Motor Insurance

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What to look for in motor insurance?
We buy a motor insurance policy simply because it has been mandated by law. If left to our own devices, we would not consider securing our cars or bikes under a valid insurance cover, just like we ignore insuring our life or our health. But, thanks to wise lawmakers, a motor insurance policy is mandatory if you plan on driving your vehicle on Indian roads and so if you have a vehicle, you need to own an insurance policy on it.
Just the other day I accompanied my friend when he wanted to buy a new car. He checked the car’s features, took the car for a test drive and, satisfied with his choice, he booked the car. Two weeks later, when the car’s delivery was due, my friend asked for my company again to bring the car home. There, at the car’s dealership my friend was filling out the necessary forms when the insurance form caught my eye. I pride myself on my insurance knowledge and thought to assist my friend in choosing his car insurance policy. However, when I enquired about the policy details, the salesman gave us a blank look and said that the policy which was being offered was quite good. Unconvinced, I stressed to see the policy details and, after much hesitation, was shown the policy which the dealership was offering. Needless to say, there was room for much improvement.
The practice of ignoring the coverage details of a motor insurance policy is quite common. Many of you, when you buy a car or a bike, buy the motor insurance policy which your vehicle dealer offers. You don’t take time out to review the coverage provided under the plan and the premium that you pay. This is a mistake. You should ensure that the coverage under your motor insurance policy is suitable and that the premium is competitive.
When you buy a motor insurance policy, there are certain aspects which should be considered before finalising the plan. Since insurance is a technical concept many of you don’t know what to look for and I don’t blame you. But ignorance is harmful and so it is better to understand which factors to watch out for.
Firstly, understand the coverage under the policy. Motor insurance plans come in two variants – third party plans and comprehensive plan. Third party plans cover the mandatory third party liability which you face if you cause physical harm to any individual or damage someone’s property. They do not cover the damages suffered by your own vehicle. Comprehensive plans, on the other hand, cover third party liabilities and also the damages which are suffered by your vehicle due to natural or man-made causes. 
Choosing comprehensive plans provides a wider coverage but the premiums are also high compared to third party plans. If you are buying a new car or your car is not more than 5 years old, comprehensive plans are ideal. If, on the other hand, your vehicle is quite old and/or you don’t use it very frequently, you can make do with third party plans only.
 Secondly, look out for add-on covers. Motor insurance policies offer different types of add-on coverage options at additional premiums. These coverage options increase the scope of coverage and prove useful. Add-ons like roadside assistance and zero depreciation prove very useful and should be chosen with a comprehensive cover. However, other add-ons should be selected only if required. For instance, the engine protect add-on is suitable only if you live in an area with a problem of water-logging. If you don’t, you can give this add-on a miss.
After the coverage is secured, look out for premium discounts. Comprehensive motor insurance policies offer various types of premium related discounts. For instance, you can get a discount for installing safety devices, for being a member of automobile associations, for choosing a voluntary deductible, etc. Look out for these discounts to reduce your premium outgo.
Lastly, the policy should be bought only after comparing. There are more than two dozen general insurance companies and more than 90% of them offer motor insurance plans. Every plan is different with a respect to the coverage offered and the premium rate. So, always compare the different plans and choose a plan which has the best coverage features, an optimal level of IDV and which charges a reasonable amount of premium.
I helped my friend get the most suitable motor insurance plan and it was not what the dealership offered. My friend is, therefore, enjoying a good coverage at a much lower premium. You should also be careful when choosing a motor insurance policy so that you can get the best coverage option and that too at the lowest premium rate.