Driving in right car insurance
My friends have a habit of pressing the emergency buzzer for urgent questions related to insurance. A friend recently called with mixed emotions. While he was excited about finally zeroing in on an SUV, he was unable to understand and take a call on what would be the most cost-effective yet comprehensive insurance cover for his car. Here’s an attempt at creating a step-by-step guide on how to go about finalising the best insurance cover for your new car.
Insured declared value or IDV is the agreed valuation of your car between the insurer and you. This is the value you will get in case there is more than 75% damage or if the car is stolen. You need to understand this value better when you buy insurance and every year you renew it. This is to ensure fair and correct valuation of the car.
IDV of the car: NCB transfer of previous car:
If you are selling your car and buying a new one, you must not miss including it in your car insurance. You just need to cancel the insurance on the old car within 90 days of sale and provide some basic documented proofs on it. Once you cancel your insurance, you will get a no-claim bonus (NCB) retention letter from the insurance company. This letter can be used within three years of the effective date.
Customise using add-on cover:
Only having the conventional comprehensive cover may not cover all contingencies. Hence, attaching a few additional add-on covers can provide you with complete all-round protection.
This add-on helps the owner from facing any deduction on the value of damaged parts and get complete reimbursement of the claim filed. It offers complete coverage without taking into account depreciation of parts such as plastic, fibre, rubber and glass. This saves a lot of money as you receive the entire claim.
Zero or nil depreciation: Return to invoice cover:
This cover costs around 10% more than the comprehensive policy. It is a must if you stay in an area where car theft is common or if your workplace is in a locality that doesn’t have a secure car park.
Engine protector:
This add-on cover protects against damage to the car’s engine because of water ingression that may lead to hydrostatic lock. This cover becomes the ultimate saviour during the monsoon for people living in flooding-prone locations. It also provides coverage for damage to the gear box as well as leakage of lubricating oil.
Roadside assistance:
This add-on provides emergency roadside assistance services such as help in changing flat tyres, roadside repairs, emergency fuel refilling and towing facility on a 24 x 7 basis.
Shop around:
While this is not widely known, car insurance products have dynamic discounts and pricing. You can get the same product with identical benefits at a price benefit of around 20-35%. It is therefore recommended that you shop around across various channels online and offline apart from your car dealer to see if you can get a better deal. Contrary to the popular myth, there is no difference in claims when you buy a policy from any channel or directly from the insurer. Remember the car workshop’s core business is car claims. No workshop will avoid offering you seamless claims service just because you did not buy the car insurance from them.
Be careful during the entire purchase process:
We are used to just signingformsandmakingchequeswith respect to insurance, especially in case of products such as car insurance. However, it is extremely important that you read through the details of the car, the IDV, the deductibles, add-on benefits opted before you sign any papers or make payment. Similarly, you mustn’t just shove your policy in your car glove box without spending careful five minutes reading through the policy to understand whether all details mentioned earlier are correctly entered in the policy document. There have been cases where claims have been denied outright by insurers in case of incorrect representations.
Mahavir Chopra is director health, life and travel insurance, Coverfox.com