Things to Consider While Buying a Motor Insurance Policy

Motor insurance is probably the most popular form of insurance in India, not because vehicle owners love their assets way too much, but because motor insurance is mandatory by law. Any vehicle running on Indian roads must have a valid motor insurance policy without which the vehicle (two-wheeler, four-wheeler, etc) can’t legally ply on the roads.
Today, our post is to explain the essential components to pay attention to while buying a motor insurance policy (primarily four-wheelers). Motor insurance is a tool to take care of any unforeseen loss or damage to your vehicles which in the absence of insurance would have to be borne out of one’s own pocket.
Majorly, Insurance policies are of two types:
Third-Party Insurance Policy
Third-party insurance covers your legal liability for the damage you may cause to a third party while using your vehicle. The beneficiary of third party insurance is the injured third party. It does not pay for injuries or damages suffered by the policyholder. Third-party insurance is mandatory for all vehicles.
Third-party cover inclusions:
  • Medical bills of the third party
  • Compensation for partial & permanent disability
  • In severe cases, death compensation to the survivors based on factors such as earning capacity of the affected
  • Damage to any property
Comprehensive Motor Insurance Policy
It is an all-inclusive insurance policy that covers both third party damages as well as own damages.
Comprehensive motor insurance policy inclusions:
  • Various damages caused due to accidents and natural calamities
  • Loss or theft of an insured vehicle
  • Impairment of the vehicle because of fire & explosion, terrorism, riots, strikes, and malicious acts
  • Third-Party damage, injury or death claims for the third party, legal cost, and expenses.
Third-Party insurance is mandatory. It doesn’t cover the damages that you may suffer during any loss event. We will focus our remaining discussion on comprehensive cover. There are a host of factors that one should look for while buying a comprehensive insurance cover. Each factor affects the premium that you pay for your car as well as the coverage that you have in case of a loss event. Let’s have a look at the prominent factors:
Insured Declared Value (IDV)
Insured Declared Value is the estimated current market value of the vehicle. It is the maximum amount that you can claim in case of total damage or theft of the car. The IDV is calculated every year after considering the depreciation of approximately 10%. However, you can opt-in for a higher IDV based on the agreement with your insurer for which the premium will be bumped upwards.
Zero Depreciation Cover
The value of accessories is also subject to depreciation. Often you come across cases of insurance claims when the insurer pays only a fraction of the claim. For instance, in case of damage to rubber material the insurer may pay only 50% of the claim amount. This can burn a hole in your pocket. By paying a higher premium, you can add a Zero Depreciation Cover, which considers the value of damaged parts before depreciation and provides full reimbursement of parts replaced. Thus, for a vehicle with zero depreciation cover the damage to rubber and glass parts, along with other materials,  will be reimbursed in full by the insurance company.
Discount
Another feature to look into before opting for any insurance policy is the discount on own damage premium offered by the insurance company. The discount varies from company to company and should be a major factor while opting for a particular company.
Other Add Ons
  • One very important add on is the engine protector cover, which is generally not a part of the standard policy. The cover helps in compensating for the failure of the engine or any other part of the engine in case of loss.
  • You can opt for a 24x7 roadside assistance cover which provides relief from various roadside breakdowns like a flat tyre, battery jump-start, emergency fuel, medical assistance, etc. which are not covered under the regular policy. However, a lot of luxury vehicles provide the RSA facility as a part of their service package. Check if you already have an RSA plan from your car manufacturer. RSA cover usually costs around Rs 100-500.
  • Consumables are those parts of any vehicle that are subject to wear and tear (nut, bolts, washers, etc.). The cost of these parts is to be paid out of pocket in case of a loss event. Adding a consumable cover helps you shield from the cost of consumables in case of loss.
  • The keylock replacement cover is also one important although ignored cover which you should consider. The cover pays for the cost of replacement of the key set in case of loss of a key. This may sound to be a nominal expense but the car key replacement can be an expense worth Rs. 8,000-10,000 and may go up to Rs. 1,00,000 in luxury cars. The cover costs around Rs. 100-600. 
Personal Covers
A cover for the owner-driver is mandatory for any insurance policy in India. The premium for the same is around Rs. 350. You can even add insurance cover for the passengers as well as hired driver by paying a nominal incremental premium.

Paying attention to these major points while buying an insurance policy can help you minimize your loss in case of damage to your vehicle. Make sure to go through various quotes before taking a final call on renewing your motor insurance.
For any further queries or getting your car insurance quote, feel free to contact us at finriseinvestment@gmail.com or call us at +91-8568953926.

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