Car Insurance

covers your car against risks like theft, accident, explosion etc.

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Vehicle Insurance and Affordability

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Vehicle insurance affordability depends on a range of factors such as

  • Market Forces
  • Government Policies
  • Insurance Excess
  • Insurance Declared Value
  • Insurance Policy Claims
  • Type of Vehicle
  • Frequency of Premiums

There is no denying the fact that vehicle insurance forms a necessary investment that you would want to minimise. As long as there are transportation needs and as long as there are risks on the road, the prospects of insurance policy claims cannot be discounted – which makes vehicle insurance something that you cannot possibly forego. However, even as you would want to neutralise the risks associated with driving, using tools such as third party insurance, there is no reason why you would want to miss out on vehicle insurance that is also affordable. So, in the light of Coverage such as third party insurance and given the prospects of insurance policy claims, here is a quick look at what you could do towards getting the most of your investment in third party insurance, whether you would need to make insurance policy claims or not.

1.Market Forces:

In a competitive market, the affordability of vehicle insurance is driven by the market forces of competition and market leadership. The leading companies may be able to provide the most affordable vehicle insurance because they have such significant market share, on account of the services that they offer and the insurance policy claims that they honour. Look out for those who have a record of honouring insurance policy claims and for those who offer competitive rates for third party insurance.

2.Government Policies and State:

Vehicle insurance affordability is not just a subject matter of the players in the industry, but also is a reflection of government policies. Insurance is a regulated industry and there are strict norms that players in the industry would have to adhere to. If you find that third party insurance is on the expensive side, it could also be on account of certain government policies that are specific to the state that you are in.

3.Insurance Excess:

When you make insurance policy claims, you would be compensated for the damage you incur, based on the features of the policy that you have opted for, such as third party insurance as well as features such as add-ons. However, one important aspect of vehicle insurance that determines its affordability is the excess – both compulsory and voluntary. You could make your vehicle insurance more affordable by choosing voluntary excess that you would shell out in case you make insurance policy claims. Choosing a higher excess is one way you could benefit from features such as third party insurance and could still make for affordable vehicle insurance.

4.Insured Declared Value (IDV):

Irrespective of insurance policy claims or third party insurance, your vehicle would hold its own value in terms of vehicle insurance, defined as Insurance Declared Value. The IDV refers to the maximum amount that you could hope to get in terms of insurance policy claims, even if you had to settle for a complete write off after an accident. The IDV, starting with the vehicle’s market price, tends to decrease every year on account of depreciation. The affordability of vehicle insurance depends on the Insurance Declared Value of the vehicle at that point in time.

5.Insurance Policy Claims:

There are features such as ‘No Claims Bonus’ that should ideally make your vehicle insurance affordable. This depends on whether you have staked the insurance policy claims in the past and how your record as a driver has been.

6.Luxury or Economy:

Beyond concepts such as third party insurance and your record of insurance policy claims, if your vehicle is classified as a luxury vehicle, you would have to live with a vehicle insurance that may not be the most affordable.

7.Annual Insurance:

One more way that you could make your vehicle insurance affordable would be to pay your premiums annually rather than choosing the monthly or quarterly payment cycle.