Why Should I Avoid Cheap Car Insurance?

It’s a human tendency to look for discounts on everything we buy. Be it apparel or any electronic gadget or even real estate! We want to make sure we get the right and the cheapest deal. The tendency prevails even when we buy a car insurance plan. We often overlook the important aspects of a car insurance plan while stressing on the cheapest quote. You may have a tendency to bargain to buy other stuff in life, obviously because looks to save money! But, car insurance plan is something that should not be solely judged basis the cheapest quote. It is thus imperative that you answer all the impending questions regarding your requirements for a car insurance plan before you finally conclude on one.

Various insurance companies have various rates to offer. Much like a health insurance plan, a car insurance plan can also be customized as per your requirements.

Certain Considerations:

You should ask the following questions and analyze the answers yourself before you choose any car insurance plan.

  1. What are the various coverage included in the policy?

A car insurance policy can be a third party insurance plan or a comprehensive plan. A third party car insurance plan will cover you from any legal liability in case your car is involved in an accident. Any damage to the third party property or bodily damage to the third party only will be taken care here. On the other hand, a comprehensive plan covers the third party as well as the policy holder from any expense arising from a mishap. Though a third party insurance plan might fetch you cheaper premium rates but you will be bearing all the risk and expenses for any damage to you or your vehicle in case of an accident.

  1. What is the liability limit?

Third party Car insurance plans come with liability limits. For example, if your insurance company offers a liability limit of Rs.8 lakh for a third party damage whereas the evaluated damage in case of an accident is more than the specified limit, the remaining is borne by the policy holder. It is thus important for you to consider your affordability to meet the expenses in case of any unfortunate event if you choose a plan with lesser liability limit.

  1. What protection do I have for myself?

This is an important question to ask while choosing a car insurance plan. As discussed earlier, while a third party insurance plan could cover your expenses for any damage to the third party property, the insurance company doesn’t pay a single penny for any damage caused to you or your car. Ask yourself if you will be able to afford the expenditure in case of an accident. If the answer is no, you should rather look for a comprehensive plan. This plan might not fetch you the cheapest deal because of the higher premiums compared to the third party plan, but can cover you from all the risk in case of any unfortunate event.

  1. Does my insurer pay for everything?

Insurance companies do not pay for damages and expenses arising from any accident. They have certain exclusions to their policies. For example, an insurance company can deny any claim made for a damage caused due to riots or terror attacks.

A cheaper car insurance plan does not mean the best deal. Consider your other liabilities, lifestyle and preferences on coverage from an insurance plan before you select the best bargain that is not just driven by the lowest price!