14 Things You Probably Didn’t Know About Buying Car Insurance In India

8 min read Posted on 04 September 2024

When it comes to buying a car, you spend so much time researching the latest models, checking out the latest safety features and jazziest colors. Why then, make vehicle insurance an afterthought? Here's all that you need to know about car insurance policies and all that it entails.  
Very often, the whole process of insuring a car is a mere formality in the country. In fact, a huge majority of vehicle owners just pick an insurance policy, recommended by car dealers, without giving it much thought.

Low premium costs are all that's taken into consideration when buying auto insurance. This lethargic attitude means that you end up with insufficient coverage during critical times like an accident or damage. Simply put, you end up paying the costs from your pocket when it could have been easily covered by the right car insurance policy.

"Handpicking the right Motor insurance matters as much as choosing the right car".
Don't be taken for a drive, by incentive focused insurance agents. Buckle up, as we give you the A-Z of vehicle insurance in India.

1. Buying Third-Party Insurance is Mandatory in India

As per the India Motor Vehicles Act and Indian Road Safety Act, it's compulsory for all vehicle owners to hold third party insurance. So, if you're buying a car for the first time, you need to purchase this policy, before you can hit the roads. Third-Party insurance is bundled with your vehicle's on-road price and provided by your car dealer.

2. Third-party Insurance Only Provides Limited Coverage

As the name implies, this policy offers coverage against any damages caused to a third-party vehicle, property or person. For instance, let's imagine that you're behind the wheel when you tail-end your car with another. With this insurance policy, you can claim damages caused to a third-party including claims for injury, disability, and even death.

However, you cannot make claims for damages to your vehicle or yourself, using this plan.

3. You Must Opt for Comprehensive Car Insurance

With a comprehensive insurance policy, you can make claims for damages caused to your vehicle or yourself, in the case of an unfortunate accident. Additionally, this plan also protects your car from thefts, natural calamities, and other mishaps as determined by your specific policy type.

Don't cut corners by skipping comprehensive vehicle insurance. Remember that the third-party insurance doesn't cover you or your vehicle in an accident.

4. You Can Extend Coverage with Add-Ons

You can opt for several add-ons to your insurance policy to extend the protection offered. Make sure that you choose add-ons that are a match to your driving profile.

For instance, if you go on long drives on the highway, then opting for quick road-assistance ensures that help reaches you quickly, if your vehicle happens to break down in an isolated stretch. Opt for zero depreciation cover, if you want to claim comprehensive coverage without factoring the depreciation of the car. Compare car insurance online to find out the add-ons offered by different agencies.

5. IDV of Your Car Matters

IDV (Insured Declared Value) is the maximum amount you can claim using your insurance policy. For instance, the IDV of a brand new car is higher when compared to another vehicle of the same make and model, but a few years old.

The amount you receive from the insurer, as well as the premium you pay for your vehicle, all depends on the IDV.

6. Several Factors Affect Car Insurance Premium

Did you know that two individuals pay widely varying premiums for the same vehicle? Yes, the insurance premium of your car is dependent on several factors like your geographic location. Additionally, the make and model of your car, cubic capacity of the engine, and age of the vehicle all determine your premium. An easy way to get an idea of how much premium you have to pay is to use a car insurance calculator. This tool calculates the premium you have to pay, based on your input details.

7. You Can Bundle Insurance for Multiple Vehicles

Is your car insurance premium pinching your pockets? An easy way to cut down on premium costs is to bundle the insurance policies of all the vehicles in your household.

8. Voluntary Deductibles Can Reduce the Premium

This is another way to reduce the overall premium of your auto insurance. When you choose this option, you're agreeing to shoulder a percentage of the repair costs during a claim. This reduces the premium you have to pay.

9. You Need Not Buy Car Insurance from Your Dealership

Very often your car dealer presents an insurance plan at the time of purchase of your vehicle. Sadly, this option isn't the best (in terms of cover) nor is it cost-effective. Make it a point not to buy a vehicle insurance plan before comparing car insurance premium online. Compare features, coverage, and quotes to help you pick the best one.

10. NCB Can Reduce Your Premium

Haven't made any claims on your car insurance for the whole of last year? As a reward for your good driving, around 5-10% of the IDV is returned to you during the time of renewal. You can redeem this amount at once or carry it forward to the next year. You can accumulate this no claim bonus up to a maximum of 50% of the IDV.

11. You Can Opt for Car Insurance Portability

Just like all other insurance policies, your vehicle insurance must be renewed periodically. Not satisfied with your current plan? You can easily switch to another insurer during the time of your car insurance renewal. Also, you can take your no claim bonus with you when you switch agents.

12. Claim Procedure Matters

Ultimately, a good insurance policy is one that lets you make claims without any stress. So make sure to check out the claim history of a particular insurer before you sign the contract. Additionally, several insurers have a cashless claim policy, where they partner with a specific garage to offer you immediate service. This means that you don't have to run around for reimbursement.

13. Fine Print of a Policy Include Several Things You May Not Know

A vehicle insurance policy is a contract between you and the insurance provider. While it may sound a bit geeky, make sure to read through the entire policy before you sign on the dotted line. Clarify all your questions beforehand, to avoid nasty surprises later on.

14. You Can Buy Car Insurance Online for Better Deals

Many people still rely on agents or dealerships to purchase car insurance. But you can find better deals while going the online route. Insurance companies and aggregators provide discounts or special offers when you buy directly through their websites, and the process is quick and hassle-free.

On to You!

Just like taxes and death, there's no way escaping vehicle insurance. Make use of this comprehensive guide to pick the right plan that fits your budget as well as meets all your specific requirements, providing you adequate coverage in times of need!

Disclaimer: The content published in this article is intended solely for the readers' informational purposes and should not be relied upon for personal, medical, legal, or financial decisions. It is advisable to seek advice from a qualified professional regarding specific concerns. The details provided regarding the plan are for reference purposes only. Please visit the insurer’s website for the latest updates on the plan. The company does not guarantee suitability, reliability, timeliness, or accuracy of the information, services, or any other aspects mentioned in this regard for any purpose. We do not endorse any insurance company or insurance product provided by any insurer.