Riya: Hi Amit! I just bought my first car and I’m super excited… but a bit confused about which car insurance to pick. Everyone says different things.
Amit: Congrats, Riya! And don’t worry — I’ll simplify it for you. First, do you know the two types of insurance?
Riya: Umm… third-party and comprehensive?
Amit: Spot on!
- Third-party is mandatory — it covers damages you cause to someone else’s vehicle or property.
- But Comprehensive insurance covers both third-party damage and your own car’s damage — due to accidents, fire, theft, floods, etc.
Riya: Got it. So comprehensive is like full coverage?
Amit: Exactly. Think of it like this — if someone hits your car, or a tree falls on it during a storm, third-party won’t help. Only comprehensive will.
Riya: Makes sense. But I saw different premiums based on something called IDV?
Amit: Good observation. IDV stands for Insured Declared Value — it’s the current market value of your car. That’s the amount you’d get if the car is stolen or totally damaged.
Riya: So higher IDV = higher premium?
Amit: Yes, but also better compensation. Don’t reduce the IDV just to save premium — it’ll hurt during a claim.
Riya: Okay. Now what are these add-ons people talk about?
Amit: Add-ons are like toppings on your pizza — optional, but useful.
Here are some:
- Zero Depreciation: You get full claim without any deduction for parts’ depreciation. Perfect for new or premium cars.
- Engine Protection: Great if you live in flood-prone areas like Mumbai.
- Return to Invoice: If your car is stolen, this add-on gives you the full invoice value of the car — not just market value.
- NCB Protector: If you’ve never made a claim, you get a No Claim Bonus. This add-on lets you keep that bonus even if you make one claim.
Riya: Ohh! That’s actually helpful. I didn’t know the difference. What about deductibles?
Amit: Good question.
There are two types:
- Compulsory deductible: Set by the regulator — you must pay it during any claim.
- Voluntary deductible: You choose to pay more from your side, so your premium goes down.
For example, if your bill is ₹10,000 and you chose a ₹2,000 voluntary deductible, you pay that, and the insurer pays ₹8,000.
Riya: Hmm, I’ll keep that in mind. Anything else?
Amit: Yes! A few important things:
- Check claim settlement ratio – A company that settles 95% of claims is more reliable than one at 70%.
- Cashless garages – Make sure they have garages near your area.
- Know the exclusions – Accidents due to drunk driving or without a valid license aren’t covered.
- Discounts – You can get discounts for installing anti-theft devices or being a member of automobile clubs.
Riya: Wow Amit, you made that so easy! I was expecting insurance to be all boring fine print.
Amit: Haha, it can be. But with the right guidance, it becomes manageable. And hey, pick smart now, and you’ll be thanking yourself later during a claim.
Riya: I’m definitely going with comprehensive insurance now — and maybe a few add-ons. Thanks again!
Amit: Anytime, Riya. And congrats again on your new ride. Drive safe!
Simplified Money Talks 