Why You Can’t Rejoice the Cheaper Premiums in Third-Party Motor Insurance?

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Recently, Insurance Regulatory and Development Authority of India (IRDAI) has proposed to reduce third-party motor insurance premiums with effect from April 1. This will lead to third-party insurance policies getting cheaper. Many of you might be delighted with this information, after all, now you would be able to save money on third-party motor insurance. Though it is true that you would be paying less premium on your insurance policy, it doesn’t mean you should ignore comprehensive car insurance policy and go ahead with third-party insurance policy only.

Choose a Comprehensive Cover policy over a Third-Party Insurance

Third party insurance policy provides cover for any damages to the third-party vehicle/party. These third-party policies cover injuries caused to other people in an accident, in addition to the damage caused to third party property. However, these policies do not provide any coverage for damages to your vehicle. So, while you might save some bucks by purchasing an only third-party insurance policy, it may prove costly to you in the future when you meet with an accident.

Hence, instead of a third-party insurance cover, you should be looking at a comprehensive car insurance policy to cover the damages to your car. It is wider in scope and provides third-party cover as well. Some of these comprehensive insurance policies also offer personal accident cover to the owner of the vehicle. So, factor in all the pros and cons, compare policies and go for a comprehensive policy that provides much more benefits than a third-party policy.

Here are a few things that you should keep in mind while buying comprehensive car insurance policy:

  • Has the insurer lowered your car’s value?

This is likely to happen when you buy your car’s insurance through an agent. If you negotiate hard with an agent, he is likely to lower the value of your car and in turn, lower your insured declared value(IDV). For example, if your car is valued at Rs 8 lakh and your premium is Rs 25,000, and you push for a bargain, the agent might reduce the value of your car to Rs 7 lakh and bring down the premium by a couple of thousand bucks. You’ll only discover this when you make a claim and end up getting a low pay-out due to having been given lesser cover. Hence, always check with your insurer about your vehicle’s IDV because your claim will be settled only on its basis.

  • Has the insurer increased voluntary deductible?

The deductible is the monetary loss borne by the insured. It can either be compulsory or voluntary. Your insurance agent may increase deductible to bring down your premium amount, and you end up having to cough up a good sum in the event a loss occurs.

  • Incorrect claim history?

If you choose to go with a new insurer and do not honestly disclose your claim history, you might get a discounted premium from your new insurer. The problem shall arise when you make a claim, and your insurer gets in touch with your previous insurer to verify your claim history. If discrepancies are found, you might risk rejection of your insurance claim.

  • Standard cover pitched as a special offer?

Very often, agents try to sell standard cover and add-ons as a special offer or deal, curated especially for you. They may include an add-on and tell you that you get an extra benefit for the same premium amount. Don’t get swayed by the convincing sweet talk by the agent and research the market. Compare policies and read the fine print to understand which policy suits your needs best and choose accordingly.

Conclusion

As a comprehensive car insurance policy doesn’t cover third-party only but also includes your vehicle as well, therefore, this premium revision will curtail the cost of comprehensive car insurance as well. Taking advantage of the situation, it is worthwhile to go with a comprehensive motor insurance and enjoy the latest cut in third-party insurance premium. It is like killing two birds with one stone.

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