There are several determinants that influence the premium of a car insurance policy, but the premium is not the only thing to be concerned about while choosing or renewing a policy. Moreover, third-party motor insurance cover is compulsory in India, as per the Motor Insurance Act. Normally, one gets the first motor insurance policy from the car dealer itself, which is purchased in a hurry. However, during the first renewal, most policyholders examine the need and then browse for a proper policy.
Here are some points to consider while opting or renewing a car insurance policy;
No Claim Bonus (NCB)
NCB is a discount that usually ranges from 20% to 50% on the premium due. It cannot be claimed while buying a policy but has to be earned by keeping a claim-free record. It is a discount rewarded by the insurer to the policyholder, which is only accessible on renewal of the policy when no claim has been made for in the previous year of the policy. When a new comprehensive motor insurance policy is purchased by the policyholder, the holder is not fit for any NCB discount on the premium paid. A policyholder on the first renewal of the policy is qualified to a no claim bonus of 20% provided there has been no claim during the past year. With every claim-free year, the discount progresses unwaveringly to a maximum of 50% at the end of 5 claim-free years. The NCB applies to the policyholder and not the car. So, you can also preserve your NCB if you change to another insurer at the time of renewal of the policy or if you buy a new car.
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Own Damage Premium (OD)
Own damage cover in automobile insurance secures the insured vehicle from damages, unlike Third-party insurance. Some companies also term it as collision insurance or self-damage insurance. This cover includes precisely two coverage, damage to the insured vehicle in accidents or theft and total loss of the vehicle.
Although third-party liability insurance in India is compulsory, own damage cover is not compulsory by the law, however, it is a very beneficial cover. Own damage cover offers coverage for accidental damages, damages while in transit via rail, road, theft and vandalism, natural calamities such as hurricanes, landslides, floods, man-made disasters such as riots, strikes, personal accident cover to the owner or driver of the vehicle.
Compulsory Personal Accident
A Personal Accident insurance policy offers coverage to the policyholder in the case of permanent disabilities and renders financial support. The insurance policy provides cover for both minor and major setbacks, along with total or partial incapacity.
Premium
The sum of insurance premium remitted to the insurance company by the policyholder depends on a several of factors, such as type of policy, tenure, the sum insured, type of coverage, type of car, the area where the policyholder lives, the likelihood of a claim being made, among other factors. The greater the risk correlated with an event or a claim, the more costly the insurance premium grows.
