Thursday , December 8 2016

7 Questions to Ask Before Buying Auto Insurance

With auto insurance largely being bought online these days, here are some questions you should inquire the customer care executive before subscribing to a policy.

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NEW DELHI: Driving a car is a massive responsibility. So is insuring it made compulsory. But we frequently don’t realize the importance of selecting the right auto insurance policy. Sometimes we go by what our friends say, or simply buy a policy from the company whose advertisements have been running on TV recently.

But that’s hardly the best idea. Like all other businesses, insurance companies too have several rates. Moreover, they greatly vary in their coverage and the speed in settling claims. You need to compare the Insurance plans before you sign on the dotted lines.

But most prominently, you should ask certain questions to your insurer because not all agents will expose full details of their insurance policies. With insurance largely being bought online these days, here are some questions you should enquire the customer care executive before subscribing to a policy.

#1 What is my car’s IDV?

Mis-selling of motor insurance policies frequently happens when you buy through agents. If you can negotiate well, you may be able to land at lower premium, but that could come at the cost of the car’s insured declared value (IDV). Let’s assume, your vehicle is valued at Rs 8 lakh and your premium payable is Rs 25,000. You may negotiate with the car insurance agent and be able to settle at a lower premium of, say Rs 23,000. But simultaneously, the agent, unbeknown of you, may lower the IDV of your Car. Unfortunately, this is generally noticed when there’s a claim. You’ll get a low claim amount if your IDV is low. Check your car’s IDV with the insurer before you subscribe to a policy.

#2 What is the voluntary deductible limit?

Deductibles are the expenditures you have to pay out of your pocket before the insurer pays the claim amount. There are usually 2 types of deductibles: compulsory and voluntary.

Let’s say, you have a Honda City (1.3 DX variant) and the IDV of your car is Rs 5,61,735. If you have subscribed a “no deductible” policy, your premium is likely to be Rs 12,448. But if you are ready to contribute Rs 15,000 as voluntary deductible, your premium will come down to around Rs 9,500. Motor insurance agents often agree to a lower premium but increase the voluntary deductible limit. In case of a claim, you have to dig your pockets for a huge payment, for both compulsory and voluntary. You can negotiate with the Car workshop to adjust the deductible against your claim and pay it at the time of taking delivery of your car.

#3 Should I disclose previous claims history?

You may be able to negotiate a lower premium than your existing one if you switch to a different insurer and don’t reveal details of previous claims. But the real problem will arise when you place a claim. Your new insurer will contact the previous insurance company to check your claims history. A difference in information may cause rejection of your claims. While agents will quickly suggest ways to lower your premium amount, it’s the policyholder who will suffer the most if the claim is rejected.

Online renewal of motor insurance has made things at ease for the buyer. If you switch to a new insurer, it will ask for a no-claims certificate from your present insurer. Or the new company may get it by contacting your present insurer. Your premium will vary accordingly. Each year of no claims will consistently reduce the premium payable for the subsequent year. This is called no claims bonus (NCB).

#4 What about add-on covers?

The insurance agent will initially quote a premium, after factoring in the cost of add-ons, like personal accident cover for the passengers, roadside breakdown assistance, and loss of personal items. If you ask, the agent will uncheck the add-on covers and that will lower your premium amount. But all the 3 common add-on covers are very important, particularly if you take highway trips. Think again, before striking them off from the list.

Most insurers offer online filling up of insurance forms where you can select these options according to your will. You can see the insurance premium changing when you click or unclick an add-on.

#5 Will I get any discount?

Most of the major car insurance companies will offer discounts. But don’t expect insurance agents to reveal available discounts on their own. You have to ask yourself about available discounts. Discounts may come in the form of a lower premium or an extended coverage for a few months. But it all depends on how hard you can negotiate. Insurance companies are always keen to retain their customers. But ensure that discounts don’t lead to imposing of any hidden charge.

#6 Will my car be fitted with manufacturer parts?

Bet this never came to your mind. Whenever a vehicle is damaged, people generally tend to assume that the insurance company will pay for the parts that come from the car’s original equipment manufacturer (OEM). But in most of the cases, repairs are carried out with aftermarket parts that usually fit all types of vehicles.

In India, insurance is refunded only to authorized garages that which use genuine spares for repairs. In most of the cases, outside body parts of the vehicles are entirely replaced instead of repairs.

#7 How many number of authorized garages?

This is one of the most important questions to inquire your insurer. Renew your policy with the company which has the maximum number of garages attached, and if at all possible one close to your home. Companies like Maruti Suzuki and Hyundai have authorized garages in almost every corner of the country, compared to say, a Mitsubishi or Toyota.

A company with a lesser number of repair garages means less number of options for you to service your car. Local garages, occasionally, have under-table tie-ups with authorized garages, where the latter takes care of the paperwork. Avoid repairing your cars in such garages.

The way the entire insurance sector is developing, you may soon get attractive deals depending upon your track record of driving, age and other factors. But as of now, don’t commit blindly to discounts. And compare between insurers before committing to a policy.

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