Although it is said perceptions are reality and we humans are ought to believe what we perceive, how would you feel when your perceptions prove you wrong! Well, recently I came across a friend named Ravi who was very much disturbed by the "Terms & Conditions" laid by the car insurance company and he had to compromise on his most prized possession! It so happened that he got motor insurance from company x whose agent promised him to help in every scenario but when he met with an accident & broke his car, he rushed back to that agent & insurance company who then slowly pulled out all so-called "Terms & Conditions" policies. With that late revelation of terms, my dear friend felt cheated by getting a 50% claim and not 100%. Maybe he should have checked what are the basis on which premium is decided and how much insurance he should take on his vehicle. Insured Declared Value which depends on Model of Vehicle & its age The amount of premium you pay depends largely on its Insured Declared Value, which is a fancy way of saying “market value”. Thus, the more expensive your car, the higher the premium you pay. It’s thus safe to assume that imported brands and bigger cars like SUVs or high-end sedans will charge more premium than hatchbacks. Similarly, for Fuel Type, the premium is generally higher for diesel vehicles Besides, the year of manufacture and the date of registration of the vehicle will also be considered. If a vehicle comes with rare or expensive spare parts, that will increase its insurance premium too. Ravi was owning Brezza, but he never cared to know that minimum insurance he should have taken was of 7 lakhs, but he took of 6 lakhs. Also taking Comprehensive Insurance (Covers Self damage + Third-party damage) saved him otherwise if he would have taken Liability Insurance (Covers Third Party), then most of its claim would have gone to the third party Purpose of the Vehicle Car insurance is available for personal as well as commercial vehicles. If you are using your vehicle commercially, insurance companies are bound to charge you a higher insurance premium, given that it is a source of income. Safety Devices Modern cars are built to ensure the safety of all passengers. They come with state-of-the-art safety features like airbags, advanced braking systems, robust locks, and anti-theft devices. Thus, some insurers increase premiums for cars that are more susceptible to damage, occupant injury, or theft, and lower rates for those that fare better than the norm You can avail of a discount of up to 2.5% on your premium if your car is inherently safe-provided its features are included in the list approved by Automobile Research Association of India (ARAI)- so it’s advisable you do some research before you buy. Ravi didn’t bother to take this discount and paid the whole premium Insurance Zones Where you live and the location your car is registered in also influences the amount of motor insurance premium you pay. ‘Insurance zones’ are thus created by insurers according to a vehicle's vulnerability to damage or loss Due to higher rates of vandalism, theft, and accidents, urban drivers pay more for car insurance than do those in small towns or rural areas. This zonal bifurcation thus generally comprises metro cities and the rest of India. And so much more… While the above factors are essentially what Indian insurers consider before deciding car insurance premium, several additional factors are likely to become important soon, given the rapid rate at which the insurance industry is evolving These factors include your credit history, the distance your car has traveled, the Cubic Capacity of the engine, etc. Being an aware customer, before taking insurance, it will be wise to read insurance policy completely and understand all the hidden terms & conditions so that you do not feel cheated the way my friend Ravi did. Now he is running around the lobbies of various offices to get justice but he could have saved all this time by simply investing 15 minutes to read the policy.
