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Things Beginners Should Know About Car Insurance

Published On Feb 18, 2021, Updated On Mar 16, 2021

Much as you have ensured that the car you purchase suits your specifications well, you will need to make sure that you buy car insurance according to your wishes. In India, there are now many insurance companies and several different types of vehicle insurance plans, particularly for first-time buyers. The initial step in making the appropriate decision is to comprehend car insurance.

There are a few essential matters that one must know about car insurance, much as all the other kinds of insurance. You would have to go through many considerations very carefully, from the type of vehicle, model, economy, colour, to its cost, to make the right purchase decision. When you have made up your mind, choosing car insurance is the next step.

Things Beginners Should Know About Car Insurance

Things to Know About Car Insurance for Beginners

Here are a few tips to remember before you decide to purchase your first car insurance or worry about car insurance renewal.

Select A Policy Suiting Your Requirement: There are 2 types of car insurance plans: “third-party car insurance and comprehensive insurance”. The former is obligatory under Indian law, but the latter category provides more coverage and benefits. If you select to use minimum coverage, i.e., only against third-party risks, opt for car insurance from third parties. However, go with a comprehensive policy if you want to cover your vehicle as well.

Set the Insured Declared Value (IDV): This is the car's estimated current selling price. The IDV is not the vehicle's resale value, it is the current value. If you have taken only third-party car insurance, then setting of the IDV is not required. If the vehicle is stolen or meets a massive accident where it is damaged beyond restoration, the vehicle would be considered as 'complete loss.' into the picture. You will then be paid by the Car insurance provider for the estimated IDV amount you have set when ordering the policy. Thus, setting the correct IDV is quite necessary.

Deductibles: This is the amount that the policyholder pays at the time of claim payment. In car insurance, there are essentially two types of deductibles: voluntary and optional. Under the voluntary deduction, you will decide the amount you want to pay at the time of making a claim. Setting a higher deductible is widely considered to be beneficial for safe drivers. Setting a higher deductible can, though, lead to a lower claim sum. Thus, when setting a voluntary deductible, be cautious.

Add-Ons: If you have selected a comprehensive car insurance plan, you would be granted an option to choose extra coverage options, i.e., add-ons. You can choose from a wide variety of add-ons if you have a new car. Each add-on can be purchased separately. The cost of your insurance will increase by this. You must select only those add-ons which fit your needs

Timely Renewal: You must make sure that your car insurance policy is always active and renew the insurance on time to avoid denial of claim. A car insurance policy is typically valid for 1 year, though there are also long-term plans available. An expired policy is of no value and would not give you or the third party any form of financial protection. Even, if you fail to renew the policy in time, you can forfeit the accrued NCB, i.e., the No-Claim Bonus

Also, Read

What To Do If your Car Catches Fire?

Benefits of Multi-Year Car Insurance in the Long Run


The above are some of the fundamentals that can allow you to understand the definition of insurance for vehicles. The terms and conditions, the fine print, and exclusions that are referred to in the policy document must be, without fail, read.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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