Purchasing adequate motor insurance is mandatory for all vehicle owners in India as per the Motor Vehicles Act. With options to buy basic third party liability cover or enhanced protection through comprehensive policies, choosing the right motor insurance can get confusing. This detailed guide will help you select suitable motor insurance cover in India.
Understand Types of Motor Insurance Policies
Third Party Liability Cover – This is the basic mandatory motor insurance cover required by law. It provides protection against legal liabilities arising out of third party death, bodily injury or property damage caused by your vehicle. However, it does not cover any damages to your own vehicle.
Comprehensive Policy – As the name suggests, this policy offers wider and enhanced protection. Along with covering third party liabilities, it also covers damages or loss to your own vehicle due to accidents, theft, floods, fire etc. It allows you to add extra safety net through add-ons.
Standalone Own Damage Cover – This policy variant only covers damages to your own vehicle without third party liability coverage. It is generally availed if you already have third party liability insurance active through another policy.
Align Coverage as per Vehicle Profile
Evaluate your vehicle type and value to determine suitable coverage:
- For cars and expensive SUVs, it is strongly recommended to avail comprehensive policy. This ensures financial protection for high vehicle costs along with mandatory third party coverage.
- For budget two-wheelers, basic third party liability insurance suffices to meet legal requirement. You can also opt for comprehensive cover based on your budget and added protection needs.
- For commercial vehicles like trucks, buses, etc. comprehensive policy along with passenger liability cover provides adequate protection given higher risks and liabilities.
Carefully Assess IDV Based on Vehicle’s Market Value
The Insured Declared Value (IDV) is a key aspect you must carefully consider while purchasing motor insurance. IDV represents the insurer’s maximum liability for own damage or theft claims. Ensure you declare the IDV matching the current market value of your vehicle model after factoring appropriate depreciation. Higher IDV translates to higher claim payment on damage and thus better coverage.
Enhance Coverage with Add-On Covers
Add-on covers allow you to expand the coverage provided by comprehensive motor insurance for some additional premium. Some useful add-ons include:
- Zero Depreciation Cover – Waives off depreciation deduction on own damage claims thus increasing claim payouts.
- Engine Protector – Pays repair costs if internal engine parts or gear box are damaged.
- Key Replacement – Covers cost of replacing vehicle keys that are lost or stolen.
- Consumable Cover – Pays for oil, lubricants, nuts & bolts etc. required during accident repairs.
- Roadside Assistance – Provides towing facility, on-spot fuel delivery, flat tyre repair, battery jump start etc. in case of breakdowns.
Evaluate your needs and choose relevant optional add-on covers to enhance your comprehensive motor insurance policy for better financial protection.
Check Claim Settlement Ratio Before Buying
An important parameter to check while purchasing motor insurance is the insurer’s claim settlement ratio. This ratio indicates the percentage of claims settled by the insurer out of the total claims received.
Check and compare the claim settlement ratios of last 3-5 years for shortlisted insurers from the IRDA annual reports. Reputed insurers have settlement ratios of 90% and above. Choose an insurer with higher ratio for assurance of smooth claim settlements.
Buy Long Term Policies to Reduce Costs
Instead of renewing the third party and own damage components annually, you can buy single long term policies:
- Long term third party liability cover of 3 years
- Long term own damage cover of 2 or 3 years
Long term policies cost less compared to individual annual policies due to lower servicing charges. Secondly, long term own damage policies also qualify for No Claim Bonus just like annual renewals, enabling significant savings subsequently.
Renew on Time to Enjoy NCB Benefits
One of the biggest advantages of timely motor insurance renewal is accumulation of No Claim Bonus (NCB) on the Own Damage component of comprehensive policies.
Renewing without any lapses or breaks enables you to accumulate NCB at the rate of:
- 20% NCB for 2 continuous claim-free years
- 25% NCB for 3 continuous claim-free years
- 35% NCB for 4 continuous claim-free years
- 50% NCB for 5 continuous claim-free years
Higher NCB leads to proportionally lower premiums on own damage insurance. Avoid policy lapses to ensure uninterrupted NCB benefits.
Use Online Insurance Marketplaces
Online motor insurance aggregators like Policybazaar, Coverfox, InsuranceDekho etc. allow you to compare insurance quotes, coverage options, add-ons, reviews etc. from multiple insurers at one place.
This simplifies selection of the optimal motor insurance policy as per your coverage needs at the most competitive premium rate. You also enjoy the convenience of purchasing end-to-end online without paperwork along with exclusive web discounts.
Periodically Review IDV and Enhance Coverage
It is advisable to review your motor insurance cover periodically, especially at the time of renewal to ensure adequate protection. If the insured declared value is low compared to vehicle’s market value at renewal time, increase the IDV to get full coverage.
Also use any major change in your use of vehicle, claim experience, address etc. as a trigger to re-evaluate your overall coverage and enhance if required by opting for wider add-ons etc.
To summarize, understanding policy types, aligning coverage to vehicle value, checking claim settlement records, availing online discounts and maintaining NCB helps maximize benefits when purchasing motor insurance in India. Invest in adequate motor insurance to enjoy complete financial protection for your prized vehicle’s damages and third-party liabilities.