Car insurance or vehicle insurance is an agreement between the car owner and the insurance company to protect your car against financial loss or unforeseen risks such as accidents, thefts, or third-party liabilities. The insurance company covers for loss or damage caused to the car in exchange for the premium, the car owner pays. Car insurance is compulsory in India, be it for commercial or private vehicles.
To get car insurance, one has to pay a yearly premium. In the event that you are lucky enough to not have a serious accident or mishap to need to claim, you lose the premium amount you paid for insurance. Then, you get a No Claim Bonus, which is a significant amount beginning from 20% of the premium in the first year to 50% in the 6th, which is the reason it’s advised not to claim for minor damages.
The key factor that determines the amount of premium is IDV- the Insured Declared Value of the vehicle. When buying insurance for your new car, ID is calculated on the basis of the showroom’s listed price. Next year, when you renew your car insurance policy, ID will decrease because of the rate of depreciation applied on vehicles.
IDV = (Manufacturer’s listing price – Depreciation)
(Accessories are not included in the listed price – Depreciation)
Also, one has to renew the policy within the stipulated period of time or bear the penalties. The period is generally 90 days.
One can check the car insurance online price by a car insurance calculator. It’s an online tool available for prospective buyers to check and compare the quotes of premiums to be paid from different insurance companies. This helps them to choose the perfect insurance plan as per their requirements. It allows you to compare different insurance plans and helps buyers to evaluate their insurance needs and get plans accordingly. While buying an insurance policy, new car insurance coverage should be checked. The best policy should cover your vehicle-specific, driving conditions specific, driver-specific, and third-party specific needs. Premium will increase as the insurance coverage increases.
Basically, three types of car insurance are provided by most insurance companies. They are liability, collision, and comprehensive. Each of these has its own range of coverages
Liability Coverage: It covers repair/ replacement costs, and medical bills of the third party. One should choose a liability insurance premium higher than the mandatory requirement as maximum risk coverage will be done by the policy, reducing your pocket expenses.
Collision coverage: It covers property damage or any damage to the vehicle as a result of the collision. It also offers replacement provisions.
Comprehensive coverage: This coverage includes the replacement of a vehicle if it is stolen or damaged by natural disasters.
Personal Injury coverage, and uninsured motorist protection, should also be studied while taking a car insurance policy. Nowadays, one can get car insurance easily online. Each company has unique coverage and provisions for different policies. One has to determine what coverage provisions he wants and what other features are beneficial to him.