Things you must know before buying car insurance
Remember the time when you buy a new car? No matter whether it is your first vehicle or second, the purchase of the vehicle is always an elated feeling. And why not, after all it involves a big amount of investment which makes every car a prized possession for its owner. You as a proud owner of the vehicle would surely want to ensure that your car stays secure from any kind of damage. Although unfortunate incidents like accidents can’t be avoided. Hence, you need to buy protection to secure you against such expenses.
By protection, it means buying the right car insurance. Before you select a car, you research and compare the car’s fuel capacity, design, mileage and other features. Similarly, there are a few points that need to be considered while selecting car insurance. Here are those points that every prospective buyer planning to buy car insurance must know.
- Study the terms –
Any insurance document is a legal document. Hence, to understand the offerings and clauses of policy better, it is essential to study the technical terms. You can consult your insurance agent to know the technical terms that you don’t understand. Here are a few basic jargons of car insurance policies that you need to know before buying one.
(a.) First-party and Second-party – The first thing you must know while buying the insurance is a primary role of owner and insurer. The owner of the car is referred to as first-party, and the insuring company is known as the second-party.
(b.) Third-party (TP) – Any person who is affected by your insured vehicle in an accident or collision is referred to as third-party.
(c.) Own damage (OD) – In case of an accident, any damage suffered by the insured vehicle and its owner are referred to as own damage.
(d.) No claim bonus (NCB) – In case there is no claim raised from the owner of the insured car or third party in the active year of the policy then the owner of the insured car enjoys a discount on the premium of next renewal of the policy.
(e.) Insured Declared Value (IDV) – The present value of the car inclusive of depreciation is known as insured declared value.
(f.) Add-ons or Riders – The additional coverage options offered on the comprehensive policy is called as add-ons or riders.
(g.) Claim – A claim is a request raised by the owner of the insured car to the insurance company to pay for the damage of the insured car concerning the insurance policy purchase.
(h.) Claim settlement ratio (CSR) – Claim settlement ratio is the number of claims settled compared to the number of claims received in a year by the insurance company.
(i.) Depreciation – The decrease in value of the car caused over a time period
- Types of car policies – Learn about the different types of car insurance policies to choose better. There are mainly two types of car insurance. First is Third-party car insurance, which covers damage caused to the third party by the insured vehicle. This is now made mandatory for all car owners under The Motor Vehicle Act, 1988. The second one is Comprehensive car insurance that covers wider coverage by compensating damage caused to the owner of the insured vehicle as well.
- Car Insurance Calculator – Various car insurance companies offer different policy offerings to fit the needs of different sets of customers. To know which policy will suit your need best, you need to compare well. Car insurance calculator is an online feature provided by car insurance company websites. It helps you to compare the premiums and quotes offered by different companies.
Knowing these points will help you to research better and make a wise decision while buying a car insurance.