Your Vehicle in COVID-19 Lockdown: How to save on insurance premium

May 11, 2021 10:07 AM

With people hardly taking their vehicles on road, it does not make sense in buying a comprehensive motor insurance policy.

During the lockdown period, when you are hardly driving your vehicle and only using it for emergency purposes, it is better to get Third party + Fire + Theft insurance in place of a comprehensive policy.

We are more than a year into the COVID-19 pandemic, and, the result is that our lives are changing drastically. Most of us have been hardly using our vehicles as commute to work remains cancelled due to the lockdown and also trips and journeys to see family and friends remain suspended. The situation is expected to continue for a few more months as work-from-home orders continue to be in place at least until 70% of the population is vaccinated.

In fact, many studies conclude that until remote work adoption and shift to online shopping remain in action, the traffic volumes probably will not be going to increase. With people hardly taking their vehicles on road, it does not make sense in buying a comprehensive motor insurance policy.

A combination of Third-party Cover and Own-damage Cover – a comprehensive motor insurance policy protects you against damages to your own vehicle and third party in case of an accident. Buying a comprehensive motor insurance policy only makes sense when you are taking your vehicle on road every day and driving for a considerable number of kilometres.

Save on Premium with Third-party + Fire + Theft Insurance

Insurance is one of the big costs in keeping a car on the road, with the average price of a fully comprehensive motor insurance policy for a 1200CC sedan car ranging between Rs 15,000 and Rs 18,000. However, if you are not driving your vehicle so frequently due to the ongoing lock-down and work-from-home orders, it is better to only buy coverage that is required. Considering the prevailing conditions, several insurers have come up with a special insurance plan – Third-party + Fire + Theft insurance. The plan gives your vehicle-required coverage at affordable prices – 50% less than regular comprehensive plans. Under this plan, the vehicle gets adequate coverage for damages to the Third Party and damages to your vehicle due to fire and theft.

Adequate Coverage at Affordable Premiums

The plan works like any other regular plan, however, the extent of coverage differs, as it will not cover you for damages to your own vehicle. With this insurance, you can easily drive your vehicle on the roads because as per the government rules, only third-party insurance is mandatory for driving the vehicle on Indian roads. If while driving the vehicle, you meet with an accident and cause damages to the third party, your insurer will bear the expenses on your behalf and pay to the third party.

Also, in case your vehicle gets stolen while it is parked on road outside your home or any other place you might feel is safe, the insurer will pay you the entire IDV – Insured Declared Value mentioned on your insurance policy document. While renewing your motor insurance vehicle, it is always advised to make sure that you select the maximum IDV possible. This is because in case of incidents like total damage and theft, in case the authorities fail to retrieve your vehicle, the insurer will pay you the IDV mentioned on your policy. In order to get the maximum returns from your damaged vehicle, always select maximum IDV.

The third incident for which the plan provides you adequate protection is fire. With day temperature crossing 40 degrees in most parts of northern India, incidences of vehicles catching fire are quite common. Most vehicles that catch fire usually get completely damaged and cannot be used again. The insurer places such vehicles under the total damage category in which the vehicle owner gets the complete IDV of the vehicle. Fire and Theft are the two most common incidences that cause maximum damages to the vehicle and it is always important to provide adequate coverage to your vehicle against both of them. Third-party cover is also important, as it is mandatory by the government for driving the vehicle on road.

Take Note

During the lockdown period, when you are hardly driving your vehicle and only using it for emergency purposes, it is better to get Third party + Fire + Theft insurance in place of a comprehensive policy and save considerably on the premium. In the last one month – with lockdown rules again coming into force – there has been 2x increase in the sales of Third party + Fire + Theft insurance plans. Currently, these plans are available with a prominent insurer like Future Generali, United India Insurance and Digit. For a 1200CC sedan, the plan costs approximately Rs 4,500 – Rs 5,500.

(By Utpal Raman Sharma, Head-Motor Insurance, Policybazaar.com)

Do you know What is ? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1No proposal to merge public sector general insurance companies: MoS Karad
2Will there be a hike in term insurance plan premium soon?
3Embedded Value: Review your life insurance needs every 10 or 15 years