Comprehensive or Third Party Insurance for your vehicle

Background
Third party insurance and Comprehensive insurance are two options available for owners who want to insure their automobiles. Owning a new car is a delightful experience and a car is a thing of pride for the owners. Getting it insured is a necessity. There are people who consider their car as an asset and hence go for a comprehensive insurance, while others take it as a utility to cover distances and are satisfied with a third party insurance only.
Whatever the type of car insurance you opt for, it is a fact that getting insurance is a must for your car. Understanding the differences between a third party insurance and a comprehensive insurance can give you the required knowledge to take an informed decision and be prudent about optimizing your vehicle insurance expenses.

Can multiple insurance policies cover the same risk?

Background

Insurance policies are designed to ensure that the recipient of the policy benefits do not collect more than the claim is worth (risk coverage), regardless of how many insurance policies may be in force. 

Insurance is designed to protect against financial losses from damage. It is not meant to be used as a way to gamble and make money off damage to your business or personal assets. If you own multiple policies that cover the exact same risk, the payout result depends on the type of insurance coverage.

No Claim Bonus (NCB) for your Car Insurance

Vehicle insurance is mandatory. But make sure that you are not losing out on the No Claim Bonus especially when you are buying a vehicle (new or 2nd hand).

What is a No Claim Bonus (NCB)

No claim bonus is a discount given by the insurer to the policyholder on his / her vehicle insurance policy premium for making no claims. NCB can be accumulated over years and the discount ranges from 20% to 50% on own damage premium. No claims bonus (NCB) is crucial to reducing car insurance premiums.

Typical Car Insurance Claim Rejection reasons

Facing an insurance claim rejection is never easy. It can put your monthly or even annual budgets into jeopardy, depending on the loss.

In many cases, auto insurance claims are rejected because of mistakes or lack of awareness on the part of the owner.

Following are some of the typical reasons for insurance claim rejection:

1) Post accident, if the driver is found under the influence in alcohol, the claim is liable to be rejected

2) If the driver of the car does not possess a valid license, the claim can be easily rejected

3) If you car remains unattended following an accident and subsequently gets stolen, the insurance company would not honor such a claim

4) Any consequential claims would be rejected, which means when a car gets damaged and the owner does not get it repaired, then any further consequential damage is at owners risk. e.g. if your car hits a road bumper resulting in oil leakage, if you do not get this repaired soon enough, you could damage the car engine. If such a damage is established, it will not be covered under insurance.

There are many other reasons which you may not be aware of. Let us say your car gets stolen because of your negligence like you forgot your keys inside the car itself and the car gets stolen, then the claim would be rejected. The insurance company can find out about this. They would typically ask you to submit both the original keys of your car before they approve your insurance claim. If you cannot produce both the original keys, the assumption would be that you would have forgotten the keys inside the car.

To avoid such a situation, you should apply for a new car key with the dealer if you do not have all the original keys.

Small habits like these can help you save money and can also prevent from your budgets going into jeopardy. The book "From Rat Race to Financial Freedom" guides you through such practices which can help you save and grow your money.

Cheers !!

Manoj Arora

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