Selling a used car in India can often be a Herculean task – there’s too much involved to let a car-seller breath easy. Usually, someone who wants to sell an old car scrambles through the internet to find out what the car is worth and how he or she can get the best price for the vehicle. Selling a car involves complicated and time-consuming activities, including getting the desired price for your vehicle, verifying the buyer’s identity and getting the RC transferred. It’s equally complicated for the buyer, who needs to go through several steps to acquire an old car.
A used car buyer often overlooks an important aspect, which is the car insurance policy. In the first episode of MyDrive, we have discussed the various types of car insurance policies and their pros & cons.
Types of Car Insurance Policies
There are two kinds of car insurance policies that are available in the market-
- Third Party Insurance
- Comprehensive Insurance
The latter is often available with a handful of add-on features. Some of these extra features include-
- Roadside assistance
- Zero depreciation Cover
- Engine Replacement Coverage
- Water Damage Protection
A Third Party Insurance, on the other hand, is a no-frills policy. However, any motor vehicle requires to have at least a Third Party cover to stay road-legal.
What is a Third Party Car Insurance Policy?
A third party car insurance provides coverage of any legal liability owing to death, injury or loss suffered by a third party from your vehicle. Mostly, the insurance company is bound to pay for the damages that the insured vehicle would have caused to a third party. However, this basic car insurance policy doesn’t offer any coverage for either the driver or the vehicle. Hence, this insurance policy is useful only for the third party, which would have suffered a loss due to the mishap.
Many car owners opt for this insurance cover. However, it should be used only when a car has depreciated to a large extent. Also, this policy ensures a car stays road-legal, which means those who don’t wish to spend too much can simply opt for this cover.
What is a Comprehensive Car Insurance Policy?
Comprehensive insurance, as the name suggests, has many more benefits. This plan makes sure the car owners benefit from coverage for not only the third party but even for himself or herself. It also offers a wide range of coverage options like-
- Damage due to manmade or natural disasters
- Damage from Fire
- Damage from falling objects like tree
Selection of add-ons like zero depreciation, roadside assistance, medical expenses, accessories cover and more can further help the car owner. While a comprehensive Insurance policy is highly advisable, it is expensive.
What is Insured Declared Value?
Next, let’s discuss something called IDV or the Insured Declared Value. This is simply the highest possible amount that you can receive in case you suffer a ‘total loss’ of the vehicle. Essentially, an IDV is the current market value of your vehicle. One can determine it as per the car’s age, make and model, condition and many other factors.
At times, a car owner declares a low IDV to keep the policy premium low. However, in case he makes a claim for total loss through accident or theft, he will receive a low claim amount owing to the lower declared value. A small saving on the premium by declaring a lower IDV can result in a much higher loss in an unfortunate event.
Similarly, some car owners tend to declare a high IDV after assuming that they would receive a high claim. However, the insurer considers several factors before processing a claim. Hence, in spite of having paid a high premium, the policyholder receives only a realistic amount.
So, basically, a car owner can either opt for a basic coverage at a much lower cost or go for a full-fledged car insurance policy that is many times pricier. We advise all car owners to choose the car insurance policy wisely. The right insurance policy can go a long way to ensure peace of mind for a car owner.
Is there more that you wish to know about a car insurance policy? You can get free advice from our in-house experts by letting us know of your doubts through the comments section.