What to Check Before Buying an Insurance Policy for Your Car?

When you’re buying a new car or renewing your existing cover, one of the most important decisions you’ll make is choosing the right insurance policy for car. Many people tend to go with whatever option is offered by the dealer or a friend’s recommendation without fully understanding what they’re getting into.

But this is more than just a formality. Picking the right car insurance can protect you from financial losses, legal troubles, and unnecessary stress later on. Let’s break down exactly what you should check before buying a policy so you don’t get stuck with something that doesn’t actually help you when it matters.

Understand the Type of Insurance You’re Getting

There are two basic types of car insurance policies in India. Understanding them helps you choose based on your usage, car value, and driving habits.

Third-Party Insurance

This is mandatory by law. It only covers the damage your car causes to someone else, either their vehicle or property, or if they are injured. It doesn’t cover damage to your own vehicle.

Comprehensive Insurance

A comprehensive insurance policy includes third-party cover, but also protects your own car in case of accidents, theft, floods, fire, or natural disasters. It offers wider protection, which is especially useful if your car is new or you drive frequently.

Check the Insured Declared Value (IDV)

The IDV is the current market value of your car. This amount is what the insurer will pay if your car is stolen or completely damaged beyond repair.

What You Should Do:

• Compare the IDV offered by multiple insurers.
• Make sure it reflects your car’s actual resale value.
• Avoid undervaluing just to save on premiums.

Look at What’s Included and What’s Not

People often assume everything is covered, but every policy has limits. It’s important to know both what is covered and what is clearly excluded.

Coverage May Include:

• Accidental damage
• Fire or explosion
• Theft
• Natural disasters (floods, earthquakes, etc.)
• Third-party legal liability

Common Exclusions:

• Mechanical breakdowns without an accident
• Driving without a valid licence
• Drunk driving
• Regular wear and tear

Make it a point to go through the policy wording or ask your insurer to explain anything unclear.

Review Add-On Options Carefully

Add-ons are optional benefits that enhance your insurance policy for car. Some are worth considering depending on your needs.

Useful Add-Ons:

• Zero depreciation: Full claim without cutting value for wear and tear.
• Engine protection: Helps in water-damaged areas or monsoons.
• Roadside assistance: Support in case of breakdowns or emergencies.
• Return to invoice: Pays the full original invoice value if the car is totalled or stolen.

Avoid buying all add-ons just because they’re offered. Focus only on those that are relevant to your usage and region.

Consider the Claim Settlement Track Record

When you buy car insurance, you’re trusting the insurer to support you in a crisis. One of the most important signs of a reliable insurer is how quickly and fairly they settle claims.

What to Check:

• Claim settlement ratio (CSR): A higher CSR means more claims are honoured.
• Reviews from real customers.
• Ease of filing a claim - is it online, app-based, or paper-heavy?
• Time taken for processing claims.

You want someone who stands by you when things go wrong, not someone who complicates the process.

Check the Network of Cashless Garages

Cashless service is where the insurer directly settles the repair bill with the garage. You just pay the deductible, if any.

Before Buying:

• Ask for the list of network garages in your city or area.
• See if authorised service centres are included.
• Confirm whether roadside assistance can tow your vehicle to these garages.

This feature makes life much easier, especially after an accident or breakdown when you already have enough on your plate.

No Claim Bonus (NCB) is a Reward You Should Use

NCB is a discount you get on your premium when you don’t make any claims during a policy year. It can go up each year and is transferable even if you change insurers.

Keep in Mind:

• If you make even a small claim, you might lose the NCB.
• Some insurers offer NCB protection add-on, which helps you keep the bonus even if you raise a claim.

Always ask how much NCB you are eligible for during renewal. It adds up to a decent saving over time.

Look at the Premium, But Don’t Choose Based on That Alone

It’s natural to want a cheaper premium, but it should never come at the cost of essential coverage. Sometimes, low-cost policies leave out key benefits or have high deductibles during claims.

Strike a Balance:

• Choose the policy that gives value for the premium.
• A slightly higher premium may give better coverage and faster service.
• Use online comparison tools to weigh multiple options.

Think of it as a safety net, not an expense.

Understand Renewal and Portability

Policies are renewed annually, and if you’re not happy with your current insurer, you don’t have to stick with them.

What to Ask:

• Is there a grace period for late renewal?
• Can you port the policy to another provider?
• Will your NCB be carried forward if you switch insurers?

If your insurer doesn’t offer flexibility, it may be worth looking elsewhere during renewal time.

Final Word

Buying car insurance may not feel like the most exciting part of owning a vehicle, but it’s something that can make a big difference when life takes a wrong turn. Don’t treat it like a checkbox to tick. Instead, take a bit of time to read, ask questions, compare, and choose based on what works best for your needs.

(Disclaimer: Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)