• Damage to an automobile/ automobile parts
• Loss of the automobile/ automobile parts due to accident, theft, riots or natural calamities etc.
• Personal Accident cover
• Financial liability on damage of property, and injury or death to third party.

There are many companies offering car insurance. Let us see how to select the most appropriate one from the numerous insurance policies available –

Policy Coverage – Ascertain the kind of coverage you want. Coverage can be of different types –
Comprehensive coverage – Extensive protection for damages, theft, personal accident and third party liability.
Collision Coverage – Provides financial cover for the damages in the car when there is a collision
Third Party Liability Coverage – It covers liability to a third party against damages and injury caused by you while driving your car.
While Third Party Liability insurance is mandatory, you should buy a policy that provides protection to you and your car.
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Insurance Company – There are many companies offering car insurance. How do you choose the appropriate one? Here are some parameters that can help to decide –
Check the incurred claim ratio – It shows the how reliable the company is in terms of claim settlement. If the ratio is too low then it may not be settling claims easily. If it is high, it indicates that the policyholder has a chance of getting the claim. If it is too high, the company might be going in loss as claims are closer to premium collected.
The incurred claim ratio is arrived at as follows –
                     Incurred Claims Ratio = Net Claims Incurred/ Net Premiums Collected
Here is the incurred claims ratio of a few insurance companies for the year 2015-16 as per the IRDAI report of 2015-16-

• HDFC Ergo Emergency Assistance Plan gives support for lost key/key locked inside the car and on road repair. Charges are to be borne by customer though.
• Some companies give discounts based on age and profession.
• Bharti AXA has a short turnaround time for settlements.

Costs versus Benefits – You have to pay a premium for the insurance policy which is the cost for you. The premium depends on type of vehicle, area of registration, claims history and the insurance company. Usually PSU insurers have a lower premium. But it is not necessary that with higher premium, you will get better service or coverage. On the other hand, some companies might give better customer support and more service which makes the higher premium worthwhile. So You should check out the policy features and choose the one that is suitable for you. Some companies provide add-ons such as

• No Claim Bonus – Claim free years can avail a discount in premium.
• Cover of Car Accessories – For a slightly higher premium, car accessories can be covered by the policy.
• Online Purchase/Renewal of Policy – Reduced hassle of physically going and buying the policy.
• Towing/Pickup facilities – In case of accident or breakdown, towing facilities are provided by some insurers.

Some add-ons will be for a higher premium but might be worth it. For example, hydrostatic lock cover is an optional add-on. Hydrostatic lock is a condition that affects the car when the engine is in contact with too much water causing problems. But it is useful if you live in a flood-prone area and many areas in cities like Mumbai and Chennai usually have flooding problems during the monsoon season.

Customer Feedback – It is always better to get word of mouth feedback on different insurance policies. Some companies might have better service in one city as compared to another. So you should do some research and get information about policies from people you know and decide the policy to buy.

Once you have studied these factors, you can compare quotes of the shortlisted insurance policies and decide on the most suitable product. It is essential to buy car insurance for a suitable amount so that your risk is reduced. With a little research, you can find out the best insurance policy for yourself at a competitive cost.