Mistakes to avoid while buying fresh motor insurance and renewing an existing cover

Buying a new vehicle can easily be listed as one of the few most important purchases of a lifetime. Buyers ask around for opinions, plan their budget months in advance, and keep a tab on the latest features and models before they can finally make up their minds. So, quite understandably, nobody wants to see their vehicle damaged or broken down. While a lot of thought goes into purchasing the vehicle, buyers often don’t ponder much over the insurance that protects their vehicle from damages.

This just doesn’t apply to new vehicles, the old ones need to be insured just as much. Whether your vehicle is new or old, motor insurance is not just a mandate by law, but a crucial accessory to protect your ride. The Motor Vehicles Bill, 2019 has made it compulsory for all personal and commercial vehicles to have insurance in place before they hit the road.

When you are out there driving, there’s always a risk of uncertainty. It could be something as serious as an accident or something as common as a vehicle breakdown. Your motor insurance is the shield that protects you and your vehicle and makes your ride a smooth one. However, it’s also quite possible to hit a few bumps if you don’t take note of important points and end up later with rejected claims or an insufficient cover.

Here’s what not to do while buying fresh motor insurance or renewing an existing cover.

For first-time buyers

Accepting the first insurance by the dealer in a jiffy

The excitement of taking a brand new vehicle home is like none other. It’s natural to run with the first insurance plan they get from the dealer and take off. But might we ask you to hold off for a bit more and decide only after comparing various options available to you? As you’d know, the dealers have a commission-based partnership only with certain insurers, so that limits your scope of choices. Also, the extent of coverage and features can be limited in this case. So, shell out your insurance money wisely by comparing policies online before you decide.

Relying on just the third-party insurance

This could be true for both first-time buyers and the ones who want to renew their policy. Third-party insurance (TPI), which is a mandate by law, takes care of any damages caused by your vehicle to the third party. However, this is just the bare minimum that you need to have. This might save you the heavy penalty but will not cover any damage caused to you or your own vehicle. Unfortunately, accidents occur at the most unexpected time and place. So it’s not enough to have just TPI because it won’t guarantee any financial protection to you or your vehicle and this can cost you heavily. If you have a new vehicle or if you have been depending just on TPI, you should opt for comprehensive insurance with sufficient coverage and features.

Not opting for riders or add-ons

Often, new vehicle owners are not aware of the riders they can choose for their vehicle. After you have picked a policy with sufficient coverage, you need to make it all-inclusive by adding riders. There are some damages that are not covered by the policy but are taken care of by riders like roadside assistance cover, zero depreciation cover (bumper to bumper cover), engine depreciation cover or no claims bonus protection cover. These riders are not available with just third party insurance, which is another reason for you to buy a comprehensive policy covering own damage. Even if you are about to renew your policy and don’t have these riders or are not aware of them, do remember to check with your insurer. You can customise your policy as per what riders you think you’d need the most.

For renewals

Forgetting to renew your policy in time

For the most part of the past two years, almost all vehicles have just been parked and rarely been used. In these circumstances, the renewal date and grace period can easily slip out of your mind. However, this mistake can cost you dearly. If you don’t renew the policy in time, it will lapse. This way, you are not only exposing your uninsured vehicle to financial losses but also making yourself prone to legal consequences. Apart from this, renewing your insurance after the due date will make you go through the documentation again. It’s quite possible that your renewal might be rejected based on the condition of the vehicle. Renewing your policy within due time is completely hassle-free.

Losing out on no-claim bonus

A No-claim bonus in your policy rewards you for not making any claims during the policy year. In a nutshell, it’s a discount on your premium upon renewal in case of no claims. As per the rules, you could enjoy up to 20% discount on your first year of no claims, 25% for two years, 35% for three and 45% for four consequent years with no claims. You stand to lose out on this benefit under these circumstances –

– Not renewing your policy within three months of the policy expiry date

– Losing the entire NCB by making a claim even for a small amount

Providing wrong information or hiding information

Like any other insurance, motor insurance also follows the principle of utmost good faith. Do not hide any information or provide wrong information about damages, condition of the vehicle or yourself while renewing the policy. Doing so counts as a serious offence and amounts to insurance fraud. This can attract heavy fines or even imprisonment. In case you want to get any information changed, you should do so at the time of renewal. It could be a change in your name or place of residence. Always disclose full information while renewing your policy.

Keeping the above points in mind will help you make the most of your motor insurance policy and enjoy a long-lasting and hassle-free ride with your vehicle.

(By Tarun Mathur, CBO-GI, Policybazaar.com)