Car Insurance - Why should you get car insurance in India?

Insurance is a simple concept. You pay an amount of money as insurance premium per month to insure the object you are insuring against one or more unfortunate events. These events may cause temporary or permanent damage to the thing you are insuring, or it may cause monetary loss, etc. For the premium you pay, the insurance company gives a promise to give financial aid in case you meet with the agreed upon circumstances.

In this article, we shall look into the basics of the most common questions regarding car insurance in India.

Car insurance in India

In the recent past, the car insurance industry has undergone a number of positive changes. New-age digital insurance companies and new technologies have simplified the insurance industry. Now, you as a policy-holder do not need to depend on any agent to understand the various nuances of an insurance policy. You can see all the required information online. You can compare policies and generate quotes within minutes. You can even buy and renew policies under a few minutes due to the facilitation of online vehicle insurance.

Why should you get car insurance in India?

This is something you should get if you, of course, have a car. In fact, the Government of India does not allow you to drive on roads unless you have basic car insurance. This is done to protect you as well as the other party involved in road accidents or cases of car damage. In instances like natural calamities and car accidents, you can face financial loss. To make sure this does not happen, you need car insurance. See any road in a busy Indian city and you’ll get an idea that there are more vehicles than roads, in a manner of speaking. Driving on the road has become much tougher than what it used to be before, and thus you need car insurance.

Types of car insurance

There are two main types of car insurance:

Third-party liability car insurance policy: This policy is compulsory if you want to drive legally in India. If you don’t have it, or if it has expired and you get checked by the policy, there are heavy penalties to pay. You may end up in jail too.

Comprehensive car insurance policy: If you want all-round coverage, this is the car insurance policy type you want. It covers both the features of Limited Liability as well as Own Damage cover.

Steps Before Buying Your First Car Insurance - Car Insurance

Most people tend to get car insurance after buying the car. That may sound like a normal thing to do, but that is actually wrong. It is a big mistake which one makes without knowing! It can cost more money than they can account for. The best thing to do is to search for car insurance once you have a good idea of the type of car you will buy. Don’t get car insurance for a normal vehicle and later end up buying a sports car!

According to the Motor Vehicles Act 1988, it is mandatory for all car owners to have motor insurance. Buying a car? Make sure you have money to get the car insurance. Here are some important tips to aid you in getting the most suitable car insurance cover. 

Types of car insurance covers

In India, there are two types of car insurance plans. These are:

Third-party liability insurance plans:

These are plans which offer protection from all legal liabilities coming out of events like third-party injury, death and property damages. The plan protects you from all legal issues in case you are responsible for the accident, leading to damages above. If you drive in India, it is the minimum level of cover that you need. If you are apprehended without this type of insurance cover, you will see heavy penalties, possibly even jail time.

This insurance cover does not give coverage to the vehicle. That means if your car is damaged, you can’t make any claims with this insurance. Some insurance companies provide a Personal Accident cover for the car’s owner or driver, along with third-party liability insurance plans. It is cheaper than other types of motor insurance.

Comprehensive car insurance plan

This again has 2 main types of coverage:

1. Owner-damage cover: It protects the car from damages like floods, lightening, landslides etc, man-made disasters like strikes, thefts, riots, etc, and in-transit damages.

2. Third-party liability insurance: It covers the same as above.

Know your insurance needs

Several factors dictate how much car insurance you need. This includes the amount owed to the vehicle’s financer, the value of your asset, the number of dependents in your life, and the money you can afford when dealing during an accident.

All car owners should have an auto insurance policy with third-party liability insurance cover. If you have financed the car, or if you can’t replace the car easily, think about getting comprehensive car insurance. Think about getting appropriate add-on coverage, as well as your budget.

Comparison shop

Whether you are shopping for one type of car insurance or another, it is important to compare plans online. There are several financial websites from where you can get this information for free!

Once you get the car insurance’s estimated cost, you can compare it with the coverage offered, and finally decide on the best option. One important thing to find out is the reputation of the insurer.

Understand the policy’s coverage

Documents of an insurance policy are filled with many legal jargons, many of which you may be unfamiliar with. This is why you should carefully read all such documents and get all your questions answered at the onset by agents of the insurance company. Understand especially the conditions on the financial instrument.

Look out for bundling discounts

Have you purchased other forms of insurance from the same company? Things like home and health insurance? If so, there is a high chance you can get loyalty discounts for your car insurance if the insurer is the same.

Regularly assess your insurance requirements

Your insurance needs may vary as you progress through life. Thus, you should evaluate your needs regularly and update your insurance coverage. This is not just for car insurance, but for all insurance products too. To get the best possible insurance cover, it is essential to review your needs for insurance regularly.

Never let your insurance go on a lapse

You can’t legally drive without an insurance policy. Thus, if you have a car you should not let there be a lapse in the car insurance coverage. There are insurers who refuse you insure vehicles after a break in the insurance. Always renew your policy on time.

There are several factors which affect your car insurance rates. These factors are your age and gender, the area of registration of your car, your marital position, the purpose of your vehicle, and its make and model. This means the cost of your car’s insurance policy may not be the same as your neighbors. Remember this when getting car insurance.

Is Cheap Car Insurance a Good Idea? - Car Insurance

 When you are buying a new car, you should be getting car insurance as well as mandated by Indian law. However, you should not hurry the decision and take just any car insurance that comes your way. Don’t settle for low quality insurance. A low-priced insurance is generally not good as it gives significantly less coverage and presents a number of risks.

Here are all the reasons why now to fall for cheap car insurance traps.

Affordable and cheap car insurance

When it comes to car insurance, the cost of the insurance indicates the service or coverage which you’ll be getting from the insurer in case of an accident or damage. One thing you need to understand is that there is a gulf of difference between affordable and cheap car insurance. The cheap ones offer much less coverage, which means it may not be of much use. The affordable plans give you more than adequate coverage. Thus, it is important to compare the insurance policy rates and coverage.

Disadvantages of getting the cheapest auto insurance

Few people can resist the temptations of a low price tag. However, don’t let that deter you know getting the plan most suitable for you. Here are the drawbacks coming from cheapest car insurance

• Insufficient coverage
• Poor customer service
• You’ll have to pay a part of accident expenses despite giving high deductibles
• How to select a good car insurance policy
• Here are a few ways to help you find the best car insurance at affordable cost.
• Compare insurance between different providers.
• Compare their add-on covers specific to your needs.
• Negotiate price with the auto insurance company reasonably.
• study the claim settlement history of the insurance provider, and look for a success ratio of 85%
• Make sure that the insurer has a wide network of cashless garages and auto repair shops. With this, you can make sure that you can get problem-free claim settlement without the requirement of paying upfront damage repair fees.
• Check the cost to feature ratio. For all the cost you are giving, are the features enough? Be especially attentive to the Exclusions under the insurance plan to know in which circumstances the company won’t help you.
• Buy car insurance online. By doing this, you get discounts on premium without damaging the coverage. When they sell insurance online, insurance companies save significantly. There are no middlemen in the process, which saves distribution and processing costs. Insurers can therefore pass on these savings to the customer through premium discounts.
• There are various other discounts as well you get from insurance companies when buying a good product online. For instance, if you already have anti-theft measures installed, you have higher chances of getting lower cost. You also get discounts and loyalty discounts depending on your profession and on your length of being their customer. Always check with insurance companies whether you are eligible to get any of such benefits to save premium.

Car Insurance - Car Insurance For Used Cars In India

In India, the used car market is growing considerably. More and more people are seeing sense in getting a second-hand car rather than buying a completely new car. One of the biggest reasons for this change in mindset is that the value of a new car depreciates by 20% after one or two years. Is it then worth paying all that money for? Second-hand cars are not bad, just negligibly older. You can get a used car through many businesses that cater only to these orders.

The process of buying and selling of used cars may seem scary to both buyers and sellers. The checklist below shall help out both to ensure that the transaction remains hassle-free.

Checklist for sellers of the used cars

If you are the seller of used cars, here’s what you need to do.

Insurance transfer: One of the first things you need to do is to transfer your car insurance policy over to the buyer. Since he’s buying the car, he needs to get its existing car insurance, right? If you have paid a premium for it, add it to the car’s selling price.

Remember to get the NCB Retention letter from the insurance company. This does not get transferred to the new owner, but gets transferred to your other vehicle if you have one, or is saved for two years till you get one. NCB is a reward in the form of premium discounts given for not raising claims for a certain amount of time.

If you don’t want the NCB and want to cancel it, send a written letter to your insurance company and get their confirmation. After this, you won’t be charged a premium for the car insurance after selling it. Documents you need to submit are Form 51, the original policy letter, and Application for NCB retention.

Car maintenance records: If you still have detailed records of your car’s maintenance and repairs, you can use these to get a better selling price.

Written sale contract: This transfers the legal ownership over. It includes the date of transferring, the car’s condition, the selling price, registration details, and insurance details.

Steps to take for buyer of used cars

If you are making the purchase, carefully sift through the various models and decide which is the most appropriate for you. Try not to go for sports cars and luxury cars if that does not help you. You need to pay for insurance and maintenance for the car you buy. Think about the long-term expenses. Here are the other things to see before buying.

The vehicle’s condition: The car needs to be in good condition. Take it for a test drive, which the seller won’t mind. Pay attention to the performance of its engine, cooling, transmission and wheels. Get a mechanic to check things over. Thus, you’ll get an idea of the car’s worth. After buying, get it checked again. It may happen that the parts were changed after your first assessment.

Registration details: Get all the ownership documents from the car’s seller. Also find out whether the person is indeed the owner or not. Ask for road tax receipt, and ensure the owner has paid all his dues. You also need to get the NOC from the car’s financing company.

Insurance details: Check out the IDF or Insured Declared Value of the car which is stated in the policy documents. This is an essential step as it gives you the car’s value you’ll get from the insurance company in case of damages and total loss claims. Keep track of NCB earned over the years for the past 3 years. Thus, you’ll know if the car was involved in accidents or needed repairs.

Check or auto part modifications: If the car is a used one, you can get it upgraded or changed according to your comfort, safety and value. Check the car carefully. Is it suited to getting upgrades?

You can get the seller’s auto insurance policy made in your name. Otherwise, you can get your own car insurance policy within 14 days for buying the car.

Car Insurance - Car Insurance Terms You Should Know

The Motor Insurance of India makes it absolutely necessary to have at least a basic car insurance policy if you want to drive on Indian roads. Without this, you won’t be allowed. Doing so is punishable under law. Thus, it is important to get car insurance, which ultimately is for your benefit.

When trying to buy car insurance, new customers often have the problem of not understanding the technical jargon of the industry. Thus, they have trouble understanding the insurance plans as well.

In this article, mymoneykarma explains some of the most common terms of the car insurance industry.

Third-party liability cover: Third-party liability cover is the type of car insurance which compensates a third party when you were involved in an accident resulting in injury, death or property damage of the other party. While the insurance cover for cases of death and injuries is unlimited, it is worth remembering that there is a cap of Rs. 7.5 lakhs against third-party’s damages. Third-party liability cover is the minimum level of car insurance you need to operate on Indian roads.

Own Damage Cover: This is the part of the larger motor insurance policy. It covers and protects your car from various forms of damages like theft, fire, accidents, man-made disasters, natural calamities, etc. However, it won’t pay for third-party death, injuries and property damages.

Legal liability: When the car you’ve insured had got involved in an accident, and when a third party has suffered damage, you’ll have to pay for the said damage. However, if your car has a car insurance policy, its third-party liability cover shall take care of the problem. Under this, the victim will be compensated.

Comprehensive policy: This type of car insurance policy protects both you and your vehicle in case of various accidents. It covers man-made damages, natural calamities, external accidents, terrorist acts, malicious activities, in-transit damages, landslides and rockslides, liabilities to a third-party, explosion, lightning, fire, explosion and self-ignition.

Anti-theft device: These are devices installed in your car which reduce the chances of your car getting stolen. If you have already installed it, you can get car insurance at lower premiums since such cars are seen as safer. Common anti-theft items include car alarm, steering wheel lock, vehicle tracking system, electronic immobilizer and tire lock.

IDF: Insured Declared Value of a car is the sum insured under its motor insurance. This amount is equal to the manufacturer’s selling price minus the depreciated amount. The listed price is always agreed upon during the time of signing up for the policy.

Voluntary deductibles: During the time of buying a car insurance policy, you have two choices. You can choose to bear either all or part of the claim payouts. The amount you agree then to pay is termed as Voluntary Deductibles. Getting a high voluntary deductible gives you a big discount in premiums.

Compulsory deductibles: This is the section of your car insurance claim amount that is to be paid mandatorily. The amount depends on the car’s cubic capacity. Such deductibles are used by all car insurance companies to check car owners from raising claims too frequently, especially for small damages. Unlike voluntary deductibles, compulsory deductible amounts are smaller and cars can be paid back easily during filing or claims.

NCB: Its full form is No Claim Bonus, and is offered to car insurance policy holders at the time of renewing the policy. Each year, you get more NCBs if you don’t file for claims. In the 1st year of policy renewal you get a 20% discount from premiums, 25% discount after 2 claim-free years, 35% discount from premiums after 3 claim-free years, 45% discount from premiums after 4 claim-free years, and 50% after 5 claim-free years.

Cashless garage: Car insurance companies today have tie-ups with garages around India where their customers can get cashless transactions for damage repairs. These are network garages, so always pick a policyholder who has a reasonably big network of such garages. In case of damages, you can get your car repaired at such centers without hassles. At such times, the repairing bill is covered by your insurer. All you need to pay is the deductible and depreciation part on the car parts replaced.

Should you Approach an Agent when Buying Car Insurance

A decade ago, the one single way to get an insurance policy was from an agent. However, now things have changed a lot. You can get insurance policies online. Customers now see that buying insurance policies online is very convenient. Agents cannot manipulate you or sell you fake policies. However, the importance of agents is still relevant. Here are the benefits of getting car insurance online as well as from agents.
From where can you get car insurance policies?

You can get car insurance from various channels. There are:

• Through agents: You’ll find two types of agents- captive agents and independent agents.
• Captive agents: A captive agent is one who sells the products of only one insurance provider. He or she only cares about getting business of one company. This agent handles all queries of the customer even when the agency has a customer support department.
• Independent agents: They sell the products of several insurance providers.
• Through dealerships: When buying cars from dealerships, you’ll get the option of getting car insurance from the dealer. Most dealerships have partnerships with insurance providers. Do your own research on these policies as they may not be the most cost-effective one for you. Read the terms and conditions page carefully before buying.
• Buying online: This is the most reliable and hassle-free way to go. You can get the benefits of premium discounts and the ability to maintain your policy easily. When buying online, you can also compare various plans to find out the best deal.

Benefits of getting the insurance from an agent

There are several benefits of doing so. They are:

• Getting personalized service: Agents offer tailor-made solutions. If you are not tech-savvy, reaching out to an agent is the best way to get explanations.
• Agents know your area: Local agents know the area well, and that will benefit you a lot when you are filing a claim. The agent will tell you about motor body shops and other shops nearby from where you can get all the repairs done, and this shall help you a lot to get your claim.
• Discount bundles: If you buy several policies from the same insurer, agents can give you discount bundles which save you a lot of money down the line.

Here’s what to know before getting the help of an agent

• Verify if the agent is genuine or not
• Don’t pay with cash, but pay with cheques and debit/credit card
• Get a receipt every time
• Check the policy coverage carefully
• Check for special and discounts

Benefits of getting insurance online

• It is fast and convenient
• You save more since processing and distribution costs are eliminated when buying online. This lowers the premium.
• You understand the product better. All the documents are online and you can study them in your own time.
• Buying policies online is very secure. Websites follow international security rules, and so these websites are very safe.
• Policies are easier to maintain online. Online, you can download documentation at will, renew when the time comes, pay EMIs, and much more.

Is Cheap Car Insurance a Good Idea? - Car Insurance

When you are buying a new car, you should be getting car insurance as well as mandated by Indian law. However, you should not hurry the decision and take just any car insurance that comes your way. Don’t settle for low quality insurance. A low-priced insurance is generally not good as it gives significantly less coverage and presents a number of risks.

Here are all the reasons why now to fall for cheap car insurance traps.

Affordable and cheap car insurance

When it comes to car insurance, the cost of the insurance indicates the service or coverage which you’ll be getting from the insurer in case of an accident or damage. One thing you need to understand is that there is a gulf of difference between affordable and cheap car insurance. The cheap ones offer much less coverage, which means it may not be of much use. The affordable plans give you more than adequate coverage. Thus, it is important to compare the insurance policy rates and coverage.

Disadvantages of getting the cheapest auto insurance

Few people can resist the temptations of a low price tag. However, don’t let that deter you know getting the plan most suitable for you. Here are the drawbacks coming from cheapest car insurance

• Insufficient coverage
• Poor customer service
• You’ll have to pay a part of accident expenses despite giving high deductibles

How to select a good car insurance policy

Here are a few ways to help you find the best car insurance at affordable cost.

• Compare insurance between different providers.
• Compare their add-on covers specific to your needs.
• Negotiate price with the auto insurance company reasonably.
• Study the claim settlement history of the insurance provider, and look for a success ratio of 85%
• Make sure that the insurer has a wide network of cashless garages and auto repair shops. With this, you can make sure that you can get problem-free claim settlement without the requirement of paying upfront damage repair fees.
• Check the cost to feature ratio. For all the cost you are giving, are the features enough? Be especially attentive to the Exclusions under the insurance plan to know in which circumstances the company won’t help you.
• Buy car insurance online. By doing this, you get discounts on premium without damaging the coverage. When they sell insurance online, insurance companies save significantly. There are no middlemen in the process, which saves distribution and processing costs. Insurers can therefore pass on these savings to the customer through premium discounts.
• There are various other discounts as well you get from insurance companies when buying a good product online. For instance, if you already have anti-theft measures installed, you have higher chances of getting lower cost. You also get discounts and loyalty discounts depending on your profession and on your length of being their customer. Always check with insurance companies whether you are eligible to get any of such benefits to save premium.

Car Insurance - Why Get Own Damage Cover Car Insurance in 2021

It is very useful to have your own damage in your car insurance. That’s because it safeguards insured vehicles from various damages. Own damage cover is also known as collision insurance and self-damage insurance. This type of car insurance covers theft, accidents and total loss.

When driving in India, it is necessary to have the basic level of car insurance. This is called third-party liability insurance as well. Having a damage cover is not mandated under the Indian law, it can be useful.

Here’s why you should get your Own Damage Cover

 When buying car insurance: you have two choices. These are:

1. Limited cover plan

2. Extensive cover plan

The limited cover plan is what is known as a liability-only plan or third-party insurance. One of the biggest downsides of owning this is that it does not offer damage protection for the car. It just protects the vehicle’s owner from legal liabilities in case he or she gets involved in an accident. It covers death, property damage and third-party injuries.

The comprehensive car insurance, on the other have, offers these two coverages:

1. Third-party liability coverage: This is similar to t coverage of a standalone liability-only plan.

2. Own damage cover: This is the one that protects your vehicle from accidental damages, theft and vandalism, in-transit damages, natural calamities, man-made disasters, personal accident cover for driver or owner.

3. Add-ons: You can boost your basic car insurance with adding these packages.

As you can see, there are many benefits of getting comprehensive car insurance, although it is more expensive.

How are premiums for damage cover determined?

The process or determining the premium for third-party liability insurance is simple. IRDA or the Insurance Regulatory and Development Authority of India provide fixed rates for third-party liability premium on a yearly basis. These depend on the insured car’s engine capacity. There are no variables.

It is more complicated to cover your own damage cover’s premium. The premium here is based on several factors such as:

1. Car owner’s age and profession

2. Vehicle’s age of registration

3. Insured Declared Value and age of vehicle

4. Installed safety equipments

5. Owner’s membership in known automobile associations country-wide

6. Discounts the owner or driver is eligible for

7. Add-on covers chosen

8. Voluntary deductibles opted or

All this is taken into account and to this is added the third-party liability premium to get to the quote.

How much protection is given by Own Damage Cover?

In the event of own damage, the insurance company pays you an amount that depends on your car’s IDF, deductibles chosen, and model and make of car. 

What are the documents you’ll need to fill out an Own Damage Claim?

These are:

1. FIR from the nearest police station in case of theft or accidental death of the involved party

2. Copy of car’s insurance policy

3. Car’s registration certificate

4. Copy of driver’s driving license

5. Bills provided when the car was repaired in case of reimbursement claim

6. Photos of the accident spot

9 Surprising Things Covered Under Auto Insurance Schemes

Let’s pause for a moment at the very outset. What did you think of when you read the above title? Unfair premium rates and mishandled insurance claims, right? However, car insurance can also give you pleasant surprises as well. There are many features in car insurance, and it is possible that there are exciting benefits as well which you didn’t find out before.

Here is a list of factors which can surprise you pleasantly when getting a car insurance.

1. Cover for in-transit damage: You know that a comprehensive car insurance plan saves you in case of your vehicle’s vandalism, accident and theft. However, the same plan also gives protection cover for instances of floods, lightning, hurricanes and natural disasters. It even gives protection for damages sustained during the vehicle’s transportation.
2. All-day roadside assistance cover: There are some car insurance companies that offer Roadside assistance cover as a part and parcel of the comprehensive car insurance policy. It can be very useful as it helps the car owner in times of car breakdowns. And let’s face it: if your car is old or has already sustained significant damage, it can break down. When your car does creak down, just call your insurance company and report what happened. They shall call the nearest garage and send a mechanic.
3. Personal accident cover for all passengers: A comprehensive can insurance plan is great that way. It protects that car, but also the owner from death and injury. The downside? This won’t help the passengers in case of their injury and death. This can be rectified by getting an add-on cover. Take this one if you travel with your family.
4. Purchasing online car insurance:  It was not so common earlier, but now more and more people are buying insurance online. Some top insurance companies are offering this useful facility. Buying these online saves a lot of money and effort. You actually save money online as you get discounts on premiums. Besides, you can maintain and renew policies with ease online.
5. No-depreciation cover: This is the cover that allows car owners to get the complete cost of car parts that are damaged in accidents. What this means is that car depreciation shall not be considered. In case of damages, the original price shall be reimbursed.
6. Engine protect cover: A comprehensive motor insurance policy does not protect your car’s engine, which has to work hard every day. In case of damages, it won’t help you. What you need to do is to get an add-on protection for the car’s engine. After this, if the engine is damaged, you receive compensation from the insurance company.
7. Garage cash benefit: This is a benefit add-on plan which enhances the basic motor insurance policy. Your life gets disrupted if the car is under repair. In times like this, you have expenses from public transportation. What the Garage Cash Benefit does is it gives you Rs. 500 while your car is being repaired. You get an allowance per day. However, there is an upper limit on the allowance days, as well as the number of claims you can make.
8. Transfer of your no claim bonus: You can retain the NCB bonuses when selling your car. For this, call your motor insurance policy company to give you a retention letter which reserves your NCB for 2 years, by which you can attach it with another vehicle you own.
9. Commercial car insurance: Many people confuse personal car insurance and commercial car insurance. These two have similarities as well as dissimilarities. Cars for commercial use have to be insured differently but it is more expensive. You can use a commercial car insurance policy for a personal car, and vice versa.

How To Choose The Best Car Insurance Plan?

You spend days researching online or the best car deals. You research on the make and model, mileage, safety features, style quotient, and more. And these are only a few of the many criteria you search on. You sift through customer reviews online, and all the expert analysis. However, no one gives you the plan on how to choose the best car insurance or auto insurance.

It is important to get car insurance. To drive in India, you need at least a basic level of auto insurance. The importance of a good car insurance becomes apparent when the car gets involved in an accident or sustains some damage.

Now, how can you buy a good car insurance policy?
How do you select a good car insurance plan?

Choosing a good policy is not rocket science. All you need to know is the market conditions and your own requirements for car insurance.

Compare policies online: Buying car insurance online gives you many benefits. Firstly, you can view and compare many policies online. Secondly, you get a lot of discounts on insurance premiums when buying a policy online, which saves you a lot of money down the line. Lastly, it is easier later on to renew the policy, to pay premiums, and so on.

Customer service: Does the company offer good customer service? What do the reviews say? Here are the things you need to learn about the company: its years in the industry, customer reviews, the functioning of its customer service team, its offered policies, and claim settlement statistics.

Options for a flexible coverage: Having a flexible coverage is important too. Always select a policy that is suitable for your needs. Getting pre-existing packages is a plus, and companies having them do their best to give the best customer experience. They give priority to their customers first.

Cost-effective: You can get third-party liability car insurance policies at low cost, but then you’ll get low and limited coverage. It is much better to get a plan at a reasonable rate that offers more benefits. You can choose add-on covers based on your circumstances. Again, compare policies before picking anything.

Smooth service experience: A good car insurance company should have a large distribution network, including cash-free garages in case your car needs emergency repairs.

In short, you need to take the steps to find out the policy most suited to you.

• Assess your needs
• Compare insurance plans at neutral websites
• Select the most suitable one from a company that also offers good customer service and fair claim settlement ratio

Keep track of auto insurance renewal dates, and give premiums on time.

Is Car Insurance Affected by Credit Score? - Car Insurance

Your credit score indicates your financial stability, as well as your likelihood of your getting a new loan or credit card. In the insurance industry however, credit score determines whether or not one can get car insurance.

It is still unknown to what degree the credit score is important in the determination of a policy’s premium, but insurers do study one’s credit score to determine the risk factor association with a potential customer.
What is a credit score?

A credit score is a number that is based on a person’s financial history. Credit score therefore depends on:

• History of debt and bill payments on time
• Credit available
• Total debt
  

To get approval for loans and insurance policies, you need to have a high credit score. Having a high credit score helps in getting loan approval. You can even get lower interest rates!

Financial companies like banks and sometimes your independent lenders provide information about your financial activities with them

Car insurance premium and credit score

Let us now come to the subject of car insurance premium and its direct relation with credit score. Before giving you any money as loan, lenders and financial institutions take your credit score into account. If the score is too low, you will get neither loans nor insurance. If your score is high, there is a high likelihood of your getting them. This happens because lenders calculate the risk you pose, or don’t, to the company. Thus, they check your credit score and even enquire at the concerned credit bureau.
Do you have a low credit score?

It can be due to:

• Not having an extensive track record or an extensive credit history enough to determine a positive creditworthiness.
• Having a poor credit history from not paying dues and bills on time.

Car insurance companies also make soft enquiries on your credit score. Such soft enquiries do not damage your credit score in any way, nor has a negative impact on your credit history.

Insurance companies use your credit report to find your insurance score, depending on which they decide to give or not give loans. The insurance score is the measure of risk associated with giving your loans.
Factors which affect insurance rates

It is essential to understand at this point that your credit history is not the only thing that is studied before you get a car insurance policy. Other factors are:

• Your driving record
• Make and model of the car
• Car’s registration area
• Car’s safety features
• Car’s use
• Car’s engine capacity
• Discounts you qualify for

All this means that if you have a good driving record and have anti-theft devices installed, you can get a good car insurance plan regardless of your credit score. In this case, your credit score may be poor, but you may still get the car insurance.

Car Insurance Terms You Should Know - Car Insurance

 The Motor Insurance of India makes it absolutely necessary to have at least a basic car insurance policy if you want to drive on Indian roads. Without this, you won’t be allowed. Doing so is punishable under law. Thus, it is important to get car insurance, which ultimately is for your benefit.

When trying to buy car insurance, new customers often have the problem of not understanding the technical jargon of the industry. Thus, they have trouble understanding the insurance plans as well.

In this article, mymoneykarma explains some of the most common terms of the car insurance industry.

    Third-party liability cover: Third-party liability cover is the type of car insurance which compensates a third party when you were involved in an accident resulting in injury, death or property damage of the other party. While the insurance cover for cases of death and injuries is unlimited, it is worth remembering that there is a cap of Rs. 7.5 lakhs against third-party’s damages. Third-party liability cover is the minimum level of car insurance you need to operate on Indian roads.

    Own Damage Cover: This is the part of the larger motor insurance policy. It covers and protects your car from various forms of damages like theft, fire, accidents, man-made disasters, natural calamities, etc. However, it won’t pay for third-party death, injuries and property damages.

    Legal liability: When the car you’ve insured had got involved in an accident, and when a third party has suffered damage, you’ll have to pay for the said damage. However, if your car has a car insurance policy, its third-party liability cover shall take care of the problem.  Under this, the victim will be compensated.

    Comprehensive policy: This type of car insurance policy protects both you and your vehicle in case of various accidents. It covers man-made damages, natural calamities, external accidents, terrorist acts, malicious activities, in-transit damages, landslides and rockslides, liabilities to a third-party, explosion, lightning, fire, explosion and self-ignition.

    Anti-theft device: These are devices installed in your car which reduce the chances of your car getting stolen. If you have already installed it, you can get car insurance at lower premiums since such cars are seen as safer. Common anti-theft items include car alarm, steering wheel lock, vehicle tracking system, electronic immobilizer and tire lock.

    IDF: Insured Declared Value of a car is the sum insured under its motor insurance. This amount is equal to the manufacturer’s selling price minus the depreciated amount. The listed price is always agreed upon during the time of signing up for the policy.

    Voluntary deductibles: During the time of buying a car insurance policy, you have two choices. You can choose to bear either all or part of the claim payouts. The amount you agree then to pay is termed as Voluntary Deductibles. Getting a high voluntary deductible gives you a big discount in premiums.

    Compulsory deductibles: This is the section of your car insurance claim amount that is to be paid mandatorily. The amount depends on the car’s cubic capacity. Such deductibles are used by all car insurance companies to check car owners from raising claims too frequently, especially for small damages. Unlike voluntary deductibles, compulsory deductible amounts are smaller and cars can be paid back easily during filing or claims.

    NCB: Its full form is No Claim Bonus, and is offered to car insurance policy holders at the time of renewing the policy. Each year, you get more NCBs if you don’t file for claims. In the 1st year of policy renewal you get a 20% discount from premiums, 25% discount after 2 claim-free years, 35% discount from premiums after 3 claim-free years, 45% discount from premiums after 4 claim-free years, and 50% after 5 claim-free years.

    Cashless garage: Car insurance companies today have tie-ups with garages around India where their customers can get cashless transactions for damage repairs. These are network garages, so always pick a policyholder who has a reasonably big network of such garages. In case of damages, you can get your car repaired at such centers without hassles. At such times, the repairing bill is covered by your insurer. All you need to pay is the deductible and depreciation part on the car parts replaced.

Car Insurance - Why Is Motor Vehicle Insurance Mandatory in India ?

The moment it was observed that there is a distinct growth in the sale of cars in the country, authorities knew that traffic accidents could not be far away. Traffic accidents and crashes present a wide range of damages, not just to the car but even to humans. The damage can be so high that you may not be able to pay for it. Thus, it makes sense to get car insurance when buying a new car.

Why get car insurance?

With the growth of the Indian economy, many came to find that they have considerable disposable income at hand. Coupled with the fact that car loans are cheaper now, it is easy to buy a car. Some buy more than one.

When you get a car, it is important to get car insurance as well. In fact, you can’t drive in India without one, according to the Motor Vehicles Act of 1988. There are several reasons for this:

• Car insurance limits your liability: A car insurance covers you from legal liabilities to a third party during an accident.
• The insurance plans cover the injury or death of a third party.
• It covers third party damages as well.

There are other benefits as well!

It pays for your hospitalization: Some car insurance companies give coverage for personal accident hospitalization in a third party insurance plan. It is useful as it pays for minor to serious injuries. When hospitalization is involved, you do not need to pay the full fees. The car insurance company shall pay a part of it.

It keeps you stress-fee: In case of a car accident, expenses can be huge. Having car insurance lets you know that you are covered no matter what happens.

Here is why you need to get comprehensive car insurance

It is not mandated that you have to get comprehensive car insurance, but it is advised. It includes:

• Third party liability cover: This is very similar to the third-party liability coverage.
• Own damage cover: This is what sets the comprehensive car insurance apart. It protects you from car damages caused by yourself. It protects your car from natural calamities, accidental damages, in-transit damages, and more. It includes a personal accident cover for the owner or driver as well.

Remember, a comprehensive car policy costs less if you buy it online. So that’s an added advantage of getting your car insurance policy online.

How Can Freelancers Manage Their Money?

 There are many benefits when you are your own boss. You can work when you want to, with whom you want to. You have the luxury of choosing your own clients, and can even work in your pajamas! In fact, working from the beach has always been the dream for freelancers!
Get your free Credit

1. Build your Credit Score

2. Reduce your Current Borrowing / EMI Costs

However, at the end of the day, things are not always so good. For freelancers, life is not a party because there is a price to be paid for becoming one. First of all, income flow is uneven, and unless you pay close attention to it, you can fall into debt. Secondly, you miss out on employer benefits. Thirdly, you are the only one, on top of managing your business, who needs to manage your personal finances.

In this article, we at mymoneykarma shall help you to get your financial home in order, and will give you tips to make money by freelancing!
Track your income

The very first thing to do is to know how much you are making, or what your income is. Do you know what your income was last month or last week? Was it more or less than the previous period a year ago?

One financial expert says that freelancers have more predictable income flows than those who are not into freelancing. Most of them do not know or track their income, and feel overwhelmed when their financial situation becomes overwhelming, unmanageable and unpredictable.

On the other hand, if you do have a historic view of your income, it gets easier to prepare for the lean times of the year, especially if you have seasonal projects and repeat clients. Freelancing world can be irregular, but historic insights of your personal finance can give you some financial stability. Want to track your freelance income and expenses? Just use a separate bank account, a simple spreadsheet or a free app.
Plan to meet your tax obligations

You might be freelancing, but that doesn’t mean you can sneak away from paying your taxes. And that is one of the things which make this line or work tough by itself. It can get stressful in a hurry.

If you work in a corporate office, employers shield you from some taxes. But when you freelance, there is no such lenient shield. You’ll have to pay all your taxes yourself. But it is not so hard as it looks. Here’s what you got to do. Make an educated guess on your yearly earnings, and then make estimated quarterly payments to help you stay on track on taxes. If you can, use the previous year’s tax return as a baseline to work from.

There are, of course, things that you can deduct. These include expenses for professional development, work-related car use, and business expenses. And you can also deduct health insurance premiums, if you meet some requirements. To make sure that your tax season is smooth, learn all about the different tax rules for freelancers.
Create a budget

When you are a freelancer, budgeting may seem impossible. However, it does not have to be that way. You can use the 50/30/20 budgeting methods. In this method, 50% of your monthly income goes towards meeting your necessities post-income tax deduction, 30% towards meeting your needs, and 20% towards your savings and repaying debt.

Here are other smart things you can do:

    Stash away Rs. 50000 for emergencies.

    Save for retirement

    Pay off your bad debt first

    Don’t stop saving for emergencies

    Pay off your other debts

Get insured

Did you know that as much as 20% of freelancers are uninsured? And this is from a 2016 data. Today, with more and more freelancers joining the market, you can be rest assured that this percentage has increased. If you don’t have insurance coverage, you’ll have problems facing financial hardships in case of medical emergencies, health problems, and the like.

Here are your insurance options:

    Health insurance

    Car insurance

    Life insurance

Set competitive rates

It is always a good idea to periodically reevaluate whether or not you are compensated adequately for your efforts. According to what you find, you may need to adjust or change the price of your services. In one popular freelancing site, around half of the freelancers said they want to raise their rates the past year, and more than half opined that they planned to raise their rates the next year.

In this sense, freelancers are in a much better position. They are in control of their rates, and thus over how much they can make. This is a freedom most working people don’t have. So if you, as a freelancer, have a lot of expenses, think hard about increasing your rates.