehicle insurance is a contact between you and the insurance company. It protects you against financial loss due to accident or natural calamity by providing accident cover for the passengers as well as for the vehicle.  The claims of Vehicle Insurance can be accidental, theft claims or third party claims.

Why do you need a vehicle insurance?

Car and two wheelers have become a necessity in today’s lifestyle. Therefore, it becomes important to make a smart move when planning to buy one. Buying a Vehicle Insurance would be a smart decision for you and your vehicle. We believe that your vehicle is a lot more than four tires and an engine, it’s precious to you and as the traffic is growing at such a fast rate, so are the chance of traffic collision. Therefore, the need for protecting your vehicle against physical damage and bodily injury is becoming more important. 

 

What all does a vehicle insurance cover?

Among the auto insurance policies offered, there are broadly two basic types: one that covers third party damage to property and other that offers comprehensive plan that also covers own damage along with liability of third party. So, while the former covers only accidental death and injury to the third party, the later covers theft or damage caused due to unknown and unforeseen dangers as well. Therefore, while taking the policy, you choose what all your vehicle insurance covers.

What is Vehicle Insurance premium?

A car insurance premium is the total cost of maintaining your car insurance policy. It is supposed to reflect the likelihood of a driver being involved in an at-fault accident or having other types of losses.

What affects the premium of vehicle insurance?

This is ascertained by the insurance company underwriting the risk, which impacts the premium calculation. Some of them being as follows:

  • Risks related to vehicles: In this the fuel type, cubic capacities, the make and other specifications related to vehicle are taken into account.Also, age of the vehicle is another parameter in the same category, so at the time of renewal if the insured Declared Value (IDV) determines the premium that you pay. Where, IDV is calculated by the age of the vehicle at the time of the renewal and the depreciation on the same. And for vehicles with less than five years old, depreciation is applied basis the number of years the vehicle is used, which is applied to the ex-showroom price to calculate their IDV. And for vehicle that is older than five years, the market value is taken to be the IDV of the car.
  • Risks related to location: So here, location of registration determines the premium calculation. The premium of areas that have more population, has high record of thefts, falls under urban area, is near highways, etc. get the premium soaring.
  • Previous claims made:This includes your claim history and your driving record. So, if you’ve previously also claimed your vehicle insurance, the premium can go up.No claim Bonus is another way of reducing premiums. The more the years without a claim, the more is the discount you can get on your premium.
  • Claims related to drivers: Who all drive the car and their details on age and profession in case of multiple drivers can also impact the premium.
  • Nil-depreciation:This allows complete claim for everything that goes in your car including the plastic and rubber used. Generally an insurance company will only pay half the value of these parts, which in case of a claim can be completely be taken care by them and knocked off from your repair bill. Nil-depreciation is however bound to increase your premium, but is considered useful.
  • Personnel Cover: A comprehensive cover would include personal accident for the owner as well. However, if one has to pay little additional fee to get the additional users who drive the car to be covered under the policy, it would be beneficial.

Himani Arora, a blogger & literature fanatic. Loves doing analysis on any new financial product that comes into market and provides her views. She has written several articles focusing on insurance, auto insurance, general insurance etc.