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Ways to Choose a Long-Term Car Insurance Policy

The smartest way to secure your car is by buying a car insurance policy. In case of an accident, having a car insurance policy will protect you against financial burden. As per law, it is mandatory for every vehicle to have a third-party liability insurance policy. If you are caught driving without a car insurance policy, heavy penalties can be levied.

Types of car insurance policies

The two types of car insurance policies available are:
  • Third-party liability coverage
  • Comprehensive cover

Add-ons in car insurance

By paying an additional premium, several add-ons can be included in your car insurance policy. Some of the add-ons available are mentioned below:
  • Zero depreciation cover
  • Engine protection
  • No Claim Bonus (NCB) protection
  • Invoice cover

Benefits of car insurance

Some of the main benefits of buying a car insurance policy are mentioned below:
  • Financial protection against any loss or damage caused to a third-party vehicle.
  • Personal accident cover
  • Protection against loss or damage caused due to natural calamities, fire, theft, explosion, riots, and accidents.
  • Protection against any financial burden that has arisen due to injury or death to a third-party, or damage to a third-party’s property.

Long-term car insurance policy

As per an order passed by the Supreme Court and the Insurance Regulatory and Development Authority of India (IRDAI), it is mandatory for all cars that have been purchased after 1 September 2018 to have a 3-year third-party liability cover. Many companies such as Acko, Digit, Tata-AIG, HDFC ERGO, New India Insurance, and ICICI Lombard are selling long-term insurance policies online, or even directly at car dealership outlets.

It is important to compare policies and choosing one as per your requirements.

Benefits of long-term car insurance policies

  • Convenience is increased: Buying a long-term car insurance policy can save you the time of renewing the policy on a yearly basis. The car is insured for three years.
  • Discounts on premium: Many insurance companies are offering discounts on the Own Damage (OD) premiums if you buy a long-term car insurance policy. Though the initial premium of the policy is high, over the long-run it works out cheaper than renewing the policy every year.
  • Renewal: By buying a long-term policy, you do not have to worry about the policy lapsing and renewing the policy on a yearly basis. Many people tend to forget the renewal date and hence lose out on benefits and coverage.
  • Premium: The cost of insurance can rise on a yearly basis. However, when buying a long-term car insurance policy, the premium is fixed for the next three years. You will not have to worry about an increase in insurance premium that comes with renewing a policy on a yearly basis.

What to keep in mind?

It is important for individuals to choose the right long-term car insurance policy before buying one. Some of the factors to keep in mind are mentioned below:
  • Compare policies: It is vital to compare car insurance policies before buying one. There are many car insurance policies that provide the same features but are cheaper than other policies. There are various third-party websites available where car insurance covers can be compared.
  • Choice of insurance company: It is important to opt for a reputed insurance company when buying a long-term car insurance policy. The insured and the insurance company do not have an option to cancel the long-term car insurance policy. Unless the car is sold or transferred it is not possible to change the insurance company. Therefore, it is important to do thorough research before buying a long-term policy rather than depending on the car dealer. It is vital to choose an insurance company with a high claim settlement ratio, as claims are settled quickly by such insurers.
  • Choose comprehensive cover: It is better to choose a comprehensive cover along with the long-term car insurance policy. Having a comprehensive cover can protect you against natural calamities, accidents, theft, etc. Having a comprehensive cover provides options to include add-on's like engine protection cover and zero depreciation, etc.
Though the premium of a long-term car insurance policy is high, it works out cheaper in the long run. Comparing various policies and their terms and conditions is vital when buying a long-term car insurance policy.

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