Renew your car insurance? Here are 7 key points to remember to avoid mistakes

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Car insurance is one of the most essential insurances that one absolutely must have. It pays for the loss or damage to the car in exchange for a premium given by the policyholder. It provides coverage for bodily injury resulting from an accident in the event that the insured car is involved. It also pays for damage to the vehicle due to theft or natural disaster.

The most important aspect of owning an auto insurance policy is renewing it. You may want to consider upgrading your policy for healthy coverage or purchasing add-ons. There are a few things you need to keep in mind to avoid any hassle when renewing. Therefore, we have prepared a checklist for you to avoid making mistakes at this time:

Renew the policy on time: Check the policy’s expiration date. You must renew your auto insurance in a timely manner. You will be liable to pay a fine of Rs 2000 if you drive without third party police in India. You will have to pay a fine of Rs 4000 if you repeat this offense as well as the cancellation of your license and imprisonment.

A few insurers offer a 30-90 day grace period, which is extra time to renew the policy if you miss the expiration date. However, the insurer will not cover your vehicle during this grace period.

Update your plan: At the time of renewal, you can upgrade your car insurance to comprehensive insurance. A comprehensive plan offers more extensive coverage that includes payment for damage to your car in the event of an accident. However, the premium will increase.

Appropriate Insured Declared Value (IDV): The insured declared value is the current market value of the car. This is the maximum sum insured provided by the insurer if the car is stolen or damaged as a result of an accident. IDV is a crucial parameter when calculating the car insurance premium. A higher IDV implies a higher premium while a lower IDV implies a lower premium. You should opt for an IDV that offers good coverage and whose premium suits your budget.

Use the accumulated No Claim Bonus (NCB): The no-claims premium is the reward granted by the insurer in the event that you do not make any claims during a given period. It varies from 20% to 50% for a period of 5 years. This reduction is granted at the time of renewal. This is a good way to lower your premium. So be sure to check your eligibility and the value of the rebate when renewing your car insurance.

Consider a voluntary deductible: A voluntary deductible is an amount that a policyholder pays from the share of the claim. If a policyholder accepts a higher deductible, the insurance premium is higher whereas if the deductible is low, the insurance premium is high. If you have a good driving record, it makes sense to choose a higher deductible.

Consult the network of garages: It is difficult to wait for payment from insurers at the time of an emergency. Therefore, check the network of garages with your insurer to take advantage of hassle-free cashless claims. Their website also contains such information.

Choose the right add-ons: Add-ons provide a cushion of protection to your existing insurance policy providing adequate coverage. You can choose add-ons such as zero amortization, passenger cover, claim-free bonus protection, roadside assistance, and more.

You should assess your needs before choosing an add-on as they increase the premium. For example, a zero depreciation add-on is suitable for a new car because the claim amount is protected against not including the depreciation cost of the vehicle. Likewise, if your frequent trips involve remote areas, you can purchase roadside assistance coverage that provides immediate assistance if the car breaks down in the middle of the road. The best time to remove or purchase an add-on is upon renewal.

Summary

All these steps will allow you to make an informed decision when renewing your care insurance policy. You can also change insurers if you are unhappy with the current policy. Compare different policies, features, benefits and prices before switching to another insurer.

Sanjiv Bajaj, Jt. Chairman and Managing Director, Bajaj Capital Ltd. The opinions expressed in this article are those of the author and do not represent the position of this publication.

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