All over the world, getting your car insured is a compulsory by law, not an option.
A car insurance policy protects the vehicle owner against the covered financial loss(es) due to damage of the insured vehicle.
All this general information is well-known. But what about the details? That’s where real gold is. Let’s look deeper into them and explain top 4 mistakes that come from not knowing the little but very important things?
1) Following the advice before investigating yourself.
Most people do not know much about a car insurance policy and end up buying one that is suggested by a friend, relative or an agent. Mostly, insurance agents recommend the policy that pays them a decent commission, not the policy that will be perfect for you.
You may think “I know that agents only want to make money, so I will ask my friend who has a car insurance”. But how can you be sure that your friend or relative did not make his decision based on the agent’s words.
Understand that proper insurance may save you thousands if not millions. So make a research yourself.
Pay attention to all the details written below in this article.
2) Not understanding the Zero Depreciation Policy.
The concept of zero depreciation car insurance policy is gradually coming to all countries.
Let’s understand the basic difference between a normal car insurance policy and zero depreciation car insurance policy.
In a normal car insurance policy, insurance company provides cover on the basis of the depreciated value of the car. However, the policy holder gets a complete cover without calculating depreciation in case of zero depreciation policy.
The premium in a 0 depreciation policy is a little higher as the depreciation is not counted while reimbursing the claim. If you own a really expensive car, the decision of buying zero depreciation car insurance policy is a smarter one. You may have to pay a little higher premium but you are completely assured that you will receive a full cover.
3) Not understanding the difference between Third-Party and Comprehensive insurance.
Usually, there are two types of car insurance plans are offered:
Third-Party Insurance- Third-party insurance is a basic vehicle insurance As per applicable terms and conditions,
it covers bodily injuries/ damage(s) or losses caused to any third-party vehicle/property by the insured vehicle.
Comprehensive Insurance – True to its name, the comprehensive vehicle insurance policy provides enhanced insurance coverage.
It covers third-party liability as well as own damage to the insured vehicle.
Good Comprehensive Insurance may protect your car from such things as: car theft, vandalism, damages caused due to riots, strikes, malicious acts, earthquake, flood, storm.
Remember that more than 50 000 cars are stolen every year in any big city on the planet!
4) Not understanding how to reduce the cost of the insurance properly.
Everyone wants to reduce the insurance premium. Here’s the catch – less insurance premium means less insurance coverage. When it comes to the reduced insurance premium, insurance experts recommend to not compromise on coverage.
If you compromise on coverage, you might save a few pennies on insurance premium but in case of a claim, you might end up spending more from your pocket. It will nullify the basic need of having car insurance in the first place i.e. financial safety of the car buyer.
Here is how you can reduce the premium for a motor insurance policy without compromising on the insurance coverage:
- Install Safety Device(s)- When you install safety device(s) in your vehicle, you enhance the vehicle’s security and diminish the risk of vehicle theft. This, in turn, reduces the risk associated with your vehicle. As a result, the insurance provider offers a discount on the insurance premium.
- Refrain from Filing Small Claims – if you keep on filing small claims, you won’t be eligible for No Claims Bonus. As a result, you’ll have to pay a higher insurance premium.
5) Not knowing about transfer of insurance
Normally, one has to transfer the ownership while buying a used car. In addition to this, it is also compulsory to get the motor insurance transferred in your name.
We do hope this article was useful and you will apply the knowledge from it to your car. Please, drive safe.