Buying a new car marks a red-letter day in your life. It is a dream fulfilled, it sets you up for a higher social status, and most of all it makes life infinitely more convenient and comfortable. And, it is an expensive machine. All these things underline the importance of purchasing a vehicle insurance to protect your car as well as your life and limb, as much as to protect you from the liability of paying for the damagers that you may cause to the third party. The most common mistake that people in India make is to purchase the vehicle insurance simply because it is mandatory, and they do it as a chore without thinking about the right and most beneficial way to do it. Most of all, you need to ensure that you have enough coverage, even after taking into account IDV in car insurance. Below we outline some salient points to consider while buying vehicle insurance to ensure that you have enough coverage.
- Make an objective assessment of your risk based on the cost of your vehicle, your own financial condition, your driving habits, safety fitments in your car, etc. while determining the amount of the sum of coverage you need for your vehicle insurance. Here you must remember that you may be extremely confident about your driving and may think that you do not therefore need much insurance, but accidents often happen no matter how safely you drive, due to the mistake or reckless driving of the opposite party. So, when it comes to vehicle insurance, over-confidence can cost you dearly.
- You need to thoroughly understand the concept of IDV in car insurance which is the insured declared value of your vehicle, which is determined by the market value of your vehicle, which is in turn determined by deducting the depreciation of your vehicle from the original value of the car.
- You also have to know whether you want only a third-party vehicle insurance for your car, which will not cover own damage, or whether you will be better off buying a comprehensive insurance policy, which will cover own damage also. If you buy just a third-party cover, you will have to pay for own damage from your pocket, while if you buy a comprehensive vehicle insurance policy, it will not only protect you against the liability of damages to the third party caused in an accident where you are at fault, but will also compensate you for own damages also.
- Another factor which will determine the amount of coverage you need in your vehicle insurance is the amount of deductibles. Insurance providers generally fix a ceiling on the amount of money they will pay as compensation in case of an accident, while the remaining amount of the damages will have to be borne by you.
There are many other add-ons – such as zero depreciation, no-claims bonus, accessories coverage, etc. – that you need to take into consideration while deciding how much insurance is enough for you.