How to Choose Right Car Insurance in India 2021

Looking for best insurance policy for your car in India? We all know that it’s very important to have car insurance in India to financially protect oneself from the dangers of road rage, and to meet the requirements of the law. There are many different companies, both private and public, offering a wide variety of vehicle insurance plans for your 4-wheeler in India. Due to the plentiful options available, it can often be a difficult and confusing task to choose the right car insurance plan in India. First of all, we must know about the types of insurance coverages and plans in India.

Types of insurance coverage in India

There are 5 types of car insurance coverage provided by insurance companies:

  1. liability
  2. collision
  3. personal injury
  4. uninsured motorist
  5. comprehensive coverage.

Third-party liability coverage covers the cost of damages to a third-party. It is a legal requirement in India and is provided in all car insurances. Collision cover ensures that the insurance company would pay for repairs incurred in collisions. Personal injury cover includes all the medical expenses caused by an accident, and uninsured motorist protection covers your repair costs in case of an accident with an uninsured vehicle. A comprehensive coverage plan includes all these and protects you from all other risk factors such as theft, fire, floods etc. Although costlier, comprehensive coverage is recommended as it includes all other types of coverage and protects you financially from most dangers on the road.

Types of car insurance plan in India

There are broadly-speaking three types of car insurance plans in India:

  1. Third-party car insurance,
  2. comprehensive car insurance and
  3. add-on insurance covers
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Third-party car insurance meets the legal mandate of having car insurance, and offers the cheapest premium. However, it doesn’t cover own vehicle damage, and only provides liability coverage, making it a very basic and inadequate car insurance plan. On the other hand, comprehensive car insurance plans provide maximum coverage and account for both own and third-party damages, and include events like theft, natural calamity etc. It also includes personal injury coverage and offers full protection for your vehicle; hence comprehensive car insurance is highly recommended, despite its higher cost. Lastly, vehicle insurance companies also offer add-on insurance covers, such as roadside assistance, zero depreciation cover etc., which can be very helpful and help maximize the benefits of having car insurance.

But how does one choose the right car insurance plan? Should one focus on the premium, the claim settlement ratio or the cashless garage network? Or should one look at the availability of add-ons and extra services offered by the company? 

Here are some tips to help you choose the best car insurance plan for your car in 2021:

Understand The Company

Before browsing through the various plans offered by different insurance firms, one must look at company policies terms and conditions and check if the terms are favourable and meet your needs. Then, It is also recommended that you check customer testimonials. Avoid company that doesn’t have a high claim settlement ratio or a sizable cashless garage network, then even buying the best plan from such a company wouldn’t benefit the policyholder, as the company may lack proper reach and have poor claim settlement service.

But how does one choose the right company? We have a list of the top companies for car insurance in India, which will guide you towards choosing from the best car insurance companies in India.

Check its garage network and reach in your locality

While having a sizable cashless garage network is a key requirement for choosing a car insurance company, it is important to check the company’s presence in your locality as well. For example, although United India has a network of 3100+ cashless garages which is slightly smaller than its industry-leading peers, it also has over 200 offices in tier 2 and 3 cities, making it more accessible to the non-urban population. Additionally, some companies such as Tata AIG provide reimbursement claims for repairs done in other garages, which make it even more convenient for its users. Hence, one must check whether the insurance company has cashless garages and offices in one’s locality, and a reimbursement policy, which can be found through the company’s website.

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Check its claim settlement ratio, process and duration

The claim settlement ratio refers to the percentage of claims the company has settled from all the claims it has received. A high CSR indicates that the company has resolved most of the claims filed, and has an efficient claim settlement process. Also, many companies such as Bajaj Allianz and ICICI Lombard allow you to file paperless claims through their own mobile apps, leading to claim settlement times as low as 20-30 minutes. Hence, one must look for companies that have a high claim settlement ratio and an easy and fast claim settlement process.

Compare premiums and cover

Without a doubt, one must compare each company’s premium and cover amount to choose a policy that’s cheap and inexpensive but also provides value for its money. Sites such as Policy Bazaar and Insurance Dekho allow you to view and compare plans offered by different companies, making comparison much easier than before. However, one must keep in mind that the motor insurance company with the lowest quote may not be providing the best plan and services in the market, and hence one must consider other factors such as claim settlement ratio, cashless garage network, extra services offered etc. when choosing a car insurance plan.

Compare no claim bonus amount, transferability and depreciation cover

Many car insurance companies offer a no claim bonus of up to 50%, which is transferable across companies if you switch your car insurance plan. This can help reduce your car insurance premium significantly. Additionally, depreciation cover is also an important feature to look out for, as it ensures that the insurer will cover the full cost of any new parts required and not apply depreciation to reduce the claim amount. Most motor insurance plans offer zero depreciation cover as an add-on service, which can impact the total cost of the car insurance policy.

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Pay attention to extra features/services offered

A very important thing to note is the extra features or services offered by the car insurance company. For example, HDFC Ergo provides overnight repair service which repairs your car in a single night and has doorstep pickup and drop facilities, making repairs very convenient for its customers. Bharti AXA offers 24/7 customer assistance, which is not provided by all insurance companies. One must consider the extra services offered by car insurance providers, as they add value to the insurance plan and increase convenience for its policyholders.

Consider add-ons to maximize value

Lastly, one must also consider the add-ons available to increase the benefits from their insurance plan. Popular add-ons include the zero-depreciation cover mentioned above, and the no-claim bonus protection cover, which allows you to file claims without losing your no-claim bonus. Such add-ons carry extra charges; therefore, one must recheck their premium comparison to get the lowest rates if purchasing these add-ons.

To summarize, these are our tips to help you choose the best car insurance plan in India. It is very important to pick the right company for car insurance, as it may offer attractive insurance plans but have low reach and an inefficient claim settlement process. It is very important to choose the insurance companies with the highest claim settlement ratio, large garage networks, useful add-ons and extra features/services to choose a car insurance plan that provides you with the best services, convenience and hassle-free processing. We hope this article helped you gain more clarity regarding how to choose the best car insurance plan in India.

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Dhruv Gupta

I am Dhruv Gupta, a student of Business Management at ISBF college in New Delhi. I have a passionate interest in investment and finance, and my favorite hobbies include listening to music and playing badminton.

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