An Introduction to Comparing Car Insurance

An Introduction to Comparing Car Insurance

Whenever you set out to buy something, you end up comparing the product variants that the market offers. For example, if you want to buy even a simple and inexpensive product like a blanket, you will look at the prices that e-commerce platforms and offline stores have set, the star rating, the cloth and weave quality, customer reviews, etc.

Comparing such variants gives you the power to make a well-informed decision that caters to you - and only you. The product you choose specifically fits your needs, budget, and requirements.

So, when it comes to an important purchase like car insurance (that literally is a life and wallet saver) - it becomes all the more important to effectively compare the different insurance plans available on the market.

In this article, we shall discuss the various facets of comparing car insurance so you can make the right choice! Let’s start!

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Benefits of Comparing Car Insurance Online

  • It Is Convenient
    The world has shifted to the digital space and everything is available in a few clicks - even car insurance. You can compare the features, benefits, prices, etc. for different policies and insurers at your fingertips in the comfort of your home.

  • It Saves Your Time
    Comparing policies offline takes time and effort. You will need to visit the offices of insurance companies or agents. But, a comparison can be easily done online in a few minutes from anywhere.

  • You Can Pick The Right Coverage
    An insurance policy is a personal purchase, and hence, you need to pick a cover amount that’s right for you in terms of your needs and budget When you compare online, various products will be listed side by side. This will make comparing the coverages of different policies offered by different insurers much simpler. For example, a third-party-only policy will only take care of the damage caused to the third party or their property whereas a comprehensive policy will cover both the damages caused to your car as well as third-party damages.

  • You Can Pick A Plan That Fits Your Budget
    Comparing car insurance will help you buy an insurance policy that’s affordable for you. For instance, a comprehensive policy may cost you more than a third-party-only policy but the coverage will also vary accordingly.

  • It Gives You Value For Your Money
    You can also compare the quotes of motor insurance plans offered by different insurers online. Some platforms may also give you discounts and special offers.

  • You Can Choose An Insurer With Better Service
    It is crucial to see if the after-sales service of the insurer is worth it. For example, some insurance companies provide you with a free pick-up and drop facility when you raise a claim. Check the insurer’s credibility and service quality by going through previous customer reviews.

Important Factors Used To Compare Car Insurance Policies Online

  • Insured Declared Value
    Look at the IDV that is provided by the insurers. The IDV is the amount that you will get in case of a total loss or theft of the vehicle. Pick the right IDV for your vehicle by checking the cost of the second-hand model as old as your vehicle.

  • Coverage and Add-Ons
    Look for features and benefits that will provide enhanced coverage to your vehicle. You can also check if there are add-ons available with the policy you’re planning to buy. Add-ons will provide extra coverage to the insured vehicle.

    For instance, the zero depreciation add-on will negate the depreciation of your car parts at the time of claim. Or the tyre protector add-on will cover the costs for the repair or replacement of the tyres.

  • Premium
    Consider the price of the policy after you have checked the coverages and services offered by the insurance company. The higher the add-ons selected, the higher the premium. So, you should look for a policy that maintains a balance between both premium and coverage.

  • Cashless Availability In Your Preferred Garage
    You can make either a cashless or a reimbursement claim under your motor insurance plan. The cashless alternative, however, is only available at the insurer's network garages, i.e., the garages that have a tie-up with the insurer. So, before you buy a policy, ensure that you pick a policy that has your preferred garages under their network garage list.

How Can You Compare Car Insurance Online?

We have already discussed the benefits of comparing car insurance and the important factors you should consider while comparing car insurance online. Now, let's go through the process of comparing car insurance online -

  • Visit the website of any insurance brokers/web aggregators.
  • Enter your car details like make and model, registration number, registration year, fuel type, etc.
  • Once you enter these details, you will be directed to the quote page where you will be able to see quotes from various insurance companies.
  • You can then select the cover type and the IDV to check the premium difference across various insurance companies.
  • You can also compare the add-ons provided by various insurers.
  • Once you have checked and compared all the details, you can select the policy that is apt for your car and your budget.

Compare Add-On Covers For Your Car Insurance Policy

You can enhance your base policy’s coverage by customising it with add-ons by paying a certain extra cost. Here’s a brief overview of the different add-ons available with car insurance -

  • Zero Depreciation Cover
    When you file a claim under your motor insurance plan, the depreciated value of the car parts is usually deducted from the total payable claim amount. Depreciation percentages are fixed by the IRDAI. A Zero Depreciation policy, also referred to as Bumper to Bumper coverage or Nil Depreciation or Depreciation Waiver, negates the depreciation - so you can avoid this expense entirely.

    For example, Mehak has a comprehensive motor insurance policy with an IDV of Rs 4 lakhs for her car. She gets into an accident, which damages the tail lights. The repair cost is around Rs. 10,000. Now, the depreciation % of the tail lights (made of plastic) is 50%. However, since she has a zero depreciation cover, she will receive the full claim amount of Rs 10,000*.

    * Compulsory deductibles have not been taken into consideration for ease of calculation.

  • Engine Protector Cover
    This cover provides financial protection against damages caused to the engine of the insured vehicle. It covers the cost of replacing/repairing the engine, damages to the gearbox, leakage of lubricant oil, etc.

  • Key Replacement Cover
    This add-on covers the cost of replacing the insured car’s key. If the key gets lost, damaged or stolen, it takes care of the costs. It also covers the expense incurred in repairing the lock-set, in case the car lock gets damaged.

  • Consumables Cover
    Consumables are components of your car that have limited usage. They need to be replaced regularly due to wear and tear. For instance, nuts, bolts, engine oil, brake oil, ball bearings, lubricants, oil filter, grease, washers, AC gas, coolant, etc. The cost of consumables is not covered by a comprehensive motor insurance policy but is covered by the consumables cover.

    For example, Raj’s car meets with an accident and is damaged. Let’s say his car's repair cost is Rs. 30,000. Out of this, Rs. 6000 is to replace and repair the consumables of his car. But, since he has a consumables cover with his motor insurance plan, the cost of consumables will be covered by the insurance company.

  • Roadside Assistance Cover
    If your vehicle breaks down or undergoes mechanical failure in the middle of the road, and you cannot find a mechanic or technician nearby, you can make use of the Roadside Assistance Cover to get on-road assistance. All you have to do is contact the insurer, tell them about the situation, and give them your location details.

  • No Claim Bonus Protection
    A No Claim Bonus is a discount you get on the own-damage premium at the time of insurance renewal - if you haven’t made a claim during the past policy tenure. But, if you make a claim, you do not receive the NCB. However, if you customise your policy with the NCB Protector add-on, it keeps your NCB protected despite you raising a claim in a policy year.

  • Return To Invoice Cover
    When you buy a car, its value starts depreciating as soon as you take it out of the showroom. This can significantly affect the Insured Declared Value (IDV) of your car, i.e., the current market value of the car. This, in turn, reduces the maximum claim amount you are eligible for. With a Return to Invoice Cover, you get the invoice amount of the car in case of any total loss, constructive total loss, or theft of the car - without factoring in the depreciation.

    For example, Monika bought a brand new car for Rs 12 Lakhs. She also bought a car insurance policy with an IDV of Rs 11 Lakhs. The car was stolen within the first year of the purchase.

    Let’s see how her claim amount will be affected with and without a Return to Invoice Cover -

    With Return to Invoice Cover Without Return to Invoice Cover
    The RoI Cover gives you the original invoice amount in cases of theft and total loss. So, Monika will receive Rs 12 Lakhs as the claim amount. Monika will receive Rs 11 Lakhs as the claim amount which is her IDV.
  • Personal Accident Cover
    A personal accident cover protects you against accidental disability or death due to an accident. Accidents may hamper your life both personally as well as financially. The cover will financially cover you and your family. In case of death, the personal accident cover policy will provide the cover amount to your nominee mentioned in the policy.

  • Loss Of Belongings Cover
    In case of an accident or theft, a personal belonging cover covers the loss or damage caused to the personal belongings in your car. All personal belongings like phones, laptops, etc., will be covered. If such belongings are damaged or stolen from your vehicle, your insurance company will reimburse you for the same.

  • Cover For Car Accessories
    This add-on provides financial coverage for the accessories added to your car post the purchase, like mini LCD TVs, fog lights, air-conditioners, etc. in case of mishap or accident. You must note that the coverage for such accessories will only be provided by the insurer if you have informed them about any additional accessories to your car and have got it included in your policy.

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Things You Should Remember While Comparing Car Insurance Policies

Keep these important things in mind when you buy car insurance -

  • Mandatory Cover
    As per government norms, having at least third-party insurance for your car is mandatory. While comparing the policy, if you feel that you just want a stand-alone policy and not a comprehensive one as the former is cheaper, you must keep in mind that you can purchase a stand-alone own damage policy only if you have an existing third-party policy. Not having a third-party cover may lead to legal consequences.
  • Understand the deductibles
    A deductible kicks in when you file a claim. The claim amount is divided into two parts - the deductible, which you have to pay and the amount excluding the deductible, which is borne by the insurer.
    • Understand the compulsory deductible applicable to your policy, because you will mandatorily have to pay this.
    • Make a well-thought-out decision about opting for the voluntary deductible, since it will increase the % of the claim amount that you will have to pay from your end - even if it lowers your premiums.
  • Add-On Covers
    Purchase add-on covers only if there is a need for the same. For example, not everyone will need an engine protector cover for their car. For example, an engine protector cover will be needed the most by people who live in a flood-prone area or near waterbodies.
  • Inclusions & Exclusions
    While comparing policies, understand what is included and excluded in the policy. Check the policy wording properly to understand what the insurer will and won’t cover.

A Comparative Analysis of Different Types of Insurance Policies

Comprehensive Policy With and Without A Zero-Depreciation Cover

  Comprehensive Policy With Zero Depreciation Cover Comprehensive Policy Without Zero Depreciation Cover
Definition Depreciation will not be factored in during claims. Depreciation will be considered during claims.
Premium Slightly higher. Lower.
Claim settlement The amount you receive will be higher as depreciation is not considered. The amount you receive will be lower as depreciation is considered.
Availability Only available for vehicles up to 5 years old. Available for vehicles of all ages.
Number Of Claims There can be restrictions on the number of zero depreciation claims you can make. There are no restrictions - you can make unlimited claims.

Comprehensive Vs. Third-party Only Policy

Parameters Comprehensive Policy Third-party Only Policy
Coverage Covers any damages caused to the policyholder’s vehicle as to the third party or their property. This policy covers damages caused to the third-party individual or their property only.
Legally mandated Not mandatory. Mandatory.
Add-ons You can choose add-ons. No add-ons available.
Premium Premium is higher as it provides a wider coverage. Premium is lower as it provides a limited cover.
Discounts Discounts are available in the form of no-claim bonuses, voluntary deductibles, anti-theft devices, etc. No discounts are available.

Summing Up!

So, this was all about comparing car insurance plans. Doing this efficiently will help you zero down on a policy that is right for you, your vehicle, and your budget. We hope this article was helpful!


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