Renewing your Motor Insurance Policy? Here Are 4 Things To Keep In Mind

For most of us, renewing our motor insurance policies is something we do each year without affording it much serious thought. It would be wise to keep these four points in mind the next time you pay the insurance premium for your cherished vehicle.

You won’t lose out on anything by porting
Unlike Health Insurance, you won’t be losing out on anything at all while porting your Motor Insurance policy. The reason for this is the fact that in the case of motor insurance, no-claim bonuses accrue to the vehicle owner and not to the vehicle itself. Whether you choose to renew your existing policy, or go through a different insurer, the standard 20% - 25% - 35% - 45% year on year progression of no-claim bonuses will apply. If you find a better policy than your previous year’s one, don’t be averse to porting out. Do bear in mind that the 3% impact of GST, plus a mandated year on year hike in third party damage premiums have hiked premiums across the board this year.

Don’t scrimp on your IDV or opt for voluntary deductions
You may be tempted to opt for a policy with a reduced IDV (Insured’s Declared Value) or strap on voluntary deductions, to bring down your premium costs. This tendency is more prominent in the more careful drivers who haven’t made a claim for years on end. Bear in mind that this is akin to being penny wise, pound foolish. Your claims will be paid out in proportion to your IDV’s, and so it makes sense to opt for the highest possible figure. Deductions do not make a lot of sense either – after all, if you’re transferring the risk, you may as well go out and transfer it completely to the insurer. Just because you’ve had an immaculate track record until now doesn’t necessarily mean that you won’t be making a claim this year. Think of how the law of averages work!

Don’t leave out Zero Dep
Most insurers will allow you to take up a zero depreciation (“zero dep”) add on until your vehicle crosses the age of five. And yet, this is the one important add on that most people scrimp on in an effort to save costs! While the zero dep add on may have a limited impact on years one and two, any damage incurred in years three to five can cost you dearly if you’ve left this one out of your package. By then, your car’s IDV will have fallen by 40%-60%, meaning that you’ll be left having to bear anything from 40%-60% of the claim cost from your own pocket, if you don’t have the zero-dep cover add on in place. This effect is amplified in the unfortunate event of a serious accident that causes your airbags to open up – resulting in the need to replace your entire dashboard. In such a scenario, you may end up incurring thousands of rupees of cost from your own pocket, if you’re not protected against depreciation.

Ask your friends before you buy
When it comes to motor insurance, the proof of the pudding lies in the eating. No amount of sales spiel or colorful brochures can substitute the real-life claims experience that you can glean from your close acquaintances. Ask around and speak with somebody who may have had to have a claim settled recently. Was the helpline accessible? Did the surveyors react promptly? Was there a cashless settlement? Was he/she made to jump through bureaucratic hoops before the claim was finally settled? Even numbers available on IRDAI’s website as not easily interpretable. Nothing can substitute the feedback you receive from somebody who’s had to utilize the services of their vehicle insurer. If their experience was great, look no further. If not, you’ll have eliminated one potential suitor from the mix!