Five mistakes to avoid when buying vehicle insurance, or your claim may get stuck

Owning a vehicle has become a necessity, but insuring it matters even more. Accidents appear to be rising. Vehicle insurance is legally mandatory in India, and driving without it attracts a fine. But the law is not the only reason. If an accident or theft occurs, or the vehicle is damaged, the burden can run to lakhs of rupees.

That is what insurance is for. Yet many people do not know what to look for when buying a policy. They buy in a hurry, and when the need actually arises, the company rejects the claim and they have to pay out of pocket. These five mistakes should be avoided.

The first mistake is hunting only for the cheapest policy. Many people pick the one with the lowest premium, which is the biggest error. Companies that offer cover for less often do not cover many things. The policy looks cheap on paper, but after an accident it turns out there is little to claim. Some companies charge lower premiums but make claimants run around for months. So do not look at the premium alone. Check how long the company has been around, how far it can be trusted, how many cashless garages it has and whether it clears claims quickly.

The second mistake is not comparing with other companies. Even though everything is online, people go to a single agent and take whatever policy the agent suggests, without looking at the other options in the market. Before buying, or before renewing an old policy, check the plans of four or five companies online. Every company offers different deals and benefits. A comparison will show where better cover is available for less. It takes two minutes and can save thousands of rupees.

The third is the misconception that online insurance is costlier. Many people think buying offline through an agent will be cheaper, when the opposite is true. When a policy is bought online, the company does not have to pay an agent's commission and also saves on office costs. So the same company offers better cover at a lower price online. Online discounts and extra offers are also greater. Before buying offline, check the online price once.

The fourth mistake is not getting the insurance transferred to your name after buying a second-hand vehicle. Buyers of used vehicles are most often caught out here. They get the name entered at the RTO as soon as they buy the vehicle and assume the work is done. But what about the insurance? Registering the vehicle in your name at the RTO does not complete the job. You must get the previous owner's policy transferred to your name within 14 days. If the policy stays in the previous owner's name and you meet with an accident, the company will not pay a single rupee, saying the policy is not in your name. You will then have to bear the entire cost yourself. So transfer the insurance first thing after buying a second-hand vehicle.

The fifth mistake is entering wrong information in the form. To get a lower premium, or unknowingly, people fill in incorrect details. They give a wrong address or vehicle model, or hide a CNG kit fitted to the vehicle. Insurance is an agreement based on trust, and every detail you give must be correct. Write the name, address, engine number, chassis number and whether the vehicle is used privately or commercially truthfully. If you hide something and the company finds out later, your claim can be cancelled altogether.

Also, do not take only a basic policy. Take add-ons such as zero depreciation, engine protection and roadside assistance. They cost a little more, but they are what help in times of need. Remember, a policy taken with correct information is what shields you in real trouble.