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5 must have benefits to consider while buying a car insurance policy
Financial Express, April 18, 2019

With the increase in demand for vehicles in the country, the car insurance industry too is witnessing significant growth. According to the Motor Vehicles Act, 1988, it is mandatory for every vehicle owner to have a third-party liability motor insurance policy. A failure to produce a car insurance certificate, when requested, may result in penalties or other serious consequences. However, before buying a car insurance plan, it is important to understand the features and benefits of the motor insurance policy. Choose a car insurance policy that offers the most benefits at a competitive rate. Following are the 5 benefits that you may look out for in a good car insurance policy. 1) Financial Coverage The main purpose of a car insurance cover is to protect you from financial obligations which arise because of untoward incidents. A car insurance policy offers the much-needed financial protection in case of property damage or bodily injury due to an accident. A motor insurance policy also offers coverage against natural and man made calamities such as earthquakes, storms, floods, riots, or thefts. There are two major types of car insurance in India—third-party car insurance and comprehensive car insurance. Third-party motor insurance Here, the car insurance provider offers compensation in the event of a bodily injury or death of the third-party, as well as for any damage caused to the car. It also offers personal accident coverage to you if you are the owner or driver. However, a third-party car insurance policy does not cover any damage to the policyholder’s vehicle. A third-party car insurance is the minimum level of coverage mandated by the Motor Insurance Act. Comprehensive car insurance: It offers extensive coverage as opposed to the third-party car insurance cover. Besides offering the benefits provided under a third-party car insurance cover, you may also enjoy the coverage of the loss incurred on your vehicle. 2) Cashless Garage Network This is one of the most important aspects to look out for while purchasing a car insurance policy. Some car insurance providers are connected to a network of automobile repair shops, where your damaged car can be repaired. In cashless motor insurance, you may not be required to make out-of-pocket expenses towards the repairs of the vehicle. The car insurance provider directly settles all the bills with the repair shops in the network. However, you have to pay the difference amount to the mechanic as stated by the claims manager from the car insurance company. Additionally, the depreciation amount is borne by you, as per the rate under the Compulsory Deductibles section of the India Motor Tariff. A key benefit of cashless motor insurance is that you do not have to bear the stress of filing a claim and doing regular follow-ups with the car insurance company. Since the car insurance company handles the expenses directly, you may simply receive your repaired car without any hassles. 3) Deductibles Opting for deductibles reduces your motor insurance premium amount significantly. A deductible is an out-of-pocket expense payable at the time of making a motor insurance claim. For example, if you opt for a deductible of Rs. 5,000, and the repair expenses are to the tune of Rs. 20,000, you are required to only pay the initial amount of Rs. 5,000, while the motor insurance provider pays the rest. Although it is true that deductibles lower your car insurance premium, do not opt for a deductible more than what you can comfortably afford. Otherwise, this may defeat the entire purpose of purchasing a car insurance policy. 4) No Claim Bonus (NCB) A good motor insurance policy offers the benefit of no claim bonus (NCB). NCB is a discount on premium offered by the car insurance company if you do not make a single claim during the policy period. It acts as a reward towards the prudent use of vehicles. Knowing about the NCB discount percentage helps you determine how much you may save on your next car insurance renewal. For the first claim-free year, the NCB discount offered is 20 per cent, which goes up to 25 per cent, 35 per cent, 45 per cent, and a maximum of 50 per cent for the second, third, fourth, and fifth consecutive claim-free years respectively. Remember, NCB corresponds with the car insurance policyholder, and not with the vehicle. This means that you may transfer the NCB benefit to your new vehicle, and from one car insurance provider to another car insurance company. The benefit of NCB is available only on the renewal of comprehensive car insurance policies and not on third-party car insurance covers. Hence, you cannot enjoy the benefit of NCB on your third-party motor insurance plan even if you have not made any claims in the past years. 5) Customisation Through Add-Ons A good car insurance plan should allow customisation through riders. These riders, also known as add-ons, offer additional coverage over the basic car insurance plan at additional costs. It enhances the level of coverage through various value-added features. Following are some common rider options that you may explore: Zero depreciation: The car insurance provider is liable to bear the total cost of repair of car parts, without accounting for the depreciation factor. Engine protection: It provides financial coverage in an event of damage to the engine due to leakage of lubricating oil, engine malfunction and ingression of water, among others. Roadside assistance:This offers assistance in case of breakdown of your vehicle. The services may include arranging fuel, providing alternative modes of transport and accommodation facilities. Enhanced owner personal accident: It offers financial protection against accident-related events such as temporary or permanent partial disability, temporary or permanent total disability and death. NCB protect: It allows you to enjoy NCB benefits even if you have made a claim. Some other rider options available in the market include vehicle replacement, ambulance and medical expenses, and consumables rider. Your vehicle is a high-utility asset, and expensive investment for you. So, it is important that you protect it adequately against risks by investing in a good motor insurance policy.

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