Factors We Must Consider Before Buying Car Insurance

Car insurance is not just an option but compulsion in India. We need it for many reasons as follows.

1. Car damage
2. Theft
3. Depreciation
4. Car Accident
5. Third party car damage

There are many Car insurance companies. We must choose the same based on a few parameters.
Some of them has been listed below.
  • Garage Facility
With the garage facility offered by these Insurance companies, we can do cashless repair of our cars. This cashless facility is offered across India. Some of the companies along with the number of garages are shown below.

Car Insurance Players & Garage Cover
  1. Bajaj Allianz Car Insurance - 4000+
  2. Reliance Car Insurance - 3800+
  3. Tata AIG Car Insurance - 3800+
  4. Royal Sundaram Car Insurance - 3300+
  5. Bharat Axa Car Insurance  - 2500+
  • Non-Claim Bonus
  • Premium Amount
  • Company history
How to make less Claims and get better Premium?
After buying a Car Insurance we may be allured to take every little claim. However, it may not be a very prudential decision. We may feel pennywise but may turn out to be foolish for pound. This is because these small claims may lead to the loss when we plan to renew car insurance plan.

This is because one of the Important ingredients in Car Insurance premium is NCB (No claim bonus). It is only granted after non-claim years. Car Insurance companies provide commulative NCB every year.
Non Claim Bonus
  • 1st Year 20%
  • 2nd Year 25%
  • 3rd Year35%
  • 4th Year45%
  • 5th Year50%
We should avoid taking small claims which is less than Fifteen thousand rupees. This is because claims that we take is based on the following parameters.

Comprehensive Policy deduction- When we take claims for third-party coverage than claim amount that we get may be much less than actual. This is because the depreciation value of the third party can affect the claim value. Also if that claim is an add-on than it will further reduce the amount.

Age of the car - Claim of the amount is directly related to manufacture year of the car. It is also called as depreciation value. It will reduce our claim amount to further 20-30%.

Variable deductions – There are many expenses like Car paint; accessory damage that may not be included in Insurance. While taking small claims, reimbursement may be further reduced because of these variable deductions.

Thus in a small claim of Rs.15 000, we may just get Rs. 4000. However, it may affect our NCB to a great amount. As a result, we may end up paying more premium.

We must do all these calculations before taking claim. If the discount on renewal is more than reimbursement than we should never make claim. Also taking too many claims will affect our history. This may further affect the premium amount.

Factors that affect Car Insurance renewal
1. Depreciation value of the car – Car manufacturing date plays a great role in premium amount. As the car gets old its performance is affected. Along with the average; the engine also becomes slow. Because of such factors car may be more prone to accidents. All of these factors impact the premium amount.
2. Number of claims – The claims made in a year affects Car Insurance premium as well. Not only this we are barred from the entitlement of NCB as well.
3. IDV - Car premium is calculated on the bases of Insured Declared Value(IDV ) as well. In fact, it plays a very important role in premium calculation. It is based on couple of factors such as depreciation, model, make etc. It is the maximum amount of Sum insured that can be claimed.
We must always make an informed decision before buying or renewing Car Insurance.

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