Introduction

For FY19, the rate of uninsured automobiles on Indian roads remained at a high of 57%, with more than 60% of vehicles uninsured in 15 states.

While third-party insurance is mandatory for all vehicles on Indian roads, insurers focus on added services to differentiate themselves in an extremely competitive world.

Having one’s vehicle is exciting, but at the same time, one has to maintain the car/two-wheeler regularly and keep it insured. 

Auto insurance is one of the significant decisions to be made by a vehicle owner. Auto insurance is a kind of financial protection against the accidents caused due to owning a vehicle or any other unforeseen events. It provides monetary compensation for the injuries caused to the person and the vehicle.

Auto insurance policies are designed to protect a person, their vehicle, and any other parties involved in the accident. The best auto insurance plans and policies vary by lenders and coverage level. 

What are auto insurance plans?  

Auto insurance plans, sometimes known as motor insurance, cover any vehicle, including cars, motorcycles, and commercial vehicles. 

This insurance protects individuals from financial losses resulting from accidents or unforeseen events such as theft, collision, etc. 

The insured must pay a premium in exchange. The premium amount is determined by various criteria such as the insured’s stated value, age of the vehicle, kind of vehicle, fuel type, insured’s age, etc.

Automobile insurance safeguards the person against any legal liability for third-party unintentional damages, injuries, or death and personal automobile coverage.

Types of auto insurance policies 

There are two types of auto insurance policies:

1. Comprehensive policy

A comprehensive policy is a combined policy that covers both third-party liability and vehicle damage. If the vehicle breaks and needs fixing, the coverage will pay for the costs. A comprehensive auto insurance policy includes the following items: 

• If the automobile damages someone else’s property, there is a third-party liability.
• Third-party liability arises if a person is killed or wounded as a result of the vehicle. 
• Damages were sustained while transporting the vehicle from one location to another.
• Injuries to the car are caused by natural or man-made natural disasters like floods, earthquakes, theft, fire, etc.

Comprehensive coverage plans also cover personal accidents. The insured would be compensated if they died or became disabled due to an accident.

As a result, a comprehensive automobile insurance policy covers damage to third parties and the price of fixing one’s losses.

2. Third-party liability policy

Third party liability covers only damages to the third-party. Under third-party insurance, a person does not get compensation for the damages to their car.

Third-party auto insurance provides financial protection in the event of third-party property damage in an accident. In addition, it is a legal obligation.

A third-party liability policy is mandatory under the Act. The coverage covers the financial consequences of causing injury to another person. Some of the obligations that are covered include: 

• Liability is incurred if a person is killed by a vehicle.
• If the vehicle damages someone’s property, the driver is liable.
• The driver is responsible if a person is physically damaged or injured by a car/two-wheeler/commercial vehicle. 

How do you pick the best auto insurance policy in India?

Insurance firms offer a wide variety of auto insurance policies to meet customers’ demands, but selecting the right policy can be difficult. 

Thus, individuals must study before selecting the right insurance policy for their needs.

1. Identify needs

Individuals need to assess their demands and determine what type of policy they want before looking for the best auto insurance and the best insurance company. 

They need to decide whether they want comprehensive coverage, third-party liability coverage, or both.

2. Compare auto insurance plans

Soon after the individuals have decided on the type of auto insurance coverage they require, they need to compare the policies offered by several insurance providers before making a purchase. 

They can compare the plans based on the amount covered, the types of add-ons available, the coverage and exclusions, the claim process, deductibles, etc.

3. Examine financial standing

Examine the insurer’s financial position once the plans have been compared. To determine whether they are financially stable, look at their solvency ratio. All insurers are required to post their financial reports online so that one can verify their financial records on the company’s website.

4. Ask about add-ons

Additional coverage options, known as add-ons or riders, can be purchased for a fee. People need to inquire about the available add-ons and select the one that best meets their requirements. 

However, only comprehensive insurance policyholders are eligible for add-ons. 

5. Verify the claim process and claim ratio

Getting instant financial aid in the event of an accident is one of the main goals of buying auto insurance. Hence, choosing insurance with a simple and speedy claim process is critical. 

Before choosing an insurer, individuals need to evaluate the claim settlement ratio (CSR). Compared to the number of claim applications submitted in a year, the CSR shows how many claims the insurance company has successfully settled. It is preferable to buy insurance from a firm with a high CSR because the claim will be accepted more quickly.

6. Read the terms and conditions of the policy 

Examine the terms and conditions thoroughly before signing the policy documents to ensure that they are favourable and match one’s needs. This is a necessary step to do before claiming to avoid any legal issues.

Conclusion

Thus, take into account these considerations, compare the available auto insurance policies from prominent insurance companies, and then get the right policy.

Individuals would not like to put themselves at a disadvantage if involved in an accident or unforeseen event, so getting the appropriate auto insurance policy is critical. 

It is also crucial to have the correct auto insurance, as this could be the difference between being insured and not. It is not as difficult as it may appear to purchase auto insurance. Following the above guidelines will greatly assist one in selecting the best plan.   

Still getting some questions in your head? Write to me contact@sbsfin.com.