Car insurance can be expensive, especially if you live in certain states. However, don’t mistake opting out to save money because leaving it to chance may cost you considerably if you end up in a car accident or have damage to your vehicle that isn’t your fault.
Below are some of the components you should consider when getting the right coverage for your 4-wheeler and how to choose a good insurance company.
1. Get Familiar with Jargon
Understanding commonly used terms in car insurance for new drivers them better understand their coverage. So, before you start looking for the best car insurance policy or insurance company, familiarize yourself with the following auto insurance jargon:
First-party and Second-party: When you buy car insurance, the first thing you’ll notice is your role as a buyer. The person who owns the car and purchases insurance is the First-party. Similarly, the insurance company that insures the vehicle becomes the Second-party.
Third-party (TP): Third-party refers to anyone harmed by the insured vehicle, such as an accident. For example, in a collision scenario, the owner of the other vehicle becomes the third party.
Own Damage (OD): Own Damage refers to any damage to the insured vehicle or injuries to the insured vehicle’s owner.
No Claim Bonus (NCB): If the insured vehicle owner or a third party does not file a claim during the active policy year, the owner is entitled to a reduced premium on the next renewal.
Insured Declared Value (IDV): The Insured Declared Value is the car’s current market value, including depreciation.
Add-on/Rider: A Comprehensive Car Insurance Policy provides additional coverage options.
Claim Settlement Ratio (CSR): The ratio of claims settled to claims received by an insurance company in a given year.
Claim: Request payment from an insurance company for the insured’s damage or compensation under the terms of the purchased insurance policy.
Depreciation: Requesting payment from an insurance company for the insured’s damage or compensation under the terms of the purchased insurance policy.
2. Understand Policy Types
There are two types of motor cover: comprehensive car insurance and third-party car insurance. According to the National Traffic and Motor Vehicle Safety Act, third-party car insurance is required as it helps protect against third-party liabilities.
Compared to a Third-Party Liability policy, a Comprehensive Car Insurance Policy provides more coverage. Along with basic Third-party Liability coverage, it also includes financial protection for Own Damage. In addition, the coverage includes theft, fire, self-ignition, and natural and artificial disasters. When you buy your first car insurance, you can also customize a policy with the help of Add-on covers.
3. Compare Products
You can shop for insurance online, over the phone, or in person with insurance agents. According to a Bankrate report, getting multiple quotes is critical because prices for the same level of coverage vary greatly. This occurs because insurance premiums are calculated based on risk. Each carrier has its formula for calculating the policyholder’s likelihood of filing a claim.
Some insurers use insurance scores to determine how likely policyholders are to file claims. Other companies may emphasize the type of vehicle you drive and how expensive it would be to restore in the event of an accident.
Additionally, where you live can also influence how much you pay for car insurance. Your insurance costs may be higher if your ZIP code has a higher-than-average rate of car accidents.
4. Inquire About Discounts
When getting quotes for your four-wheeler, ask about discounts to know what coverage options are best for you. Even if your four-wheeler has never been in an accident, it’s critical to consider which coverage options are best for which type of driver.
Collision or comprehensive coverage may be a better option for those who frequently put their vehicle at risk by driving off-road. However, those who only use their vehicle for commuting, on the other hand, may not require as much coverage as those who lead a more active lifestyle.
Before deciding, inquire about the various types of discounts and ask questions until you feel comfortable with the quote for your needs.
5. Choose the Right Add-ons
Zero Depreciation: The value of a car decreases over time due to depreciation. However, the insurer will not consider depreciation when settling claims with the Zero Depreciation add-on.
Roadside Assistance: This cover includes on-road services such as towing, minor repairs, fuel, battery jumpstart, etc.
Return to Invoice: In the event of a total loss of the vehicle, the policyholder will be compensated for the amount stated on the invoice.
Engine Protection: Covers the cost of repairing or replacing the insured vehicle’s engine.
NCB Protect: This allows you to keep your No Claim Bonus even after making a claim. This policy provides for a maximum of two claims.
Consumable Cover: The consumable cover add-on covers the cost of repairing/replacing consumables such as nuts and bolts, engine oil, etc.
Loss of Personal Belongings: If you misplace valuable personal items such as a smartphone or laptop, you can file a claim using this add-on.
You will undoubtedly find the best car insurance policy for your 4-wheeler if you follow these simple guidelines. Before purchasing the policy, read the terms and conditions thoroughly. Do not buy a policy on the spur of the moment. Clear all of your doubts, be sure of the policy, and only then make the purchase.