Some insurers charge a higher premium for renewing expired policies. Also, when you apply for a comprehensive policy after expiry, insurers insist on inspecting the vehicle. “If the inspection reveals damages, the insurer will exclude them from coverage. You will then have to pay for those repairs out of your own pocket,” says Animesh Das, head of product strategy, Acko General Insurance.
Experts say it is best to initiate the renewal process 15-20 days prior to the deadline. In case hurdles arise, you should have enough time to deal with them.
Next, let us turn to the key points you should pay heed to at the time of renewal. Compare premiums from several sources. The best rates are available from insurers’ own direct channels.
Buy the right amount of cover, referred to as the Insured Declared Value (IDV). The Insurance Regulatory and Development Authority of India issues a depreciation table which insurers follow to arrive at the IDV for the first five years (after which they use their own methodology). The IDV for the same vehicle can vary from one insurer to another as they take the ex-showroom price from different sources.
“As a rule of thumb, take the ex-showroom price and apply a 10 per cent annual depreciation. Also, get a sense of how much your car will fetch in the second-hand market. This is the amount you would want replaced in case of total loss of the vehicle. These two numbers will give you a good estimate of the IDV,” says Das.
If you get premium quotes from several players, make sure they have used the same IDV. Don’t allow a seller to hoodwink you by offering a lower premium on a reduced IDV. Finally, don’t purchase add-ons you don’t need.