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A Primer on Buying Vehicle Insurance


Unlike the traditional notion that buying auto insurance is easy; it is not just visiting online, compare the quotes and buy. There is a lot more process involved and choosing the best coverage can be quite tedious, it all starts with choosing the right kind of plan. So if you are a first time buy insurance buyer, the following tips will greatly help you.

Types of auto insurance

Most insurance companies offer plans that can be broadly classified into two broad categories:

Third party liability insurance

Under this type of vehicle insurance damage to the personal properties, accidental death and injuries caused due to the fault of the third party are covered. The liability insurance is a mandatory requirement for all the vehicles running in India.   

Comprehensive plan

A comprehensive insurance coverage is the most preferred option chosen by the automobile owners. As the name itself suggest, it provides coverage to both you and any damage done to the third party. Additionally, it covers damage caused to the vehicle due to natural catastrophes like cyclone, fire, and earthquake.

Factors that affect the premium cost of auto insurance

One of the most important factors that the insurance companies consider while determining the premium cost is the type of vehicle, the fuel type and the cubic capacity. For instance, an SUV (sports utility vehicle) would have a higher premium. Also, insurance companies tend to charge 10-15% higher premium for the vehicles that run on diesel than the petrol operated vehicles. The make also plays a pivotal role in how much you pay for insurance coverage. Vehicles that are more than five years old at the time of taking new insurance policy or renewal will pay a higher premium than newly purchased vehicles.

The insurance companies also look at the area of the registration while determining the premium cost. If you live in an urban area or any place near highways or an area that is densely populated, then you have to pay a higher premium. Also, if your area has a high criminal rate, then also premium cost may go up.

If you have a track record of frequent insurance claim, the insurance companies would categorize as vulnerable customer and would increase the premium charges.

The age and the profession of the driver are also taken into consideration. If you alone would drive your vehicle, the premium would be low as opposed to multiple people driving your car.  

Important Add-ons that add to the insurance cost but are very useful

Zero depreciation insurance

A zero depreciation insurance provides coverage for damage to all the rubber and plastic parts in your vehicle. Typically, most insurance companies pay only 50% of the value of these parts as they are subject to depreciation. Today, with most modern cars having mostly rubber and plastic parts it is best advised to take this coverage; although it would increase your initial cost, it would prove to be handy during a claim as it would help you cover a significant cost for repair of these parts.

Personnel cover

A standard insurance coverage covers only the damage to the car and the injuries to the owner. However, if you take an additional coverage, it would provide coverage to all the people who use the vehicle.

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