If you think you are smarter than others if you are insuring your car for less than its worth, you are living in a fool’s paradise. You could be in big trouble in case of an unfortunate event like car theft or accident. By paying lesser Premium for a smaller agreed value of your vehicle would never be worth it.
Let me explain it better with a simple example.
Suppose, you buy a brand new Honda City 1.5 MT at an ex-showroom price of 7, 20,000 rupees. The insured’s declared value (IDV) will be 95% of the ex - showroom price up to the first 6 months. So, your annual premium will be approximately 21,000 rupees. In case you are under Insured that is, paying lesser premium than the one mentioned above and your car gets stolen then you would not be eligible to get the declared value of your car back.
Generally, this happens when the car dealer sells you the vehicle at a price lower than ex-showroom by under- invoicing. Here, the buyer makes partial payment in cash and the remaining in cheque. But do not let go off your long Term gain for short term pain. Just to save a few hundred rupees and risking an asset like your vehicle is surely not worth it!
Now, having convinced you about having an insurance let’s talk about the two types of motor insurance:
1.THIRD PARTY OR LIABILITY OR ACT ONLY POLICY
•Unlimited liability of third party bodily injury or
•Liability towards property
•It is compulsory by law.
2.COMPREHENSIVE PACKAGE Policy COVERS:
•Third party cover
•Car loss or damage due to an accident, fire or theft while in transit by road, rail, air etc
•Risks against floods, earthquake, riots and strikes
Accessories like music system, air-conditioner, etc. can be covered by paying additional premium.
The Insurer keen on a package policy has the option to choose for either only theft or fire or fire and theft together as well. But never forget to compare different insurance companies before buying.
You could save premium out go by looking at the following ways,
No Claim Bonus
An incentive to safe drivers. For one year of no claim, the Policyholder is eligible to get a 20% discount on own damage premium. This goes up to 50% for five consecutive years of no claim. So, don’t rush for minor denting and painting work claims. The best part is that the no-claim Bonus is transferable. You can set off the bonus against the premium out go of the new vehicle.
No- frill Policy
Buying just the basic cover without Riders like Accident cover, loss of personal belongings etc. Buying insurance online could also save around 10-15% of the total premium.
The premium to be paid can be reduced if the policyholder shares the burden of the claim, called voluntary deductible.
Sharing Information & Past History
You are set to benefit more as you share all your personal information, claim history and driving record. Company’s like Berkshire India Insurance offer a 5% discount if you spell out all the details.
Think before ticking the add-on benefits
Few add-on features are quite beneficial. But, do not go for unnecessary ones as suggested by agents because that will compel you to pay a higher annual premium.
Sign up with auto associations
Signing up for the Automobile Association of India or its affiliates allows you to a discount of 5% or 200 rupees on the own damage premium. Likewise installing an anti-theft device from the same warrants you to a 2.5% discount or a maximum of 500 rupees.
So, next time you go in for car insurance
remember to be pound wise!