Top 5 Mistakes to Avoid When Buying Car Insurance

Road accidents not only cause physical damage but can also result in significant financial burden. Section 164 of the Indian Motor Vehicles Act, 1988, states that the vehicle’s owner must compensate the victim up to Rs 2.5 lakhs in case of serious injuries and Rs 5 lakh in case of death. 

Not to mention the cost of getting your vehicle repaired. Even a minor fender bender in a decent car can land you a bill of Rs 5,000 to Rs 30,000, depending on the extent of damages. That’s why having the right car insurance plan is a necessity.

However, for many owners, car insurance is more of an afterthought or no thought at all. They don’t consider their requirements or research their options. Due to these insurance mistakes, they either have to pay more for a policy or don’t get adequate coverage.

So, let’s have a look at some common insurance mistakes you must avoid when buying your next car insurance policy.

Mistake 1: Underestimating Coverage Needs

The biggest insurance mistake people make is inaccurately gauging their coverage needs. They do the bare minimum by purchasing third-party car insurance just to remain compliant with motor laws. 

But third-party insurance only protects you if your car is in an accident that causes damage to a third party or their vehicle. So, you must get at least a comprehensive plan or own damages cover to protect against damages incurred by your car.

Also, don’t buy a cheaper comprehensive car insurance plan just because it has a lower premium. That’s because a lower premium may equal poor coverage or higher deductibles. Aim for a balanced approach and select a policy that offers the right coverage at an affordable premium. This way, you’ll be well-protected against potential mishaps without straining your finances.

Mistake 2: Not Comparing Plans

Another common insurance mistake people make is that they purchase the first policy they see. They don’t research the market or compare different plans. But you know the saying – look before you leap. When picking a plan, gather all your options and see how they stack against each other. 

When you do research, go beyond comparing the premium you’ll pay. Two insurers may charge you the same price for a car insurance plan, but the extent of their coverage may vary. So, always evaluate benefits, coverage amount, damages included and excluded, etc., before buying a policy.

Mistake 3: Avoiding Insurer’s Reputation

The insurance provider’s reputation is as essential as their policy’s cost and coverage. Opting for a company with poor customer service or a complex claims process can lead to frustration and difficulties when you need support the most. In the worst-case scenario, you may even end up purchasing a policy from an uncertified insurer.

The first step in your insurer research should be to verify their authenticity. Make sure the company is registered with the IRDAI and has a valid CIN number. Then, you must go through their website and read customer reviews to assess their service quality, claim settlement ratio, network garages etc. 

Mistake 4: Overlooking Discounts

Another common insurance mistake people commit is not asking for extra discounts other than what the insurer already advertises. Always remember, the advertised price isn’t the final price, even with a discount. Skip this part, and you’ll have to pay more than what’s necessary.

For example, installing an anti-theft device in your car makes you eligible for an additional discount on premium. Similarly, if you don’t raise a claim in a policy period, you get a no-claim bonus, lowering your premium at renewal.

Mistake 5: Adding Too Many or Too Few Add-Ons

Add-ons offer you benefits that your standard policy doesn’t. However, having too many add-ons can increase your premium, while too few may leave you inadequately covered. The key here is to assess your needs and identify relevant add-ons for your unique situation.

Suppose you buy a new car for your solo rides. A zero-depreciation add-on makes more sense than a passenger cover. Similarly, if you have a slightly older car that you use for your long trips, you should prioritise a roadside assistance add-on over zero depreciation cover.

Key Takeaways

Think of all the factors you consider when buying a new car. You look at engine refinement, transmission smoothness, safety features, and comfort. You don’t just look at the price and pick a vehicle if it fits your budget. Buying a car insurance plan requires a similar mindset.

Consider your priorities and research multiple policies from different insurers. Compare plans on platforms like PhonePe based on premiums, benefits, extent of coverage, exclusions, etc. That way, you can pick a policy that provides adequate coverage without burning a hole in your pocket.