Buying a car insurance policy is deemed as a confusing process. But with the right knowledge and awareness about jargons, it is a straightforward choice. The different permutations and combinations of policies and its add-ons make it made-for-all insurance cover. But apart from first time purchase, there are quite a few mistakes that a policyholder makes. Let us have a look at five such mistakes to avoid when renewing your car insurance policy –
#1 Delayed payment of premiums
You must ensure the timely renewal of your car insurance policy. Delayed renewal causes several problems whose impact is reflected in your premium amount. Also, there may be loss of policy benefits due to delay in renewal. Thus, while selecting adequate coverage at renewal date, you should ensure it is renewed in advance. You can opt for a reminder from the insurance company or even set a reminder of your own for its prompt renewal.
#2Opting for a minimum coverage option
Most insurance buyers end up selecting minimum coverage when it comes to a car insurance policy. The primary reason being insurance is considered as an added expense. But in fact, insurance is a safety net that is your backup plan if things go south. It can be an accident or even theft due to which you might face a financial loss. Thus, the Motor Vehicles Act, 1988 further amended in 2019 makes it mandatory to have at least third party car insurance policy. It would be helpful if you consider the approximate costs of repairs and the premium for your vehicle. Once you figure out the math, you can decide on a suitable coverage option for your car.
#3Failing to compare car insurance quotes
Another common mistake that most buyers make is not comparing their insurance plans; be it at the time of car insurance renewal or first-time purchase. Since third-party insurance is a mandatory requirement, all plans cover it, but is it sufficient, is for you to decide. Selecting a plan with minimum requirements might help you comply with the law, but opting for a plan with higher insurance coverage will aid the benefits that are otherwise not available in base policies. You must also check for the terms of each policy as they might differ. Most individuals assume the terms to be similar, and it might be a problem at the time of applying fora claim.
#4 Selecting avoidable add-ons
Sometimes, the policyholders go overboard in selecting the add-ons. In this process, they often purchase unnecessary additional riders that increase the premium but offer no real benefits. Thus, it is wise to be prudent, but the over-cautious approach can cost you extra money.
#5 Reassessing the IDV
The premium for your insurance policy is calculated based on the depreciated value of your car. IDV is one factor that is calculated after depreciation. This amount is subject to limitations and maximum capping that may vary among insurance companies. It is prudent to assess the IDV such that it is not too low resulting in lower compensation, or even not exorbitant to increase your premiums rates.
Remember these frequent mistakes committed by many. Make sure you reassess your requirements at each renewal date and purchase plans that offer optimal coverage as per your requirement.