Selling a used car in India can be at times a difficult task- there are too many things involved in it. Generally, someone who wants to sell an old car goes online to find out what is the worth of the car and how he or she can get hold of the best price for the vehicle. Selling a vehicle is a time-consuming and complicated activity, including getting the required price of your vehicle, check the buyer’s identity, and transferring the RC. It is equally complicated for the purchaser, who must go through various steps to buy an old car. Often, a used car often overlooks a vital aspect, which is the insurance policy. Here, we will discuss everything about car insurance, including the different types of insurance policies and important things you should know about car insurance.
Important Things you should know about Car Insurance
Different types of Car Insurance Policy
There are two types of car insurance policy that are available in the market-
- Third-Party insurance
- Comprehensive insurance
Comprehensive insurance is often available with a few extra features. These are:
- Roadside help
- Zero depreciation cover
- Water damage protection
- Engine replacement cover
On the other hand, third-party insurance is a no-frills policy. However, any motor vehicle must at least have a Third-Party coverage to stay legal on the road.
What is a Third-Party Car Insurance Policy?
Third-Party car insurance offers coverage of any legal liability owing to injury, death or a loss suffered by a third party from your car. Mostly, the insurance company is bound to pay for damages that the insured car would have caused to the third party. However, this basic car insurance policy does not provide any coverage for either the vehicle or the driver. Therefore, this insurance policy is useful for the third party, which would have endured a loss because of the mishap.
Several car owners choose or this insurance cover. However, it must be used only when a car has been devalued to a huge extent. Also, this policy makes sure that a car is road-legal, which means those who do not want to spend too much money can choose this cover.
What is a Comprehensive Car Insurance Policy?
As the name indicates, Comprehensive insurance has many benefits. This plan ensures the car owners benefit from the coverage for not just the third party but even for herself or himself. It also provides a wide range of coverage options like-
- Damage caused because of natural disasters
- Theft
- Damage caused by a fire
- Vandalism
What is Insured Declared Value?
Next, let us discuss something known as Insured Declared Value or IDV. This is simply the highest possible amount that you can attain in case of suffering a “total loss” of the vehicle. Basically, an IDV is the current value of the vehicle in the market. One can determine it according to the car’s age, the make, and several other factors.
At times, a car owner declares a low IDV in order to keep the policy low. However, in case the owner makes a claim for the total loss through theft or accident, he or she will get a low claim amount owing to the lesser declared value.
Several factors can affect the rate of your car insurance
One of the significant things you should know about car insurance is car insurance companies use various criteria while evaluating an insurance application during a procedure known as underwriting. Every car insurance company has basic guidelines regarding which drivers they want to accept and how much money will they charge those drivers if they consider a great risk. The guidelines differ from one company to another. This means two companies comparing the same driver can arrive at different conclusions.
During the underwriting procedure, car insurance applicants are kept in a group based on the total money and how many claims the insurance firm believes it must pay. Underwriting is done in an automatic manner by software following the scenes.
During this time, the car insurance company will have a look at the record of motor vehicles to find out how many accidents or tickets the driver has got. There are many insurance companies that use an insurance history report to find if the driver has made any type of car insurance claims, and how much money was paid. Though accidents can affect the rates you obtain for three years, many organizations will look back five or more years while deciding if they want to provide you insurance.
At this time, the insurance company will look at motor vehicle records to see how many accidents or tickets a driver has received. Many insurance companies also use an insurance history report to see if the driver has made any car insurance claims, and how much money was paid. Although accidents and violations can only affect the rates you receive for three years, many companies will look back five or more years when deciding if they want to offer you insurance. Moreover, many car insurance companies also look at the credit history of the applicant. Generally, drivers with no or bad credit history pay a large amount. This means you can save money by shopping around as your credit progresses.
Prices of insurance vary
Pricing of insurance is one of the important things you should know about car insurance. Car insurance prices differ substantially from one company to another. This is so because every insurance company uses its own formula to calculate the risk and decide what you must pay for coverage. This means that no two insurers will have the same prices for the same policy-often, the difference is about hundreds of dollars. So, if you do not compare rates, you can end up overpaying.
One of the best plans is to decide what options and coverages you require so that you can find cheap auto insurance that still offers sufficient coverage.
If your policy lapses, you will end up paying more
Most of the insurance companies prefer drivers who are licensed. Due to this, if you allow your policy to lapse, you will possibly pay more when you go to purchase car insurance.
If you do not want to pay for insurance or are waiting for your policy to expire, ensure to buy car insurance before your present policy gets canceled.
High deductibles can lessen your premium
Insurance costs are based on the finances the insurance company must pay. If you want to pay for a large portion of your own damages by increasing your deductibles, your car insurance company knows they will not have to pay as much as your claims.
Due to this, they will generally offer you a low premium. If you decide to increase your deductibles to save a large amount of money, be sure to pay the deductible while making a claim.
Insurance discounts can create a huge difference
Discounts are one of the most significant things you should know about car insurance. Most of the insurance companies provide auto insurance discounts for a safe driving record, anti-theft devices, car safety, full payment within time, and electronic payments. Ensure you get recognized for being a safe driver. Look for car insurance that values your record.