Motor insurance is not just a legal requirement. Read the fine print before signing on the dotted lines to save money
AT A TIME when motown customers are facing heat over high fuel prices and soaring interest rates, shouldn't they strive to extract every penny they spend on their automobile purchase? Valid question, you may say, but most customers choose to ignore an important component while purchasing a vehicle — motor insurance. They just consider it a legal requirement without which they can't bring their new vehicle on road. Indeed, motor insurance is a necessity which covers you against damage to your own vehicle and damage to the third party.

Broadly, there are two types of auto insurance —
1) Comprehensive policy and
2) Third party insurance.

1) Comprehensive policy

In comprehensive insurance, you get full cover for every possible damage, including dents, technical problems, repair, accidents and even for car theft.

To make sure that an individual gets the best deal while buying an insurance policy, he/ she should make sure that the policy is a comprehensive one. The policy should have cover for the loss or damage to the vehicle or accessories due to natural calamities such as fire, explosion, self-ignition or lightning, earthquake, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost landslide, rockslide, burglary, theft, riot, strike, malicious acts, accident by external means, terrorist activity, any damage in transit by road, rail, inland waterway, lift, elevator or air and others, head, motor insurance of ICICI Lombard. Too exhaustive a list, but you never know when an emergency would strike.

2) Third party insurance

In third party insurance, your cover is limited to the claims payable to the third party in case of an accident. Incidentally, third-party insurance is the only insurance compulsory under the law. The other type of insurance is called 'third party theft' insurance. Here the premium is less than comprehensive cover and you get insured for the theft of the vehicle. But make no mistake here. Consumers opting for this type of insurance don't get any cover for repairs and other damages.

Consumers should also keep in mind that third party insurance is mainly offered by government-owned companies such as General Insurance, New India Assurance, United India Insurance and Oriental Insurance. Though private companies such as Iffco Tokyo, Baja Allianz, ICICI Lombard, Royal Sundaram, Tata AIG and others also offer third party insurance, they generally don't push these since they are not very lucrative for them. Though none of the policies cover medical expenses, the Motor Insurance Tribunal covers medical claims on account of loss of salary income due to hospitalisation or any other disability. There exists a personal accident cover for individual owners under optional accident cover.

Now, once you have decided on which type of insurance you plan to take, you should be clear on some issues to enable you to take informed decisions. Though almost every dealer from where you buy your vehicle offers you insurance at the showroom only, you have the right to choose your own insurance company. You may be able to save some money by choosing a company different from your dealer as now different companies offer different rates and discounts with the de-tariff regime in place.

In this regime, insurance companies have the option to offer you rates lower than other players. Of course, you just don't have to jump the gun. Check various companies for the rates and discounts and then negotiate with your dealer. If you have a good history — like your vehicle has had no accident in the past or if you haven't claimed bonus in the previous years — then the auto insurance companies will give you further special rates. The region where the vehicle is bought also plays a role in deciding premiums as some locations have higher risk profiles.

Continuity of your vehicle insurance is also important. The gap in your insurance policy will not go well with insurance companies and you may have to shell out more premium. Also, always check if you have cashless facility and make sure that your nearby workshop or garage is covered under it. The cashless option will save you from the hassle of tedious claim reimbursement procedure.

Another must is that you should never take the agents' word for granted and ensure you get the best deal. Incidentally, companies such as ICICI Lombard and Bajaj Allianz also offer interest-free instalments for the premium payment if you are paying online.

So the next time you buy your dream car, don't forget to look into the finer points of insurance.

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