The fundamentals of vehicle insurance
We list the car insurance policy structure to simplify your understanding of it – and the points to look for before you sign up.
Buying a car is one of the easiest tasks in today’s world.You can select the brand and model that seems best to you,and then go to the car showroom and make your purchase.At the time of buying the car,the salesperson informs you about buying a new insurance policy with your car.
At this point,you can do one of two things:
- Carry forward your existing vehicle insurance,by changing the car details and revising its terms.
- Take a fresh insurance plan for your new car.
choosing the latter option is a better idea.any existing car insurance plan will have a depreciated sum insured in view of your older car’s age.even the insurer will suggest buying a fresh plan linked with your new car.but if you are a first time car buyer,it will obviously be your first vehicle insurance purchase.if it is,then you must be cognisant of the following fundamental terms ingrained in the policy:
- Coverage amount:
This is the sum insured in the policy.It is calculated against the value of the car(depreciation of the car is also counted from the year of purchase),any No Claims Bonus(NCB)carried over from the previous insurance plan,the add-on covers you opt for,etc.Overall,the coverage amount must be enough to pay for car damages sustained in a road accident or by deliberate cause(burglary or forced entry)or natural catastrophe.
- Legal liability:
This is an important part of thevehicle insurance policy,and it is mandatorily covered by all leading motor insurance providers.It covers you against the legal costs and damages that a third party incurs owing to an accident with your vehicle.In essence,it pays to repair the third party’s car damages,and also pays your legal fees in defending your claim against damages.
- Purchase process:
This is the process of buying the vehicle insurance policy.The insurance provider gives you a quote for the sum insured you seek,the add-on coverage sought,any additional benefits provided against a fee,etc.From here,you can either purchase the policy online or have the insurer’s company official come to your doorstep to collect the payment from you.The first payment is made towards the first year’s premium for the motor insurance policy.
This is an important page in your policy document.It lists essential details like your name,car details,the premium payable,the terms and conditions of the coverage being provided and the terms of coverage claims and how they will be settled.
- Insuring agreement:
This part of the policy details the insurer’s obligations towards the customer against the premium being paid.It outlines the terms of the coverage,the details of the car’s users,definitions of various terms used in the policy agreement,a list of exclusions in the coverage,and how the policy holder can use the coverage provided.