People buy different types of insurance covers to secure against various risks. But among these different general insurance plans, a motor insurance policy is the only one that is mandatory by law. The Motor Vehicles Act of 1988 lays down this regulation and non-compliance which attracts hefty penalties. Thus, for that reason, many buyers purchase the bare minimum insurance cover to avoid legal problems.
This minimum insurance coverage is a third-party insurance plan which provides protection for injuries and damages to a third person. However, this policy offers no coverage for the repairs required for your car. Thus, upgrading your car insurance policy is the only alternative to ensure protection against damages. Upgrading the insurance coverage to a comprehensive plan ensures the repairs required for your car are included in the policy’s coverage. But upgrading the coverage is easier said than done. There are many factors and nuances to consider before taking the plunge. This article aims to highlight significant areas to look at when making the switch.
- Cost of the insurance cover:
When upgrading from a third-party cover to a comprehensive cover, there is a significant increase in the insurance coverage that your policy provides. It is due to own-damage cover as a component of the comprehensive insurance plan which increases the different risks that a car insurance policy covers. Not only does the coverage increase significantly, but the prices also increase. Car insurance prices are directly proportional to the scope of the insurance plan. Thus, the more perils covered by the insurance plan, the higher is the premium. In addition to that, the premium proportionately increases if opted for add-on covers. These add-ons are optional policy features available for purchase when you buy a comprehensive third-party cover. *
- Insured Declared Value or IDV
IDV or Insured Declared Value is the maximum amount of money the insurance provider will pay for your car. It is arrived after deducting depreciation from the current valuation of the car. IDV is paid in the event of damage beyond repair or for situations of theft. Since the IDV increases or decreases the risk of the insurance company, it has an impact on your car insurance policy, both coverage, and price, and must be considered while upgrading the insurance cover. *
Deductibles are an out-of-pocket expense that you need to pay before the insurance company compensates for the claim. There are two types of deductibles—voluntary and compulsory. The compulsory deductible is mandatory for all types of insurance plans whereas voluntary deductible can be opted at will. When you opt for more deductibles using the voluntary deductible option, you agree to pay for a higher expense at the time of claim. On the other hand, the compulsory deductible is a nominal and negligible out-of-pocket expense. *
- No-claim bonus or NCB
No-claim bonus or NCB is the reward you receive for not raising an insurance claim and is only available with comprehensive policies. When upgrading your insurance cover, keep that in mind as your renewal premiums will notice a significant markdown for every claim-free policy year. The amount of such a bonus starts at 20% and scales all the way to 50% for consecutive claim-free policy periods. *
* Standard T&C Apply
With these different factors to keep in mind, upgrading your insurance cover from a third-party to a comprehensive can be straightforward. While upgrading your policy, remember to use a car insurance calculator to get affordable insurance cover. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.