Why Do You Pay More Than Necessary For Car Insurance Policy?

Having a suitable car insurance policy is not only a legal prerequisite but also offers a safe driving experience to a car owner. Since it is legally mandatory for all car owners in India to buy at least a third-party liability cover for their respective cars, it is best if you have a suitable car insurance policy.

Legal compliance aside, a car insurance policy is of critical significance in keeping you financially safe in the wake of any damages caused to your car through accidents, natural calamities, man-made disasters, fire, or theft or even damages amounting to a total loss. Therefore, it is important to be as thorough as possible whilst selecting a motor insurance policy for your car.

Why Do People End Up Overspending on Car Insurance Policies

You may be paying more than necessary for our car insurance policies owing to a variety of reasons, ranging from the lack of adequate information to the lack of interest in comparing car insurance plans before selecting one. Some of these reasons have been discussed below.

1. Lack of clarity on insurance requirements

Car insurance should not be like any regular product, one that you tend to purchase without adequate thought or consideration. It is important to invest time and effort in understanding your insurance requirements and perusing the various car insurance policies available online before deciding on the one most suited to your requirements.

There is no dearth of information on car insurance online, and with a few clicks, you can easily access the car insurance plans, coverage, features, premium amount, add-on riders, etc. and customise your motor insurance policy. The higher the clarity you have on the type and extent of coverage you are looking for in a car insurance policy, the better placed you are to find a plan that fulfils those requirements.

2. Insufficient information on the calculation of premium

It is possible that you are confused about the method of computation of your car insurance premium. A quick read on the internet will show you how simple this can be. The premium of a third-party liability car insurance policy is determined on the basis of the engine cubic capacity of your car and the annual car insurance premium rate declared by the Insurance Regulatory and Development Authority of India (IRDAI).

The premium of a comprehensive car insurance policy is affected by several factors, including the ‘Insured Declared Value’ of the car, its age, manufacturer, make, model, purchase year, deductibles, and selected add-ons. To make the premium calculation easier, you can use the online car insurance premium calculators available on the websites of various insurers to determine the cost of the selected car insurance policy.

Once you understand the factors affecting car insurance premiums, you can easily decide the car insurance coverage you want to opt for without exceeding your insurance budget. A lack of understanding on this subject, however, is likely to lead to the selection of a policy wherein you end up paying more premium than necessary.

3. The inappropriate selection of add-on features

Whilst add-on features enhance the coverage of your car insurance policy, they also add to your premium payment obligation. Therefore, it is important to understand the add-ons you need in your car insurance cover and assess their price. You should prioritise the add-ons you deem absolutely necessary for your car insurance policy.

A failure to select the required add-ons and adding ones that are not needed for your motor insurance plan is bound to increase the premium of the selected plan. Remember that the premium of a car insurance policy costs around ₹1,800 or more per annum in India, depending on the type of policy, the coverage, the selected insurer, the make and model of the car, and the car’s ‘Insured Declared Value’.

4. Overestimating the ‘Insured Declared Value’

It may be extremely tempting to overstate the ‘Insured Declared Value’ (IDV) of your car whilst purchasing a car insurance policy. A higher IDV implies a higher claim settlement amount in the event of a total loss of your car owing to, say, theft or irreversible damage, but it also translates into higher premium payments which may not be feasible for you.

Therefore, it is important to quote the adequate IDV for your car whilst purchasing a car insurance policy. Overstating or understating this value can lead to a higher premium, and a lower sum assured, respectively, neither of which is ideal for you.

There are many car insurance companies in India that sell car insurance online. You can peruse and compare car insurance policies on their websites and make an informed decision about the plan to be purchased. With various online payment modes, it is safe and easy to buy car insurance online and save on time and effort.

For instance, Tata AIG, one of India’s leading insurers, has a wide selection of car insurance policies available on its website. You can carry out a purchase or opt for Tata AIG car insurance renewal online by following a simple process. The online car insurance calculator can be useful in the determination of the premium of various plans.


By carefully ascertaining your car insurance requirements and comparing various car insurance policies online, you can ensure the selection of the most suitable car insurance policy for yourself. However, it is important to keep the mistakes listed above in mind and avoid them to get a car insurance policy at a feasible price.

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