How do you view vehicle insurance? Just as a mandate by the government, which has to be fulfilled without giving much thought to it, or an important and useful policy that protects you from financial burden caused due to repairs or accidents. If you belong to the first category, you must review the following facts and reconsider the importance of having a comprehensive insurance policy for your car:
- ● With just about one percent of the global vehicle population, India accounts for about six percent of the total global road accidents
- ● Last year, around 1.55 lakh people died in road accidents in India
- ● Another 4.39 lakh people were injured in the same period
- ● Almost 2.5 lakh vehicles get stolen in India every year. Out of those, only around 25 per cent are recovered
Given these circumstances, it is of paramount importance to have a reliable and comprehensive cover for your vehicle. Moreover, as per the Motor Vehicles Act, 1988, every vehicle running on the road should have a Third Party (TP) liability insurance. But, despite the mandate, there are not many takers of car insurance. As per a report by the Insurance Information Bureau of India (IIBI), out of more than 23.12 crore vehicles on road in India as on March 31, 2019, the percentage of uninsured vehicles stood at nearly 57 per cent.
What this essentially means is that people are unaware of the benefits of having a car insurance policy. Car insurance serves everyone’s interest as it offers financial protection to the vehicle in case of accidents, theft, natural disasters, fire, and many other circumstances. It pays for car repairs, safeguards from legal liabilities and even facilitates roadside assistance, if riders are added to the policy. It should be viewed as an effective investment that safeguards savings and gives people peace of mind.
Thus, a car insurance policy should be a must-have on everyone’s list. If you are looking to insure your four wheeler, you can opt either for a third-party or a comprehensive insurance policy.
Third-Party Liability Vs Comprehensive Insurance Policy
There is a significant difference between the two types of insurance policies. For instance, if you unfortunately meet an accident involving another vehicle, the third-party liability insurance policy will cover the damages caused to the other vehicle or the person (third-party in this case) who is involved in the accident with you. The third-party policy will not pay for any damage to your own vehicle or your hospitalisation, in case of any injury. You would have to bear the cost of repairs of your vehicle and your medical treatment yourself.
Whereas, the comprehensive policy protects you and the third-party both against damages and additionally covers your vehicle in case of theft, natural disasters, fire, etc. Moreover, you can also enhance the comprehensive insurance cover by adding several riders to it.
Evidently, the comprehensive insurance policy gives you the highest form of protection as it comes with a broad range of coverage options.
What an ideal car insurance policy looks like
If there is anything worse than not having a vehicle insurance policy, it is having an under-insured one. It’s worse because you did all the work, paid the premium and bought a policy to cover your vehicle, and yet when you unfortunately meet an accident, the policy doesn’t cover the costs completely. So, it is crucial to make an assessment of what you are paying in terms of premium and what you are getting in return in terms of coverage. Several factors that should be assessed while calculating the premium amount, including the third-party cover, own-damage cover, additional riders, and the Insured Declared Value (IDV).
The IDV forms the major chunk of the premium amount as it determines the maximum sum assured fixed by the insurance company. It should be carefully calculated while purchasing the policy. Many policyholders make the preventable mistake of ignoring the IDV and then feel cheated while filing the claim. You could use a premium calculator on Bajaj Allianz General Insurance website to calculate the right premium for the benefits you need as part of your policy.
IDV and its calculation
In a nutshell, IDV is the current market value of your vehicle. In case of theft, disasters or total loss, the insurer gives you the IDV that has been fixed at the time of buying the policy. It is calculated by a simple formula:
Manufacturer’s registered price - depreciation= IDV
Since the IDV is directly linked to the premium that you pay, many car owners tend to declare a lower IDV value to save a little bit of money. However, that is a big mistake for which one may have to pay at the worst possible time - that is while making a claim.
For instance, if your car’s IDV is fixed at Rs 4 lakh while buying insurance, the insurer will pay you a maximum of Rs 4 lakh, in case of loss/theft or complete damage. However, if you declare the IDV to be Rs 3 lakh just to save a little on the premium, that is the maximum claim you would be able to file even if your vehicle is completely damaged or stolen.
Thus, fixing the right IDV is crucial for the premium amount that you will pay for your insurance, otherwise it can lead to under-insurance, and affect your claims.
It is noteworthy that the IDV calculation does not account for any extra accessories fixed in the car. Other factors that affect the IDV are the age of your car, make and model, and city of registration.
How not to get overwhelmed
It is understandable if you get overwhelmed while deciding the right insurance company as there are a plethora of options available today. To make a decision, you should look at simple, easy to understand products, and go for a trusted partner that follows a human-centric approach.
One of the trusted names that give car insurance in three minutes with hassle-free claim settlement is Bajaj Allianz General Insurance. Vehicle insurance products by Bajaj Allianz give you an unmatched experience as their robust features are built while keeping customer’s urgency and safety in mind. Bajaj Allianz offers instant policy insurance and car insurance renewal with cashless claims at over 4,000 garages across the country. If the cashless facility is not available at the listed garage, you can pay upfront and get the claim reimbursed.
Moreover, the company also values customer’s time and is available round-the-clock for claims support and on the spot assistance. Also, thanks to its Motor On the Spot feature, Bajaj Allianz settles the claim in 20 minutes.
Thus, a quality motor insurer protects you against damage of assets and with Bajaj Allianz, you can expect a policy with no hidden costs or difficult wordings. The question for you now is: do you still want to bear the heavy cost of repairs or alleviate the pain by buying a comprehensive motor insurance policy.
This is a partnered post.