Car insurance renewal is essential for ensuring continuous coverage and protection against financial risks in the event of accidents, theft, or damages. As policies often come with a one-year term, the renewal process allows you to re-evaluate your coverage options and make adjustments to meet your changing needs. With the car insurance market constantly evolving and new add-on features and policy adjustments available, it’s essential to renew your car insurance with a well-informed approach. Here’s a guide on the five crucial aspects to consider when renewing your car insurance to maximise benefits.
1. Review Your Current Coverage and Policy Type
Before proceeding with your car insurance renewal, review your current policy to assess if it still meets your requirements. Over time, your coverage needs might change due to factors such as a new driving routine, an updated vehicle, or different financial priorities. The two primary types of car insurance policies are third-party liability and comprehensive insurance:
- Third-Party Coverage: This basic coverage is legally mandated and covers damages to a third party’s vehicle, property, or injuries. However, it doesn’t cover your vehicle’s damages.
- Comprehensive Coverage: Comprehensive insurance offers broader protection. It includes third-party liability as well as damages to your car from accidents, theft, fire, natural disasters, and vandalism.
By understanding the type of car insurance policy that suits your needs, you can make an informed decision on renewal. If you previously had third-party insurance, upgrading to a comprehensive plan might be worthwhile to ensure better coverage.
2. Evaluate the Insured Declared Value (IDV)
The Insured Declared Value (IDV) represents your car’s current market value and directly impacts the premium you’ll pay. In simple terms, it’s the maximum sum assured by the insurer in case of a total loss or theft. When renewing car insurance, it’s essential to reassess the IDV, as an incorrect IDV can either increase your premium or reduce your claim payout.
- Choose an Appropriate IDV: Lowering the IDV can reduce your premium, but it also decreases your claim amount. Conversely, a higher IDV increases your premium but provides better coverage.
- Depreciation Factor: As your car ages, its IDV decreases due to depreciation, meaning the amount you could claim in the event of loss or damage will be lower. Adjusting IDV during renewal ensures that your car’s current value is accurately reflected.
Many insurance companies now allow policyholders to adjust the IDV while renewing their policies. Make sure to set it at an optimal level to balance your premium and coverage effectively.
3. Explore Add-Ons and Optional Covers
Add-ons are optional covers you can include in your car insurance to extend protection. When renewing your car insurance, it’s a good opportunity to evaluate whether any add-ons could benefit you based on your driving habits and vehicle usage. Some of the useful add-ons include:
- Zero Depreciation Cover: This cover ensures that the insurer doesn’t consider depreciation on car parts during a claim. It’s especially beneficial for newer cars, as it offers a higher claim amount.
- Roadside Assistance: If you frequently travel long distances, roadside assistance can be a useful add-on, providing help for issues like a flat tyre, towing, fuel delivery, and minor repairs.
- Engine Protection: For people living in flood-prone areas, engine protection can cover damages due to water ingression or oil leaks, which are generally not covered by standard comprehensive policies.
- No-Claim Bonus (NCB) Protection: If you haven’t filed any claims, your insurer may offer an NCB, which reduces your premium. An NCB protection cover allows you to retain this bonus even if you make a minor claim during the policy period.
Choosing relevant add-ons at the time of renewal can give you tailored protection, although each one adds a small cost to the premium. Prioritise add-ons based on your car’s age, value, and usage.
4. Compare Premiums and Providers
Insurance premiums vary significantly from one provider to another, even for the same coverage level. To ensure you get the best deal on car insurance renewal, it’s wise to compare policies from different providers. Many online comparison tools offer insights into policy benefits, premium rates, and add-ons available from different insurers.
- Discounts and Offers: Some insurers offer discounts during renewal, especially for long-term customers or if you bundle multiple insurance products.
- Claim Process and Service Quality: Apart from the premium, consider the insurer’s claim settlement ratio, customer service quality, and reviews. Opt for an insurer known for a hassle-free claim process.
- Renewal Benefits: Some insurers offer unique renewal benefits, such as a higher NCB or added services. Check these benefits before renewing your policy to ensure you maximise your savings and coverage.
Switching providers might also yield better rates or additional benefits. Always read the fine print and clarify the terms with your insurer to ensure you understand what they include and exclude.
5. Check for the No-Claim Bonus (NCB)
The No-Claim Bonus is a discount offered by insurers to reward policyholders for not filing any claims in a given year. NCB can accumulate up to 50% over a few years, offering significant savings on your premium. Here’s how to maximise the NCB during car insurance renewal:
- Retain Your NCB: If you haven’t filed any claims in the policy period, you’re eligible for a discount on your premium. Ensure your NCB is correctly applied at the time of renewal to lower your costs.
- NCB Transfer: If you’re switching insurance providers, you can transfer your NCB to the new insurer. This allows you to retain your discount despite changing providers.
- NCB Protection Add-On: This add-on lets you maintain your NCB even if you make a minor claim during the policy period. It can be beneficial if you want to keep your discount intact after a minor incident.
Avoid making claims for minor damages that you can manage out of pocket, as this will help you accumulate a higher NCB over the years, resulting in greater savings during renewal.
Conclusion
Car insurance renewal offers an annual opportunity to reassess your coverage, premiums, and additional protections, ensuring they align with your evolving needs. By reviewing the coverage, adjusting the IDV, exploring add-ons, comparing providers, and leveraging the NCB, you can enhance your coverage and reduce your premium. Taking a proactive approach towards car insurance renewal not only provides peace of mind but also maximises your benefits, giving you the financial security needed in today’s dynamic world.
Whether you’re sticking with your current insurer or exploring other options, renew your car insurance with careful consideration.
Disclaimer:
*T&C Apply – Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third-party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Limited, ICICI Lombard General Insurance Company Limited, HDFC ERGO General Insurance Company Limited, Tata AIG General Insurance Company Limited, The New India Assurance Company Limited, Cholamandalam MS General Insurance Company Limited, Niva Bupa Health Insurance Company Limited, Aditya Birla Health Insurance Company Limited, Manipal Cigna Health Insurance Company Limited and Care Health Insurance Company Limited under the IRDAI composite CA registration number CA0101.
Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer’s website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. URN No. BFL/Advt./23-24/597
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