10 factors to consider before buying an auto insurance policy


Auto insurance is an insurance plan that provides the necessary financial cover for the vehicle against various forms of damage, theft, theft and liability. While it is essential to have a valid auto policy, one should be careful before purchasing it.

Here are the main factors to consider before purchasing an auto insurance policy:


Different insurance products provide different coverage. Therefore, one should carefully study the coverage before opting for a plan, according to Rakesh Goyal, director of Probus Insurance, Insurtech Broking Company.

Premium amount

It is important to understand the needs of the car and the likelihood of risk well in advance. This will help the customer find the right amount of premium.

“Plus, comparing quotes from various insurers online will help them make the right choice based on need and affordability,” says Goyal.

Declared insured value (IDV)

The current market value of the car calculated by eliminating the amount of depreciation is called the declared insured value (IDV). It is essential to consider this factor, as it is essential in deciding the amount of compensation.

State directives

According to Goyal, there are certain additional insurance guidelines as well as general guidelines, which differ from state to state. This factor should be taken into consideration before opting for an auto insurance policy.

No Claim Bonus (PNE)

No Claim Bonus (PNE) is used when the new policy is renewed and this is a percentage offered for each non-claim year with certain limits.

This type of bonus is only applicable for new cars; used cars do not enjoy such benefits due to the change of ownership. This should be taken into account before purchasing a plan, as it can help lower the total renewed premium, according to Goyal.

Brand reputation

Another important factor is to check the market image of the insurer with which the client plans to purchase the insurance plan. This research will help clients understand the reliability of the business and familiarize them with the insurer’s claims settlement environment.


Exclusions are specific factors / situations that are not covered by the insurance plan. It is important to go through the police documents well in advance before purchasing one, in order to avoid any unpleasant surprises during the claims process.

According to Goyal, some of the common exclusions are breakdowns, collateral losses, normal wear and tear, losses incurred while driving under the influence of alcohol, etc.

Supplementary coverage

According to Ankit Agarwal, managing director of Alankit Ltd, customers should also look for additional coverages that can protect the car owner from financial loss.

“In the event of an incident or unforeseen event, additional benefits such as zero dep coverage, consumables, engine protection, key and tire protection and RTI (return on invoice) can be considered”, he added.

Claims Settlement Ratio (SCR)

Customers should also check the company’s record and the claims settlement ratio. CSR is defined as the percentage of insurance claims settled by an insurer compared to the total number of claims received.

“An insurance company with a bad loss ratio is not recommended when purchasing an auto insurance policy,” says Naval Goel, CEO and founder of PolicyX.

Garage network

The goal of purchasing an auto insurance policy is to protect customers from any financial emergency in the event of vehicle damage / loss.

“Most online businesses only provide cashless services if the vehicle has been repaired at a network garage. Therefore, look for insurers with as many network garages as possible on their list,” suggests Goel.

Disclaimer: CNBCTV18.com advises users to consult with certified experts before making any investment decisions.

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