Home Finance Rookie Mistakes to Avoid When Buying a Car Insurance Policy

Rookie Mistakes to Avoid When Buying a Car Insurance Policy

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The nation has witnessed a digital revolution in recent years wherein almost everything is now available at the convenience of your couch. Coupled with it, affordable smartphone and internet technology makes it accessible to all. This includes purchasing insurance covers that were earlier preferred using the traditional modes.

However, beware of these red flags to avoid when buying car insurance online. Let us look at some rookie mistakes that you should avoid to make an informed purchase decision.

#1 Not doing adequate research

The most common mistake that many people do is not doing adequate research. It is rare that you skip the research step when buying other items, say a mobile phone? So why ignore researching the available options when buying a car insurance cover. You can also verify the insurer by visiting the regulators website, the Insurance Regulatory and Development Authority of India (IRDAI). Do not buy insurance in a hurry as there are quite a few options that are available in the market.

#2 Not comparing the available plans

Often not comparing the various options can either leave you with inadequate insurance coverage or expensive insurance coverage. It is recommended you look for all possible alternatives and weigh its benefits against each other. Here when comparing you need to remember that price is not the sole criteria for decision making. Multiple factors should be considered when making a favourable choice of a car insurance policy. A car insurance premium calculator is a nifty tool that can help you compare the available plans and make a choice that fits your requirements.

#3 Opting for the lowest coverage

The main object of your car insurance policy is to provide financial backing in times of unfortunate events like an accident or breakdown. Although 3rd party car insurance is the minimum requirement, you must consider upgrading to a comprehensive policy due to its enhanced coverage. Opting for third-party cover will help you meet regulatory requirements but not provide enough coverage to cover any damages to your car. Thus, do not always opt for the lowest coverage unless you are hard on finances.

#4 Selecting excessive add-ons

Add-ons are optional coverage that you can purchase at an additional price. These additional riders enhance the scope of your policy significantly. Often individuals end up purchasing excessive add-ons that may not be useful. On the other end, not buying necessary add-ons may not benefit you enough. Thus, it is essential you consider your requirements and appropriately purchase add-ons in your insurance cover.

#5 Facing IDV imbalance

IDV or insured declared value is a critical component in determining your car insurance premium. It is not the resale value or invoice value but instead, the current value of your car after considering the depreciation. In case of complete damage to your vehicle, the insurance company pays the IDV to you, the policyholder. Most insurance companies allow the policyholder to set the IDV within a particular range. A higher IDV impacts the premium whereas a lower IDV results in lower premiums and insufficient insurance cover. Balancing the premiums and coverage, it is essential to have a balance of IDV.

These are some of the common mistakes that might hamper the prudent decision-making process in buying your insurance cover. Take a note and ensure to avoid them to get the best insurance coverage at an affordable price.

 

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