We go to great lengths to select the best car that balances our budget and our aspirations, but the annual renewal of the motor insurance policy that covers our prized possession is typically reduced to a mere 'tick mark' activity. It's only when the moment of truth arrives that we regret not having put a more focused effort into selecting a better motor insurance plan. Here are a few things to keep in mind while renewing your policy.
Claims Experience
Without a doubt, the most critical factor that should influence your purchase decision is the claims experience that the insurer provides. "The insurer should offer cashless settlement in a large repair network; and the turnaround time to appoint surveyors should be a few hours", says Kapil Mehta, Co-founder, SecureNow Insurance Broker.
Unfortunately, there's no formal ranking table published by a trusted authority that rates policies on the basis of their claims experience. At best, one can aim to draw inferences from the "Incurred Claims Ratio" (Claims Incurred as a percentage of Net Earned Premium) data published by the IRDAI on an annual basis. As a collective group, private insurers fared marginally better on this parameter with an ICR of 82.55%, versus public sector players who clocked 79.83%. Within the private players, Bharti AXA clocked an impressive 91.49% - albeit on a relatively smaller base.
Sasikumar Adidamu, CTO, Bajaj Allianz General Insurance believes that when it comes to motor insurance policies, the ratings of the mobile apps provided by general insurers may act as a proxy for the overall client experience. "General Insurance apps these days provide facilities for registering claims, self-inspection of vehicles and policy renewals. Preference should be given to companies that offers the best post-sales support, and with better rated apps", he says.
Add-ons
When it comes to motor insurance, the plethora of available add-ons can leave you flummoxed. Which ones are nugatory, and which ones are necessary? Mehta favours three: zero depreciation, engine seizure and tyre burst, particularly for more expensive cars costing over Rs. 10 lakhs. The Zero Depreciation cover ensures that claims on all parts, including plastics, are paid at cost rather than at depreciated values. "This can result in 20 to 30 per cent higher claim payment amounts", he notes, adding that the engine seizure add-on is particularly relevant for cities such as Mumbai, that are prone to heavy rainfall. Mehta also points out that in luxury cars, burst tyres can cost close to Rs. 1 lakh, making the tyre-burst cover essential in their case.
Adidamu adds the 24X7 roadside assistance cover to the list of essentials. "This offers you round-the-clock roadside assistance and benefits - ranging from a flat tyre or towing assistance, to even medical coordination and legal help, if required", he says.
Pitfalls to Avoid
When it comes to your motor insurance plan, steer clear of a few common pitfalls. According to Adidamu, the first mistake people make is to underinsure their vehicles in an endeavour to pinch a few pennies. "This mistake will haunt you if your vehicle meets with a major accident and is not appropriately covered", he says. Adidamu also points out the need to inform your insurer if you're making modifications to your vehicle, as it may end up nullifying your insurance policy. Lastly, he advises us to forego small claims if possible, as this may lead to substantial long-term savings in the form of no-claim bonuses.
Mehta offers some useful advice with respect to rejected claims, saying that "the main reasons why claims get rejected are that the driver did not have a valid driving license, was drunk, or a car got stolen because of sheer negligence. These, then, are the main things to watch for"