Volkswagen Financial Services- 30 Jul 2018

Don’t get lost in the lanes and bylanes of a car insurance policy!

If only, there was something like a GPS when it came to finding the way around an insurance policy! Choosing the right insurance policy can be quite a labyrinthine process – where you have to negotiate through so many things. Let’s try to make things easier for you.

Firstly, one should do a check on the car insurer. If the brand has a credible reputation and is regarded to be prompt when it comes to handling claims; you should definitely shortlist that brand. Next in line is the annual premium – and that can be quite the tricky bit. How much should the premium be – various insurers offer different rates. So is cheapest the best, or is there another way to decide?

To begin with, it helps to know the factors impacting the premium payable.

Did you claim or not?

When a customer doesn't make an insurance claim during the previous period under consideration, the insurance company offers the customer a certain percentage of discount on the premium payable during the forthcoming period. It is known as a No Claim Bonus. If at the end of every period, the customer doesn’t make a claim, the percentage of discount provided correspondingly increases.

Your nature of work

Usually relatives are very curious about your nature of work. But did you know that even car insurers give it a fair bit of thought as well? If you work as a politician or are employed in the field of sales and marketing, you might be considered to be working in a high risk environment and might end up paying a higher premium. Teachers and bank managers are considered to be in comparatively less risky professions.

The Vehicle's Value

Of course, we value our vehicles tremendously, irrespective of its size and country of origin. But insurers have a different take on it; they base premium payable on the market value of the vehicle. Imported vehicles or SUVs have a higher premium compared to sedans and hatchbacks. The market value is also known as the Insured Declared Value (IDV) and is calculated on the basis of the ex-showroom price of the vehicle.

What’s beneath the bonnet?

The capacity of the car’s engine or its cubic capacity is one of the considerations during calculation of the premium. Cubic capacity (CC) is the total power produced by the engine of the car. The premium remains the same for new and old cars as it only varies by the size of the engine and not the car’s age.

For example, cars with engine cubic capacity lower than 1000 CC pay the lowest premium as compared to cars with engine cubic capacity between 1000-1500 CC. High premiums are paid for cars with whose engine cubic capacity is more than 1500 CC.

State your purpose.

Most of us are grappling with that higher-order question: What is our purpose in life? But when a car insurer speaks about purpose, they are generally seeking to know the purpose for which the vehicle is to be used. ‘Personal’ cars have lower premiums on them whereas people using their vehicle for commercial purposes have to shell out a higher amount.

Your car is one of the most important investments; make sure it is protected to the fullest. Take all of the above factors into consideration while choosing a car insurance policy.