How to Choose the Right Coverage Limits for Your New Car Insurance Policy

 Protecting Your New Car: The Ultimate Coverage Selection Guide

When you buy a new car, it is important to make sure you have the right coverage for your new investment. Car insurance is one of the most important purchases you can make when it comes to protecting your vehicle, so it is important to choose the right coverage limits for your new policy. This article will provide you with some tips on how to choose the right insurance coverage limits for your new car.

Why do we need car insurance?

Car insurance is an important investment to protect yourself, your vehicle and other parties in the event of an accident, theft, or other covered incidents. It also helps cover the cost of damage to other people’s property and medical expenses for those involved in the accident. In some countries, having car insurance is also a legal requirement.

Why is it important to have the right car insurance coverage?

It is absolutely essential to have the right car insurance because of the following reasons:

  • Financial protection for self in the event of loss, accident or injury
  • Relaxed mind because one knows that s/he is covered in case of any unexpected incident on the road
  • Protection for others (including damage to their property, medical expenses, etc)

How much car insurance is right?

Costing of car insurance depends on multiple factors. One has to choose a policy that suits his/ her specific requirements and at the same time fulfills statutory requirements too. Given below are some of the most important factors one needs to factor in before purchasing car insurance for a new car:

Type of insurance: Third-party coverage or comprehensive coverage. Third-party insurance policy will only cover claims for the damages caused to the third party whereas comprehensive claim coverage covers both third-party liabilities as well as damages to self.

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Insured Declared Value (IDV): This is the amount the insurance company pays if the car gets damaged or if the vehicle gets stolen. Different insurance companies may offer different IDVs, so it’s advisable to opt for car insurance offering an IDV that is closest to the market value of the car.

Quality of services: Although most people opt for car insurance with the lowest premium, it is advisable to opt for a car insurance policy offered by reputed insurers who are known for their quality of services and have a high claim settlement ratio.

Additional covers: These are extra covers that an individual can purchase over & above the original car insurance cover at extra cost(s). Some of the additional covers include no claim bonus protection, return to invoice, roadside assistance, engine and gearbox cover, zero depreciation, pay-as-you-drive, etc.

What is a car insurance premium?

A car insurance premium is the amount of money a policyholder pays to an insurance company for their car insurance coverage.

What is a car insurance calculator?

A car insurance premium calculator is an online tool that helps an individual estimate the cost of their car insurance coverage based on factors such as their vehicle type, location, and coverage options.. It’s advisable to use a car insurance calculator, prior to buying or renewing car insurance because of the following reasons:

  • Helps ascertain the cost of car insurance. This helps an individual make an allocation for the premium
  • Helps save against fraudulent deals wherein the premiums might be inflated by unscrupulous agents 
  • Helps customize premium by adding/ removing add-ons and choosing the most suitable IDV
  • Helps compare the quotes from multiple insurers to find the best deal
  • Purchasing car insurance online can help reduce premiums (may not be applicable in certain cases)

How to choose the right car insurance company?

Apart from choosing the right car insurance coverage, it is also essential to choose the right insurance company. Following are some important factors to keep in mind while finalizing the insurance company:

Proportion of claims settled: This is one of the most important factors to decide the company. The higher the proportion of claims settled more reliable the company is likely to be.

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Speed of claim processing: This is again one of the most important aspects that determine the reliability of a company.

Grievance against insurer: Higher the grievances against an insurer, the less reliable it is likely to be.

Company Reputation: If the insurance company belongs to a reputed group such as HDFC, etc it is more likely to be reliable.

Financial Stability: It’s advisable to check the financial strength of an insurance company. Nowadays, it is easy to find the financials of a company. Especially, the financials of listed companies are very easy to find.

Contacting the Insurance companies: The insurance firm ought to offer various ways for policyholders to get in touch with them in the event of a requirement. Such methods could include email, physical contact at their offices, online, chat/ messenger, 24/7 customer service, etc

Note: IRDAI regulates all insurance companies and regularly publishes reports providing information on the financial stability and reputation of insurance entities. These reports, published by IRDAI, allow for the evaluation of all relevant factors (including those mentioned above).

Conclusion

Car insurance is a crucial investment for protecting your new car and ensuring financial stability in case of any accidents or incidents. It is important to choose the right coverage limits and select a policy that suits your specific needs and legal requirements. Similarly, it is equally important to choose an insurance company that is financially sound, has a good reputation and high claim processing ratio. A car insurance premium calculator is a useful tool for estimating the cost of your coverage and comparing quotes from multiple insurers. By using the calculator and considering factors like IDV, quality of services, and additional covers, you can make an informed decision and get the best value for your investment in car insurance.

Summary

Car insurance is an important investment to protect yourself, your vehicle, and other parties in the event of accidents, theft, or other covered incidents. Choosing the right car insurance coverage depends on factors such as the type of insurance, insured declared value, quality of services, and additional covers. It’s essential to choose the right insurance company based on factors such as the proportion of claims settled, speed of claim processing, company reputation, financial stability, and contact methods offered. A car insurance calculator can help estimate the cost of car insurance coverage and compare quotes from multiple insurers.

DISCLAIMER:THE ABOVE INFORMATION IS FOR ILLUSTRATIVE PURPOSES ONLY. FOR MORE DETAILS, PLEASE REFER TO THE POLICY WORDINGS AND PROSPECTUS BEFORE CONCLUDING THE SALES.

 

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