Monthly Archives: December 2016

How To Shop for Use-Based Car Insurance

In recent years, nine of 10 top U.S. auto insurance companies have started selling policies based on how motorists drive. At least a handful of pay-as-you-drive policies are offered in every state, covering as many as 3 million U.S. vehicles, according to industry estimates. Switching to use-based insurance (UBI) could help you save a little or a lot over what car owners spend on premiums associated with a more traditional policy.

If you’re considering changing to a UBI plan, it pays to understand what you’re getting.

Carriers set UBI rates by collecting mileage or other information directly from your car, but similarities among policies end there. Some insurers use a small, meterlike electronic device that plugs into a car’s onboard diagnostics port to store or transmit information. Newer versions gather driving data through an app and a smartphone connected to a car’s infotainment or telematics system.

Drivers may happily trade access to their driving habits for lower insurance rates. But privacy advocates worry that insurance companies aren’t always 100 percent transparent about what data they collect, what they do with it and with whom they share it.

“Privacy is a real question,” says J. Robert Hunter, insurance director for the Consumer Federation of America. “What do insurance companies do with that information? If I park at the corner of Main and 14th and on one corner is a bar and another is a gym, will you raise or lower my rate?”

Here are steps to take if you’re shopping for car insurance and considering a use-based policy:

Find out what’s available: Look on the Web site of your state insurance commission or consumer advocacy agency to see which insurance carriers are licensed to operate in your area. Here’s a list ofall 50 state insurance departments. Alternatively, visit auto insurers’ Web sites and type in your ZIP code to see if they sell UBI plans where you live.

Understand what types of data insurers collect: Some states restrict the information insurers can collect, which limits the types of UBI policies they offer. In California, for example, insurance companies can track mileage but are barred from monitoring where or when you drive. They also can’t track such behaviors as how fast you drive or how often you slam on the brakes, the activity known in insurance lingo as “hard-braking events.” Visit state insurance regulators’ Web sites for their explanations of the UBI plans they authorize, such as this pay-as-you-go auto insurance pamphletfrom the Oregon Department of Consumer and Business Services. You can also read the fine print on UBI policies on insurers’ Web sites to determine what driving data an insurer collects, and how it is gathered.

Try before you buy: Certain insurers give potential customers a chance to take a UBI policy for a test-drive before committing to a policy. In such cases, you may be asked to plug an electronic monitor into your car’s diagnostics port for a month or so, which allows the insurer to collect enough data to set a rate. Other insurers offer UBI policies only to existing customers.

Understand how insurers determine discounts: Insurers may offer an introductory discount of 5 or 10 percent during a try-out period, and adjust the rate as needed after monitoring mileage or driving behaviors for a set time period. Progressive Insurance bases rates for its Snapshot policy on six months of driving data. State Farm customers with Drive Safe & Save policies keep electronic monitors plugged into their cars all the time, so, theoretically, their rates could change at renewal time, if they’ve driven substantially more or less than in the previous period.

Consider a UBI bundle: Some insurers offer UBI as part of a bundle of services tied to a car’s built-in entertainment, safety or maintenance systems. State Farm’s Drive Safe & Save with In-Drive Connectpolicy, a joint venture with Verizon Wireless, offers mileage-based insurance along with stolen vehicle assistance and hands-free mobile phone service. After a one-year free trial, charges for In-Drive Connect jump to $6.99 a month or more based on what other features a customer chooses.

See how you’re doing: If you sign up, use the Web portal associated with your UBI policy to monitor your driving. Some insurers’ dashboards give customers a grade based on their driving habits. For example, customers of Allstate’s Drivewise UBI policies can download an iPhone or Android app to look up mileage, speed, hard stops and what times of day they drive.

A Comprehensive Guide to the Best Car Insurance Purchase

The moment you buy a brand new car, you are on cloud nine. To buy a car is a great achievement indeed. You allot a budget; make a list of your requirements and shortlist cars in accordance with that. You go for the test drive(s) and finalize the car that met your expectations.

After purchasing a car, some people follow this tradition. They go the preferred place of worship to seek the blessings of the almighty. The priest performs a ritual. In Hinduism, they place a lemon under each tyre and run the car over it, as it is considered as a good omen.

In India, it is mandatory to buy an automobile insurance too. So, you have to have car insurance. Before you buy motor insurance, here are the things that you should keep in your mind.

Types of Motor Insurance

There are two types of automobile insurance plans offered by insurers.

  1. Liability Only – The first one is a liability-only policy. The government has made it compulsory for all the vehicles to have this policy at the very least. This policy provides the coverage against legal liabilities that may arise due to injuries, death or property damage of a victim (a third party).
  2. Comprehensive Motor Insurance – The second type of insurance policy is Comprehensive Motor Insurance. It provides coverage for own-vehicle damage as well as for third-party liability. It also covers damages related to manmade tragedies, such as riots, thefts, vandalism, malicious activities, terrorist activities etc. In addition to that, it covers damages caused by natural disasters like floods, earthquake, landslides, storm etc.

As third-party insurance is compulsory in India, it is a wise decision to opt for a comprehensive motor insurance, as it provides an adequate coverage. When it comes to buying insurance, never be underinsured.

Imagine this scenario – after parking your car, you went into a restaurant. When you came back, you noticed that there is a dent on your car. It broke your heart a little when you saw that. When you went to the mechanic to get the dent fixed, the repairing cost broke your heart a little more.

The bottom line is, when you have comprehensive motor insurance, you are safeguarded against these expenditures.

The following are the factors that you should consider before buying car insurance.

  1. Daily Allowance – When your car is under repair, you get money by your insurer for hiring another mode of commuting.
  2. Lock/ Lost Key Replacement Cover – You get the cover to replace your car keys if you lost them or it is stolen. Also, you get cover for lock replacement if your car was broken into.
  3. Stay at a Hotel – If your car has become immobile because of an accident, you are entitled to get a hotel stay on your insurance provider’s behalf.
  4. Invoice Cover Return – There is a difference between ‘claim amount receivable’ and ‘purchase price of vehicle’ under the coverage when there is a loss because of some accident. When this happens, the rider bears the difference amount from his pocket.
  5. No Claim Bonus – When you don’t file a claim, you receive no claim bonus (NCB). To get that bonus, some people don’t file a claim, as they don’t want to miss out on NCB. If you just make one claim during the policy tenure, you retain the existing NCB. In this way, your no claim bonus is safeguarded.
  6. Depreciation of Reimbursement Cover – This is add-on feature that offers full claim without any deduction as depreciation on the cost of replaced parts.
  7. Repair of glass, rubber, plastic and fiber parts – In the case of damaged glass, rubber, plastic and fiber parts, you can get them repaired without affecting your No Claim Bonus.
  8. Lost Personal Belongings and Baggage Cover – You get coverage by your car insurance company if you don’t have any anti-theft device that is approved by the ARAI (Automobile Research Association of India).

Tips to File Small Car Insurance Claims

The future is unpredictable. It is better to hope for the best and prepare yourself for the worst. For sure, we can’t change the future. We can make efforts from our end to ensure that nothing goes wrong.

Road accidents happen across the globe. You read about it in the newspaper, you watch it on the news, and you even listen to it on the radio. Whenever you come across road accident-related news, you feel bad for the person(s) who became victimized because of their misfortune.

When Mr. Kumar bought a brand new Ford, he was ecstatic for obvious reasons. He bought comprehensive car insurance to safeguard his car. After 3 months, his car met with an accident. He was safe but the car was severely damaged. He was a little disheartened to see his car in that condition but he was grateful to the almighty that nothing happened to him. Also, he was comforted that he has a comprehensive insurance cover for his car so he won’t have to bear the repair cost from his own pocket.

After a discussion with his office friends regarding the claim, he was in a state of confusion. He wasn’t pleased by the outcome of the discussion as he was suggested to bear expenses from his own pocket. The damages were not severe; he was advised not to file for the claim because the repair cost was not that much.

As an insured person, Mr. Kumar had second thoughts about it. He had all the rights to file the claim. After all, that was one of the major reasons that he bought the automobile insurance in the first place. He was tensed about the drawbacks of filing the claim and its consequences.

Mr. Kumar was not alone who faced this dilemma. Most of the people feel just like him when it comes to file a small claim. Is it worth it to file a small claim? Read on to find out.

When it comes to filing small claims, it is all about calculations. Calculate the cost that you would have to pay and compare it with NCB that you will get if you don’t file for the claim. On the basis of the comparison, decide whether it is a smart move to file the claim or not.

Deductible Expenses

The amount for deductible expenses is specified at the time of buying a policy. It is a portion of the claim amount that the policyholder has to bear from his own pocket. When it comes to file a claim, the deductible expenses, depreciation etc. is subtracted from the total amount and then the remaining balance is payable.

It is not that necessary to file a claim that sums up more or less, close to the deductible expenses.

Your NCB Is Affected

No claim bonus is a bonus referred as a discount that is given to the policyholder by the insurer at the time of renewal of the policy if no claim has been filed. The NCB is set as 20 percent initially and it hikes consistently if you don’t file any claim. In case only one claim is filed, the NCB becomes zero. This is the reason why you should refrain from filing a small claim.

For instance, your car insurance policy’s deductible is Rs. 2000 and the NCB discount is Rs. 6000. If you file a claim of Rs. 4000; you will have to pay your share of Rs. 2000. At the same time, your NCB of Rs. 6000 will slip away from your hands.

Financially speaking, small claims are avoided because you end up losing your money. Even in this particular scenario, your will get a claim worth Rs. 4000 at the same time; you will lose Rs. 2000 since your NCB is Rs. 6000.  Make a claim only when the claim amount is large. In that case, what you spend will be more than what you will get. That justifies having a car insurance coverage.

Complete Guide to Select the Best Car Insurance Plan

Before zeroing down an insurance policy for their car(s), most people miss the crucial step of researching, and they jumping to the premium directly. On the basis of the premium, they finalize their selection of a car insurance policy.

Here is a step by step guide for you; it will be helpful for you in order to make an informed and wise choice. Consider the points mentioned below in order to select the best insurance policy for your car.

1. Compare the key feature provided by the insurance coverage

Draw a comparison of your shortlisted motor insurance policies to analyze if they all are providing the same kind of insurance cover. Your insurance plan should include all the key inclusions in terms of a car (such as own damage cover) and provide you with coverage against a personal accident as well as for the injuries succumbed by a thirdparty.

2. Review Add-on Riders as the Part of the Car Insurance Policy

It is always recommended to pay adequate attention to all the add-on riders so that you can pick out the ones that you want as the additional benefits. For your convenience, we have listed below a few crucial motor Insurance riders.

  1. Engine Cover – It provides an extra layer of protection by safeguarding you against additional expense incurred due to car engine damage.
  2. Third-Party Liability Coverage – Third-party Liability coverage ensures the protection of the car owner against any financial liability that could be because of any bodily injury, death, and damage repair cost of a third-party motor.
  3. Roadside Assistance Cover – In case you are stranded because of the engine failure or any accident or if your car’s tire is punctured, you are provided with the option of availing roadside assistance. It will enable you to call your insurer and make a request to send a car mechanic at your location.
  4. Zero Depreciation Cover – When you make a selection to add zero depreciation cover to your car insurance policy, the depreciation on substituted car parts is waived off by your insurance company. It signifies that you are eligible for getting a higher amount of claim.
  5.  Personal Accidental Cover – Personal accidental coverage ensures the financial protection to the vehicle owner against unexpected and unfortunate events that might induce physical trauma, or cause the accidental death, or the person might end up being a totally disabled permanently because of a road accident.

3. Consider Reviews of the Car Insurers

Make sure you ask your extended family members and friends regarding their experiences with any specific motor insurance company. The feedback coming directly from your near and dear ones may provide you better insights about how its customer support and claim procedure work. It will help you to make an informed choice.

4. Compare Insurance Premium Online

The Internet is flooded with so-called great deals. Don’t fall for them; they could be nothing but a trap. You can come across a decent deal online when you take some time out of your hectic schedule and search across the Internet.

While comparing car insurance plans online, keep the following points in your mind:

  1. Compare various insurance plans offered by the different insurance providers.
  2. Ensure that the comparison site computes the premium on the fixed IDV (Insured Declared Value).
  3. Compare the insurance premium on at least 3 online insurance comparison sites.

5. Negotiation is the Key

When it comes to buying motor insurance, negotiate with your existing insurance provider.You never knowyou might end up getting an additional advantage if you have been a responsible driver and have not made way too many claims or filed too many accidents.

6. Safeguard Your NCB

If you are a responsible driver, and you haven’t filed any claim, then you get the advantage of No Claim Bonus (NCB). If you don’t register any insurance claim for a year, then your car insurer rewards you with No Claim Bonus. This is the discount that is subtracted from your insurance premium during policy renewal. As an option, you can go for NCB.

7. Checkout the CSR

Before you finalize a car insurer, last but not the least, consider the insurer’s previous record of claim settlement. Claim Settlement Ratio is the time taken by an insurer to settle down the claimsfromits clients. Proceed only when it is good. Don’t even think of buying car insurance policy if the CSR is not good. You can easily find the Claim Settlement Ratio of various insurers on the website of IRDA of India.