Buying car insurance is a process that requires time and patience. One of the most important factors that affect car insurance policies and benefits are the premiums. All the factors in car insurance, like co-payment percentage, deductibles, good customer service, and great benefits affect the premium of car insurance and vice versa.
Most buyers while searching for suitable insurance policies do not see beyond the premiums and often tend to go for the lower premiums to save cost. However, this can be a big mistake given how car insurance is the one that can save you in case of financial liabilities. The quickest way to find out how much you will end up paying is to use the car insurance premium calculator. This tool will help you analyse your premiums payments with a few easy online steps.
However, the Lower premium may not always be a good idea as you may end up paying a lot more in case of an accident as compared to what you would have had to pay as a premium for the insurance.
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Reasons why buying low premium insurance may not be a good idea
Provides Limited Coverage
There are 2 main types of car insurance, namely third party car insurance and comprehensive car insurance. A third party car insurance is required for when you are involved in an accident and damage is done to the other vehicle. This insurance ensures that when a third party person, vehicle, or property claims due to an accident, you are prepared to take on the financial responsibility. The owner of the car is liable to pay a hefty fine in absence of third party insurance while driving in India.
On the contrary, comprehensive car insurance protects the car owner against any damage to his/her car in case of an accident as well as takes care of any third party liabilities. It guards your car against accidents, natural calamities, thefts, damage while transportation, and other man-made disasters.
Offers Limited Features
Low premium insurance forces you to compromise on the best features, as the low premium budget does not complete the most of it and benefits you in limited ways.
Higher premium insurance as comprehensive car insurance is to protect you from sudden financial burdens irrespective of the situation, along with a list of other beneficial features. You are safe from any friction between you and the other party in case of an accident.
When you are looking at the key features of any car insurance, they should include things like the no-claim bonus, add-ons, claim settlement ratio, and a range of premiums as per the package you choose. Understanding the perks of all policies, rather than just looking at the prices is important and will help you make a sound decision. For example, a zero depreciation insurance policy includes the zero depreciation add-on by default. You may pay a higher premium for this but it is better for the sake of maintaining your car.
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It Means Larger Deductibles
A deductible is the amount paid by the insured while settling a claim. In case the premium of the insurance policy is low, it is possible that the policyholder is expected to pay for the damages while the insurer only contributes a certain amount to the total cost. It is generally observed that the lower the premium rate, the higher are the deductibles. Moreover, it is also important to read the fine print when you are buying car insurance.
It May Mean the IDV is Lower
IDV or Insured Declared Value is the maximum sum assured by the insurer to the insured in case the car is stolen or is damaged beyond repair. IDV depends on a lot of things. It matters whether the car is privately owned or not, what is the make and model of the car, details of the registration including the date, and what is the showroom price. These factors are taken into account while deciding the IDV. When you are paying a lower premium, you may end up compromising on IDV and your car may be valued at lower than its actual price.
No access to No Claim Bonus
When you buy comprehensive insurance and don’t make a claim for a year, you get the benefit of No Claim Bonus. This means you carry over a certain percentage of the assured sum over to the next year and the sum available increases at no extra cost. This continues till the percentage reaches a limit after a few years and this is known as the sunset clause. The accumulation of sum can help you in case the damages are more severe. However, this is only available if you buy comprehensive car insurance and not a lower cost premium insurance like third party car insurance.
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How Comprehensive car insurance is a better option?
Instead of being bound by limited benefits opting for a comprehensive for a higher premium coverage is more suitable, unlike the lower premium insurance, Comprehensive has wider benefits. Comprehensive car insurance is the key to well-rounded insurance for your car. Although the cost is higher, it provides a complete package. It provides protection in case of damage to your own car in case of theft, fire, or a natural calamity. A lower premium car insurance only protects the other party involved and you have to pay for your damages from your pocket.
Moreover, in the case of comprehensive car insurance, you can customize your IDV and fortify your defences and by purchasing suitable add-ons which are not possible with a low premium car insurance. Comprehensive car insurance is a wider umbrella available for wider coverage of possibilities. This insurance is not mandatory however it is chosen by most car owners. That is why Comprehensive car insurance is the best alternative when it comes to reliable car insurance.
Apart from this, it is deemed necessary to check the reviews of past users and check the settlement ratio. A lower premium may not always mean that it is affordable and best for you. Cutting corners on your car insurance policy might prove more expensive than intended if it is not carefully considered
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