Buying car insurance might seem like a task and an extra expense. But at the time of claim, if one does not have sufficient coverage even the insurer might not be able to help with the financial loss suffered. To avoid this, let’s take a look at 3 common mistakes people make while buying car insurance:
Visiting a dazzling car showroom to buy a brand-new car is pretty overwhelming. The flawless salesperson is also always aware of our specific needs and keeps on suggesting one after another of those amazing shiny cars.
After finalizing the car with heightening excitement, it’s time to complete all the formalities. At this time the insurance of a car is also to be finalized. But the salesperson strikes again! And does all the thinking for you with lightning speed.
The ideal way of buying car insurance is by understanding your needs in terms of a car insurance policy. Go ahead with the purchase only after selecting the best insurance. However, in most cases, it is the car dealer/salesperson who decides which car insurance the owner should buy.
They even select the type of policy, the amount of Insured Declared Value (IDV) i.e. the market value of the car for insurance and also the number of Add-ons and other features. This is a big no! Never let your car dealer make the decisions about which car insurance policy is the best suited for you. These things are to be decided by the owner only.
Even if, in most cases dealers or salesperson make decisions about car insurance policy for you, their decisions can apply only for one active policy year. At the end of this policy year, you are free to make all the major changes that you need in the policy.
At this point a new problem arises, even if owners are free to make their own decisions about car insurance policy, they overlook major aspects. It is of utmost importance that one considers buying car insurance as important as buying life insurance.
Before hitting the “make payment” button for buying a car insurance policy, the owner should be aware of the following things:
- What Are the Types of Car Insurance Policy? A car insurance policy is of two types – 1) Third-party liability policy 2) Comprehensive policy
- What Are Add-ons? Add-ons are additional coverages which can be bought only with a comprehensive insurance policy.
- What Are NCB and IDV? NCB is the abbreviation of No Claim Bonus. This bonus is offered if no claim is raised against an insurance policy. IDV is the abbreviation of Insured Declared Value. It is the current market value of a car.
- Why Is Renewal Important? In case of mishaps, one will be able to raise a claim only if a car insurance policy is active. If the policy is not renewed in time, owners of the insured cars will have to bear the financial loss incurred, all by themselves. They also need to take care of the legal liabilities if a third party is affected due to the insured vehicle.
Also, if the policy is not renewed in time, one could lose the accumulated NCB, which can amount to 50% discount on car insurance premium.
Buying at least a Third-party car insurance policy is mandatory by law. But, the law is in force only to provide a fair deal for the third parties who get affected by an accident. This is no manner means that one should buy only a third-party car insurance policy and be vulnerable to financial losses in case of own damage.
One of the main reasons for buying the most basic policy i.e. a Third-party policy is – car insurance prices. As a comprehensive policy is more expensive than a basic policy, people tend to buy the basic one. Coverage offered by the policy should be the criteria for buying insurance over car insurance prices. Because at the time of claim, the financial loss incurred could be many times more than the cost of a policy.
In any case, the decision of buying a car insurance policy and selecting its features should be the solely of the owner. Understanding the features of a policy will lead to a purchase of a better product. Also, if budget is a constraint for buying car insurance, using car insurance premium calculator will come in handy for adjusting factors affecting premium amount.