When you buy a car, you know that you have to buy insurance for it as well. But insurance these days isn’t as simple as it once was. There are the short term car insurance and the long-term car insurance policies. Nowadays, there are a numerous number of things that you have to consider before you can decide what is right for you. You have so many options to choose from and so little knowledge about them. These are the times when you should not just trust any agent blindly and do some research by yourself. And this must be the very reason that brought you here in the first place.
This article is carefully written specially to tend to the most frequent doubts that come to mind when you decide to purchase insurance. The various aspects of insurance to the decision factors that help influence which insurance to go for, will be taken care of in the further sections. So without wasting any more time, let’s start.
What Exactly is a Short-term Car Insurance Policy?
Car insurance is when you pay a certain predefined amount of money to a company every year. In return, this company assures you to take care of the damages that are mentioned in the contract that is the policy. The policy is the document that is legal proof that makes the company’s promise solid. Without it, the company is not liable to pay for anything.
Types of Car Insurance Policies
There are two types of car insurance policies that depend upon the duration of the contract. Some insurance policies are long-term while others last for a shorter period of time.
Long-term Car Insurance Policy
Long-term car insurance policies usually last for a couple of years. In this kind of arrangement, the company and the individual come to some understanding in which they set an amount to be paid each year, consistently till the policy lasts. In return, the company insures the vehicle on the basis that the customer chooses. A long term insurance policy is quite beneficial as it has the factor of stability. This reflects in the premium of the car over time. This is because as cars get older, the companies tend to increase the premium to be paid at the start of each year.
But in case of a long term insurance policy, the premium remains the same for the duration of the policy. This means that the amount to be paid remains unaffected by any kind of change in company policy or any market instability. This makes long term insurance a safe option for people who want to keep the same car for a long time.
Short-term Car Insurance Policy
On the other hand, we have short term insurance policies. These policies are called short term because they have to be renewed every year. This means that all the guidelines of the policy will be revised based on the previous record. This also means that there might be a change in the insurance premium as well. This is because companies change policies over time and in case you have made a claim on the car insurance policy, the company gets additional reasons to further hike the premium. Short term policies don’t get much importance because there is no guarantee of the continuance of the customer. Therefore, what you decide to purchase depends totally on the type of vehicle and the priorities that you have established.
Key Differences Between a Long-term Car Insurance Policy and a Short-term Car Insurance Policy
There are many differences that need to be highlighted when it comes to short term against long term.
The very first would have to be drawn from the name itself. As told earlier, short term policies have to be renewed every year. These deals are annually done and changes are made accordingly. Long-term policies on the other hand have a definite amount of time. They might be for a period of 3 years or more.
Now let’s talk about insurance premium as it is a significant point of differentiation. In the case of short term insurance policies, the insurance premium is not stable. Each time a contract is renewed, the terms are restated and renegotiated. This means that every year when you renew your insurance policy, the terms are altered. This has an effect on the different terms and conditions like the cover nature and the conditions for claim validation. But most of all it affects the premium.
As the car gets older, the company adds to the premium and this addition gets higher when you have a dicey record of car maintenance. But in long term car insurance, the deal is fixed and it remains the same for the period of time that has been decided. This means that the conditions are immune to change and the premium remains the same for as long as the policy exists.
Another key difference point is the renewal date and the vendor comparison that happens at the end of each year in case of short term insurance policies. On the other hand, there is no need for all this in long term insurance as the premium is usually auto debited and even if you miss the date of payment, you get some time rather than an expired insurance policy.
Tata AIG Car Insurance calculator provides the best deals in short term as well as long term car insurance policies. The easiest way to start is by looking for car insurance online and logging into the website of the company. There, you can compare policies and decide which one is the best as per your requirements.
Things you need to know about a car insurance policy
Coverage of the Policy
The car insurance policy that you buy comes with different terms and conditions. These conditions also include the part which tells about what the policy covers. Coverage is the extent of damage or the conditions under which the company becomes liable. This means that if you have a third party car insurance policy, then the policy covers the damage done to any individual, property or vehicle due to the insured vehicle. The policy doesn’t cover any damage to the customer of any sort. Therefore, when looking for car insurance online, you should take a thorough look at what it covers because it is the main reason for getting insured.
IDV of Your Vehicle
IDV stands for Insured Declared Value. This is the maximum sum assured fixed by the insurance company. It is provided on theft or total loss of the insured vehicle. In case the vehicle suffers a total loss, IDV is the remuneration that is provided to you under the coverage policy of the insurer. This amount is calculated by taking the manufacturer’s listed selling price and reducing depreciation. This includes the accessories that are factory fitted.
No Claim Bonus
When you have an insurance policy but you don’t make use of it for some reason, the company gets happy and decides to encourage this type of behavior by providing them some incentive to this. This incentive is in terms of a discount on the insurance premium and increases every year. So that, a customer goes without making the company pay. This discount is termed as no claim bonus. The no claim bonus shaves off a significant amount of money out from the insurance premium. Once you make a claim, you lose that bonus and have to start all over again. No claim bonus is also lost in cases where there is no renewal of insurance policy for 90 days from the expiry date.
Tips and tricks to get the best deal on a short term car insurance policy
Shop around for Maximum Options
These days, a large number of insurance companies have set up shop and are waiting for you to knock at their door looking to insure something. This has fired up the competition which is always beneficial to the consumer. Due to the competitive nature of companies, the prices have reduced significantly. Along with this different insurers have different policies and provide some benefit or the other over other companies. This makes it their unique selling point and until and unless you go around looking for the best deal, you will never get what is best for you. This is a must when you are looking for car insurance online. To help you with all this, you can step up your online game by making the use car insurance premium calculators. It will give you a rough estimate as well as something to look forward to.
Maintain a Good Driving Record
Insurance companies don’t know how you drive and neither will they ever know for sure. But they can very well assume it from the history of the vehicle that is being insured. The history of the car and the different enhancements or repairs made to it are recorded each time a claim is made. When a customer or policyholder makes many claims on the vehicle in one year, the company records this. This is then reflected in the policy of next year which may have an altered coverage and a much higher premium. And thanks to the claims you made, the no claim bonus will also be gone. Therefore, it is best to drive so good that no matter what may happen, the vehicle stays safe along with you in it.