All about car insurance

All about car insurance - How to save your money on Insurance.

Mistakes to avoid while purchasing a Car insurance - a Detailed View

Car Insurance is a contract under which the Insurance provider will provide financial assistance to our vehicle or to the user or to the party which was involved in a accident.

There are 3 basic types of car insurance.

1. Third party Insurance ( mandatory to own as per government regulations )

2. Own damage car insurance

3. Comprehensive car insurance.

Third party insurance:

Here Third party means , the people or property which is not related to us or our vehicle. They are the other cars or properties or people present on the road. Under this insurance plan , the insurance provider will pay the third party if we crash into them with our car. The money can be used to repair their car , use for medical expense of third party or for repair any other property on road.

Own damage insurances:

This insurance covers our own vehicle incase of accident damage , natural calamities, theft of vehicle or man made disasters like riots.

Comprehensive Insurance:

This is the best to buy insurance which includes the functionalities of both third party insurance and own damage car insurance.

Things which are not covered under the these insurance plans

Mechanical or electrical break down of vehicle.

Part that have wear and tear like brake pads , clutches and tires.

Consumables like coolant ,brake fluid and Engine oil.

Engine damage if the vehicle is started in flood.

Depreciation amount of parts replaced.

The insurance covers do not work if it is a drunken drive case or a driver without license.

Common perks which people do not realize while buying an insurance

The insurance will pay the labor charge fully , but for parts they will not pay the full amount. They will deduce the depreciation cost of part. For example depreciation of plastic, rubber parts are higher , they tend to lose their value by 50% and parts like bumper (fiber) lose around 30% of the value. So the insurance company will pay after subtracting the depreciation amount. Remaining amount has to come from our pocket.

There is a term called IDV value of the car . This is the cost of your on the present day after depreciation. The value of your car goes down based on number of years passed after purchase of the car. The Insurance company will pay this amount ( IDV value) to us if the car is stolen by someone or is damaged in a accident and the repair cost itself will go higher than the IDV value. ( the IDV value can go around 50% of the original cost after 10 years).

We should not keep claiming insurance even for small scratches and dents. If we do not claim insurance for the paid period ( usually will be 1 year ) , then we will get a No claim bonus. This bonus can be a discount ( maximum around 50%) on the premium that we will be paying to renew our insurance next time. We can claim this bonus , even if we use insurance because of accident caused by a third party.

Additional packages that can be bought for the users benefit ( additional premium needs to be paid for each of this add ons)

Zero Depreciation or commonly known Bumper to bumper plan - This is a additional protection plan in which the car parts have no depreciation cost. The full amount of these parts are paid to the owner. To avail this facility user has to pay extra 10% to 15% of the premium paid for Insurance plan. ( few parts made of rubber , fiber glass, plastic, engine damage are not covered under zero dep)

Engine cover - Engine being costliest part of modern vehicle , this cover provides insurance incase of engine failure due to water ingress in to engine or engine failure due to oil leak. Usually damage to Engine other than accident case is not covered in normal plans , hence it is a must to have this additional cover. This also covers gearbox and differential arrangement.

Personal accident cover - This add on cover is used to provide medical expenses for the driver , also covers the drivers family incase of unexpected fatal accident like loss of life or disabilities to the driver.

Tire cover - Usually damage to tires are not covered under regular plans. This can be cuts in tire which arises while driving in broken roads or pavements. This add on cover will compensate for such costs. This cover does not work if the tire damage is due to overloading of vehicle. It does not cover tire punctures.

There are additional add ons which covers the car’s electronic accessories incase of theft , another add on which covers lost keys and add-ons for consumables like coolant , engine oil , brake oil , AC gas charging , fasteners like nuts and bolts.

The general insurance cost depends on life of vehicle , type of fuel and engine size.

Key Take Away:

Get Zero depreciation add on.

Get Engine add on cover.

Drive safe, nothing is going to happen if you reach the destination 10 minutes late.

Follow traffic rules and use your brain.