While purchasing auto insurance for your vehicle is important, knowing what type of auto insurance you really need is more important. Before you even start looking for an auto insurance policy online, you should first assess your needs and assess what type of policy you actually want. There are a number of auto insurance plans available in the market that customers can choose from.
The most important thing to decide is whether you just need third party coverage or a full auto policy. While liability insurance – a mandatory requirement by law – only covers damage caused by your vehicle to a third party, a comprehensive auto insurance policy provides adequate coverage for both the third party and your vehicle.
Third party coverage
As your vehicle’s declared insured value (IDV) declines over the years, you may not want to spend a lot to purchase a full auto insurance policy for your vehicle. This is mainly because having your car repaired for small dents and scratches yourself will be much cheaper than paying a high premium for a full auto policy. Also, as your car ages, you might not drive it much and only use it to get to nearby places.
However, no matter how little you drive your car, if you plan to take it on the road, it is mandatory to have valid insurance coverage. In order to solve this problem, you need to purchase third party insurance coverage for your vehicle which is not only affordable but also gives you the license to drive on the roads. Usually, third party coverage is 50-60% cheaper than a full auto insurance policy while still providing the required coverage.
Buy a full plan
In case you drive a recently purchased vehicle or your vehicle is only two to four years old, it is always best to purchase a comprehensive auto insurance policy that covers you for both third party damage and own damage. In the event of an accident with your vehicle, your insurer will cover the damage. In addition to accidental damage, your insurer will also pay for damage due to fire, flood, earthquake and other acts of God, as well as theft.
To benefit from the overall protection of your vehicle, you can also choose to purchase different add-ons to enhance the protection of your vehicle.
There are various add-ons available in the market that offer different protection measures. Some of these add-ons are Zero Amortization Coverage, Bill Return, Roadside Assistance, Engine Protection, and NCB Protector.
The author is Chief, Auto Insurance, Policybazaar.com