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How to Choose the Right Car Insurance Policy

Various aids like car insurance premium calculator and 24/7 assistance for Bajaj Allianz Car Insurance renewal, helps you to choose the right car insurance policy.  

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Tesla, car insurance
A sales staff chats with a customer at a Tesla store near a poster announcing orders of the Model 3 electric cars in Beijing, China, Monday, Jan. 7, 2019. VOA

Buying a new car is always an event in a family or an individual. The joy of purchasing a car should be accentuated with a matching car insurance policy. Apart from the customary “Nimbu-Mirchi-Totka” to safeguard from an evil eye that is a ritual with any new purchase in India. It lifts the spirit, but on the ground, as you drive your favourite car on the road, you are mandated to protect yourself from the vagaries of unforeseen events. The Motor Vehicles Act, 1988 has made Third-Party Insurance compulsory for all motor vehicles on the road in India.

The need for car insurance:

The practice in India is that your car dealer includes the insurance policy in the purchase package of your new car. Though he acts as the facilitator, it is in your interest to be aware of the nuances that go into car insurance to protect you from financial losses in case of an accident. The car insurance not only covers for third-party losses but also for own damage.

Car Insurance
Directly dealing with the insurer secures you a lower premium on several features including savings on overheads that is passed on to you. Flickr

Types of car insurance:

There are broadly two types of car insurance:

  1. Third Party: This insurance policy is compulsory and compensates the victim from losses incurred on collision with your car.
  2. Comprehensive: In addition to the third party, it protects you from own damage due to the collision, personal loss and other damages by both acts of man and god.

Add-on covers:

These are necessary to enhance coverage of your car insurance. Some of the add-ons are enumerated below.

  • Zero depreciation: Covers replacement of plastic and other eligible parts ignoring the depreciation with age of the car.
  • Engine cover: For the protection of the engine from damages due to extraneous factors like flooding.
  • NCB: To continue with the year to year discounts for NCB in spite of claims in the previous year.
  • Invoice Cover: The compensation is to the tune of on-road price or full IDV in case of theft or total damage.
  • Key and lock replacement: Covers for loss due to loss of the key.
  • Round the clock roadside assistance.
  • Consumables: Covers for consumable items in the car.
  • Personal effects: Loss of personal baggage in the car.
Car Insurance
Computation of IDV is important. Lower IDV will reduce the premium, but will also impact by lesser compensation. Flickr

Inclusions in car insurance:

  • Own car damage in accidents.
  • Personal cover for death or disability due to accidents.
  • Cover for loss in natural disasters.
  • Cover up to IDV for theft.
  • Cover against human-made acts like fire, vandalism etc.

Exclusions in car insurance cover:

  • Damage caused while driving under the influence of alcohol or drug.
  • Driving without a valid license.
  • Damage suffered during involvement in illegal acts.
  • Damage out of war or nuclear risks.
  • Damage due to normal wear and tear.

Car Insurance Premium Calculator:

When opting for a preferred comprehensive insurance policy, the fundamental components that determine your premium by the car insurance premium calculator are:

  • Third party cover.
  • Own damage cover: It may vary depending on the follows.
  • IDV (Ex-Showroom price plus depreciation)
  • The capacity of the engine
  • Location of the RTO where registered.
  • Personal accident owner-driver cover.
  • Add-ons: This is variable depending on the choice.
  • GST at 18% presently.
Waymo, driverless cars, car insurance
New car buyers will compulsorily have to subscribe to third party liability cover for 3 or 5 years.

Long-term Car Insurance Policy:

IRDAI has prodded insurers to issue long duration policies for vehicles from 1st September 2018, consequent to the directive of the Supreme Court. Thus new car buyers will compulsorily have to subscribe to third party liability cover for 3 or 5 years. While these increase the cost of policy due to the upfront payment, in the long run, it works out to be economical. However, on the flip side, you lose out on annual discounts based on NCB.

Claim settlement ratio:

While buying a car insurance policy, you need to factor in the claim settlement ratio of the general insurance companies. Of the major insurers, Bajaj Allianz Car Insurance Renewal makes sense as they have consistently been in the top bracket with good claim settlement ratio.

Ways to reduce car insurance premium:

Even while you chose your policy meeting your needs, some factors may still impact the amount of premium. The various ways to lessen the premium are:

Car, insurance
Buying online insurance in UAE entitle the insurance buyer to avail exclusive offers and discounts. Pixabay
  • IDV: Computation of IDV is important. Lower IDV will reduce the premium, but will also impact by lesser compensation.
  • NCB: This factor can benefit you with up to 50% discount.
  • Security devices: Installation of ARAI approved devices like anti-theft can fetch you up to 2.5% discount.
  • AAI: AAI membership fetches you a discount on Own Damage component of premium.

Online purchase of Car Insurance:

Among the many options, the best option is to buy or renew your premium online. Let us see how it benefits:

Also Read: Insurance in 10 Years Time: What Will the Industry Look Like

  • Convenience: User-friendly portals make purchase easy from the comfort of your home at any time of the day.
  • Comparison: Multiple plans and quotes can be obtained to land the best deal.
  • Discounts: Directly dealing with the insurer secures you a lower premium on several features including savings on overheads that is passed on to you.
  • Assistance: Online assistance is just a click away.

Bottom Line:

Now that you are aware of all the nitty-gritty of car insurance, you are in a position to arrive at an informed decision. Various aids like car insurance premium calculator and 24/7 assistance for Bajaj Allianz Car Insurance renewal, helps you to choose the right car insurance policy.  

Next Story

U.S. Proposes Price Tag For CO2 Emissions From Cars

Some states can put programs in place with agency regulations. Others will have to go through their state legislatures.

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EMission, carbon dioxide
Researchers turn carbon emissions into usable energy. VOA

Drivers on the U.S. East Coast may soon start paying for their climate pollution.

Nine states and the District of Columbia have announced plans to introduce a system that puts a price on the carbon dioxide produced from burning gasoline and diesel fuel.

As the federal government pulls back from taking action on climate change, the proposal is an example of how states and cities are aiming to move forward.

Details are slim at this point, but the Transportation and Climate Initiative would likely require fuel suppliers to pay for each ton of carbon dioxide that burning their products would produce. Costs would presumably be passed on to consumers.

The announcement says revenues would go toward improving transportation infrastructure and low-emissions alternatives to cars, trucks and buses.

The program could raise $1.5 billion to $6 billion per year, by one estimate.

carbon dioxide
Car emission, Wikimedia

“You can imagine, that could do a lot to modernize transportation infrastructure, improve mass transit, build out electric transportation options,” said Fatima Ahmad at the Center for Climate and Energy Solutions, based in Washington, D.C.

Reducing traffic congestion, “which is legendary in this area,” is a priority for the region’s lawmakers, she added. Those investments could create an estimated 91,000 to 125,000 new jobs.

Transportation is the largest source of greenhouse gas emissions in the United States. While electric utilities have cut production of carbon dioxide by switching from coal to natural gas and renewables, emissions from the transportation sector have been growing since 2012.

Following California

California is the only state so far that has put a price on carbon emissions from transportation fuels. The state included gas and diesel in its cap-and-trade program beginning in 2015. That program also regulates greenhouse gases from power plants and industries.

Car Emissions, carbon dioxide
Morning rush hour traffic makes its way along US 101 near downtown Los Angeles, California, Nov. 15, 2016. VOA

For transportation fuels, wholesalers buy the permits and pass on the cost. At the current price of about $15 per ton, the program adds about 13 cents to the cost of a gallon of gas.

The additional cost is less than the differences in pump price among gas stations in the same city, noted communications director Stanley Young at the California Air Resources Board, which administers the program.

“When you consider the few cents that the cap and trade program adds on to [the cost at the pump], it kind-of pales,” he said.

The state has raised more than $9 billion from permit sales since the program began in 2012.

Funds have paid for renewable energy and efficiency upgrades, mass transit, low-emissions vehicles, land preservation and other investments.

To help ease the burden on low-income consumers, a third of the funds are targeted to disadvantaged communities.

However, California’s program has not stopped vehicle CO2 emissions from rising. After a period of decline from 2007 to 2013, greenhouse gases from vehicles have increased every year since then.

Carbon dioxide
Car emissions contribute to global climate change. Pixabay

The state is studying the impact of car sharing and autonomous vehicles on reducing emissions. Young said officials are also looking into land use planning, so people live closer to work or transit.

“We invented sprawl,” he said, “and now we’re trying to deal with it.”

Hard to change

Transportation is one of the hardest sources of greenhouse gases to tackle, experts say.

Unlike the next biggest source of carbon pollution, power plants, transportation emissions come from millions of individual vehicles, and the choices their owners and drivers make have a big impact on how much carbon dioxide they produce.

There are essentially three ways to reduce their emissions, according to David Bookbinder at the Niskanen Center, a centrist research institution: make vehicles more efficient, reduce the amount of CO2 produced per unit of energy, or raise the price of fuel.

“It’s never popular to raise the price [of fuel],” Bookbinder said. Even so, “you have to really, really, really raise the price of gasoline before it has an impact on people’s use.”

Carbon dioxide, carbon dioxide
Car exhaust billows around commuter traffic in winter weather in Omaha, Nebraska, Feb. 1, 2013. VOA

France’s “yellow vest” protests are one extreme reaction to raising fuel prices. They sparked the biggest outrage where driving is least avoidable: outside city centers and in areas lacking good public transit. And they demonstrate another risk: policies that make gas more expensive can have the biggest impact on the people who can least afford it.

One way to reduce the impact is by returning to consumers the money raised by pricing carbon. That’s the preferred approach in a proposal by a group of Republican elder statesmen. Investing in affordable public transit is another, Bookbinder says.

 

The members of the Transportation and Climate Initiative — Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, D.C. — will spend a year designing their individual programs.

Some states can put programs in place with agency regulations. Others will have to go through their state legislatures. That will test voters’ appetites to pay for their climate pollution. (VOA)