car insurance

3 Mistakes to Avoid When Comparing Car Insurance

What is car insurance?

Car insurance is a contract between the owner of the car and the auto insurance company. Car insurance is done to protect one’s car from any unforeseen risks protecting against the losses incurred that are a result of unavoidable instances. 

In exchange for the car insurance, the company covers the financial loss and potential cost of possible damages that have been caused due to driving. It also helps in protecting against theft or any subsequent liability. 

Why should car insurance policies be compared? 

There are several car insurance policies available out there. However, any car owner must compare various insurances before choosing the one that suits them the best. 

Comparing car insurance policies will help the car owner find a better deal on their car insurance.

It will not allow the owner to save money but also find better coverage that suits the needs of the car. Hence, comparing car insurance is one of the most important steps when buying or renewing the car insurance policy. 

Various options and types of car insurance policies 

Car owners have various options and types of car insurance policies to choose from. 

  • Full coverage car insurance
  • Liability insurance
  • Collision coverage
  • Gap insurance
  • Comprehensive coverage
  • Personal injury protection
  • Bodily injury life insurance
  • Uninsured motorist coverage

Factors one should keep in mind when comparing car insurance 

Before one begins to compare various car insurance policies, a car owner needs to understand and keep in mind the factors on which similar types of car insurance policies can be reached. Here is a list of essential elements based on which one can compare car insurance policies. 

  • Price 

Even though cost pays a significant role in comparison of policies, one should not compromise on the features of the system. Car owners have the opportunity to look around for prices being offered by various insurers. Make sure to pick a policy that suits both the needs of the car and the pocket.

  • Coverage

A car owner needs to be well aware of their driving habits before looking for an insurance policy. When comparing car insurance policies, one should be looking out for the add-ons such as return to invoice, zero depreciation. One must also want to take into consideration other value-added services being offered by any insurance company.

  • Customer reviews

No one should spend money on car insurance and still be left uncovered during difficult times. Hence it is essential to go through the customer reviews of the insurance company. Having knowledge about the claim settlement ratio of the insurance company will be helpful. 

  • Age of the car

The car’s value determines the Insured Declared Value or IDV. The amount of one’s car decreases every year; hence the older the vehicle, the lower is its value. This can lower the car’s premium and sum assured. However, with age, a vehicle also becomes riskier and more susceptible to any damage. Car insurance companies often check the car’s age when deciding the premium.

  • Exclusions and invalid claims

It is always a good practice for the car owner to understand what is covered and not covered under the car insurance policy that they are availing for. 

Mistakes to avoid when comparing car insurance policies 

The following is a list of mistakes that one should be wary of when comparing various car insurance policies. 

  • Avoiding the basic research

In today’s world, a car owner has all the information that they need to learn about car insurance present online. When buying or renewing car insurance policies from any company, the owner must make sure that the insurer is a certified entity. One should not resort to buying or renewing car insurance in a hurry. 

  • Facing add-ons imbalance 

Buying a policy with too many add-ons can increase the premium to a great extent, whereas not buying any will result in inadequate coverage. This is where owners face add-on imbalance. One needs to analyze their insurance needs and then make a decision. 

  • Facing IDV imbalance 

The IDV of a car is the value of the car at present – not the resale value, not the invoice value. The value of the vehicle that arrives after the consideration of depreciation cost is its IDV amount.  When an owner chooses an IDV, it impacts two things – the premium and the sum insured. Higher IDV means a higher premium and sum insured. Lower IDV means lower premium and sum insured. These are the two extremes, and ideally, a car owner should be somewhere in the middle and achieve IDV balance with their car insurance policy.  

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