You recently purchased a new car, most likely your dream car. The first thing you need to do is secure insurance coverage for it to guard against any possible loss or damage. This procedure is not without its bumps, though. Even if it might seem simple, it is easy to make a few mistakes, especially if you get easily influenced.
If you’ve never bought car insurance before, you’ll be overwhelmed with the vast choices, and you might end up picking the wrong one. Many first-time car buyers start by choosing the wrong insurance plan. Even after a year, when you believe you’ve mastered vehicle insurance and are in the process of renewing one, mistakes are still possible.
Common mistakes to avoid while buying or renewing a car insurance policy
In this post, we’ll go over some common mistakes car owners make when they purchase or renew expired car insurance and how to prevent them.
Overlooking basic research
Buying auto insurance online is the same as buying any other product or service online. When planning to purchase something online, you must undertake preliminary research. For instance, before buying or renewing your car insurance, you can find out if an online insurer is licensed. You can do this by looking up the IRDAI’s CIN number and registration number online.
Avoiding policy comparisons
Not comparing policy costs and coverage options regarding auto insurance premiums could lead to insufficient insurance coverage. To make sure that you get a competitive price, it is important to take your time comparing different insurance policies. But in order to do that, you must practise critical thinking.
Choosing minimalistic coverage
According to Section 146 of the Motor Vehicles Act, it is mandatory to at least own third-party insurance. A third-party plan only offers third-party liabilities, which is a relatively low level of coverage. In the event of an accident, the type of policy does not cover you or your car. Consequently, it costs less than a comprehensive insurance policy. But if you want complete protection, it’s best to choose a comprehensive plan.
Steering clear of the online world
When compared to offline plans, online policies are seen as much more affordable and easier to obtain. Additionally, there are several advantages of the infrastructure for online shopping. The three most significant ones are purchases made with no paperwork, anywhere, and at any time.
Not installing anti-theft devices
Car theft is a nightmare for car owners. Nobody expects to have their car stolen, especially if they take great care to keep it in a secure location. Yet, sometimes, mistakes can happen.
However, by installing an anti-theft device (ATD) in your vehicle, you make it much more difficult for thieves to steal your precious possession. ATDs also help to reduce insurance prices.
If the ATDs you have installed has been authorised by the Automotive Research Association of India, you are eligible for a discount on the premium rates. It is necessary to inform your insurance provider that your vehicle has been secured by an authorised ATD. As it somewhat reduces their risk, they can offer a discount on your comprehensive insurance plan.
Not buying with add-ons
Although they cost more, add-ons offer better services and coverage. Car insurance add-ons could lead to enhanced claim payouts, increased level of convenience, or financial waste. The latter happens when add-ons with comprehensive insurance plans are not chosen carefully. You can choose your add-ons wisely by identifying your needs first.
Addressing the issue of IDV imbalance
The Insured Declared Value of a vehicle plays a significant role in the comprehensive plan’s premium calculation process. The market value of the vehicle is not the same as its invoice or resale value.
The amount determined after taking into account the cost of the vehicle’s depreciation is known as the Insured Declared Value. Furthermore, IDV is the amount that the insurer will pay to the insurance holder if his vehicle is deemed a total loss (stolen, lost and irreparable). In this case, policyholders are typically given a choice of IDVs by the insurers.
Not paying or renewing insurance on
It is to forget to pay the yearly premium if you have been with the same insurance company for a while. Never forget that an insurance cover agreement is a binding contract with legal standing that is only effective for a specific period. The period of time between the end of your annual policy and the time you actually pay for new coverage is considered uninsured and risky.
Failing to renew expired car insurance may result in a lower annual payout, but it will put you in a financial bind should something happen that needs insurance coverage. To prevent this from happening, consult with an insurance provider to come up with a flexible payment plan that works for you. If you are unable to pay your annual premiums on time, the majority of insurers provide the option of monthly instalments.
During the purchasing of a new insurance policy, or even more so when you renew expired car insurance, several car owners often make one mistake or the other. Some of the mistakes discussed above are done consciously while some are done unconsciously.
It’s important to steer clear of these mistakes while purchasing your car insurance policy. Being new to vehicle insurance, it’s easy to become lost in the confusing array of coverage options and jargon. Avoiding these common mistakes will make it simpler for you to make wise and healthy decisions.
Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.