Know your rights while buying your new cars insurance

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04 Aug 2023

Read about Know your rights while buying your new car�s insurance. For more information, check out the car insurance policy from Kotak General Insurance.

Buying a car is a dream come true for most, especially those who have been planning and saving for months or even years. With the advent of many car companies in India, the Indian car lover is spoilt for choices. People choose the brand, model, colour, features, and budget well in advance. However, not all of us pay similar attention to car insurance. More and more people are investing in new cars, and when buying new new car insurance, most people find themselves in unfamiliar territory. If you are planning to buy a new car or a new car insurance policy, it is imperative that you know and understand your rights about the same.

1) IRDAI latest rulings on multi-year policies
As per the latest rulings of IRDAI, it is mandatory to purchase at least a third-party car insurance policy for your car for 3 years. You can surely opt for standalone own damage or comprehensive insurance to increase the coverage further, but that is optional.

2) One size doesn't fit all. You have the freedom to choose.
There is a misconception that when it comes to car insurance, one type of policy would suit everyone. Be aware of this trap. One plan that has worked for someone might not work for you. Comprehensive insurance offers wide coverage, but a third-party insurance cover would be enough if you hardly ever use your car. And if you do not drive your car too often, you can opt for a pay-as-you-drive car insurance plan. Thus, you need to chalk out your needs and then opt for the best plan.

3) IRDAI fixes the rate of depreciation.
Your insurance company can only charge you for depreciation per the IRDAI guidelines. Also, remember that zero depreciation is an add-on that eliminates your depreciation charges while filing a claim.

Vehicle's age

Rate of depreciation

Up to 6 months

0

Over 6 months below 1 year

5%

Above a year less than 2 years

10%

Above 2 years less than 3 years

15%

Above 3 years but less than 4 years

25%

Above 4 years but less than 5 years

35%

Above 5 years but less than 10 years

40%

Above 10 years

50%


4) You are free to buy car insurance from where you prefer.
People often think it's beneficial to purchase car insurance from a car dealer because of better deals and advantages. Still, many assume it's mandatory to purchase it from them. While it may be convenient, it is not mandatory. You have the right to choose a car insurance company of your choice. You can also buy it through a trusted insurance agent. You must do your due diligence and purchase a policy that best suits your needs and budget.

5) You can customise your IDV
IDV stands for insured declared value. It is one of the crucial aspects of a car insurance policy. It denotes today’s market value of your car. If you lose your car, or it is totally damaged, you will file a claim, and your insurance provider will pay you an amount per the agreed IDV value in the contract. When buying/renewing your policy, you can increase or decrease the IDV to a certain limit. But weigh the pros and cons. While lower IDV may get some discount in the premium, it would also mean lower compensation in case of theft/ total loss.

6) Benefitting from NCB
Your hard-earned no-claim bonus is yours. Neither the car insurer nor the insured car has any claim on it. When buying new car insurance, you can easily get your NCB transferred and enjoy up to a 50% discount on the premium.

7) Policy renewal/ portability
If you are not very satisfied with your current car insurance company, the IRDAI allows you to port the policy to a different insurer at the time of renewal. You will not lose your acquired no-claim-bonus if and when you do so. 

8) Pay as you drive.
As per IRDAI, you can choose a car insurance policy based on the distance travelled at regular intervals. It is also called the usage-based policy, ideal for those who do not use their car much for any reason. You need to choose a slab of distance in kilometres, choose a plan, and pay the premium accordingly.

Conclusion

Before you invest in a new car insurance plan, it is your right to understand, research and know all the relevant information. If you still have any doubts or queries, clear them before you sign the policy contract with your insurer.


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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.