Factors in choosing a Car Insurance in India

With 26 general insurance companies in India and various options (plans+add-ons) for car insurance, it is a tough job to narrow down on one. 

As I'm going to anyways research as much as I can I thought it would be useful to other people if I collate everything.

A simple car insurance have become so complex  now with various plans and add-ons.

Listing down few of the popular add-ons available with various insurers. These might not be available with everyone but with majority of them.

I) Zero depreciation: It's very straight forward, this is the bumper to bumper insurance. Most insurers offer this for at-least initial 3 years of the car. Any new car owner should opt for this as this will cover almost all parts include plastics and provide a 100%coverage. In normal (comprehensive) insurance, the coverage for plastic & paint is 50%, metal and wooden parts depreciate every year from 95% to 50%.

II) Return to invoice: If you have this add-on, in case if the vehicle is destroyed more than 75% or if it lost, then you will get the invoice amount (on-road price) - IDV.

As this is an add-on there is no NCB (no claim bonus) applied to the amount. Instead of choosing this we can directly increase the same amount in IDV (Insured Declared Value), at-least we will get an NCB discount of 20% for the increased amount. This might make sense for the first year, but after that I just see this as a waste of money.

III) No Claim Protect: As per the insurers this add-on can protect your no claim bonus even if you make a claim in the current year.
But the twist  is that the claim is limited to few damages like below

1. If car is damaged by others when it is parked

2. If the claim is less than 25% of IDV

3. Car is less than 3 year old.

So this is not straight forward, so look out for these clauses before opting.

IV) Road side assistance: This add on will provide road side assistance in case of a breakdown, interesting part is that this doesn't add as a claim when used and there is a cap on the max number of usage. But most car manufacturers are already providing this so this is not something that is very necessary.

V) Consumables cover: This covers the cost of the Consumables replaced in case of an accident. Consumables that come under this are engine oil, coolant, nuts,bots,bearings etc..,

VI) Engine Protect: It covers the cost of damage in case of any engine issue because of water clogging or other reasons that are not related to accidents. This is available only for first three years.

There are few more add-ons like Key replacement compensation, daily allowance, insurance cover for co passengers and drivers etc..,

I'm not going to cover those as they are all straight forward, please do a research if you want to take any one of them.

Below are few points to be noted before choosing an insurance,

1. Like all other types of  insurances, claim settlement ratio is very important for car insurance too.
2. NCB will be applied only for own damage premium/covers. It is not applicable for third party liability or for any add-on
3. As per govt, only third party liability is mandatory everything else is optional.
4. GST applicable is 18%
5. You can further reduce your premium by opting for voluntary deductions, which are a predefined sum of amount that you accept to pay for each claim. Say like for every claim you agree to pay some fixed amount like 2500rs or 5000rs or 7500rs.

Coming to the last section.. this is purely my opinion, you can skip this if you want

• Except for zero depreciation add-on I don't see any value in any of the other add-ons
• Any car older than 3 years, I believe we shud go for normal comprehensive cover instead of going for bumper to bumper. At this point of time we won't mind the scratches and cracks in bumpers.
• Return to invoice make sense may be for the first year. From second year instead of going for return to invoice increase your IDV value. 
• Few insurance companies quote high OD premium and they give a discount for that so get an exact quote for your car before ruling out any option ( but don't forget claim-settlement ratio).
• Most of your bumper to bumper insurance claims are limited, after which your policy will be treated like the usual comprehensive policy. So watch out for this. Also sometimes in a single accident they may raise multiple claims to cover various parts, this should be monitored while raising a claim.

<<You can read about my experience with one of the leading insurer in this Facebook Review, if you are still continuing and looking for something more .. 😜😜>>

All the above are purely my opinion and understanding, feel free to add if I have missed anything.

PS: Please excuse the blog article structure and formatting, writing a blog post after a very long time.

-- NaveeN

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