Why should you consider Car insurance premium payment as an investment?
Do you own a Car? Good! Does your car have a valid insurance?
Owing a car is not longer considered a luxury; it has now become a necessity to own a car. This has increased the sales of the cars drastically in the recent years. India is considered as one of the most favourable markets for car makers due to the huge market potential. With the increase in the sales of the cars and other motor vehicles, there has also been an increase in the insurance policies taken for these vehicles.
According to the Motor Vehicle’s Act, 1938 it is mandatory for every Car to have at least a third party insurance to cover the death or damage of third party life or property. At the time of purchasing a car many of us are opting for insurance from the car showroom itself where the insurance price is included in the invoice price.
This has given less privilege for customer as there would be no choices to compare from. Many customers forget to renew their car insurance at the time of 1st renewal and are exposed to risks at the time of accidents. Despite follow up from the car showrooms for renewal, there is no 100% conversion of car insurance policies. As per the data from General insurance council for the year 2015-16 there were 19 Crore vehicles sold and registered while the vehicles insured were only 8.26Crore. This means almost half the vehicles sold were uninsured.
Many people defaulting on insuring their vehicles are from the semi urban and rural areas. This is due the less vigilance in these areas where there are few or none police checks to ensure the insurance is taken. Since the vigilance is high in the urban areas due to frequent policy checkups people are renewing their car insurance policies.
Car Insurance as an Investment:
Mr. Michael has purchased a brand new car and had it insured from the showroom for a period of 1 year from the showroom itself with a reputed insurance company. Michael uses his car very frequently and is careful when it comes to driving. He paid around Rs.35, 000 as car insurance premium in the first year and had not claimed anything. This continued for 4 years where he paid almost Rs.25, 000 on an average per year for these 4 years.
At the time of renewal in the fifth year he found that his car insurance premium was almost Rs.20,000 and was in a dilemma whether to insure his car or not as he had not claimed anything in the last 4 years after paying such a huge premium. He thought at time of renewal, this time he would opt only for third party insurance to save the money as he was not claiming and there were no accidents. Renew expired car insurance online where the inspection is raised by our agents from your choice of insurance company. Car insurance expired policies can be renewed online https://www.policybachat.com/car-insurance by taking to our agents who can help you with your requirements.
In total he had paid almost Rs.1 Lac in premiums for the car insurance in the past 4 years and had not claimed anything. One bad day when he was driving, he met with an accident die to the fault of the opposite party. After a big fight with the opposite car driver, he took his car to a nearby garage for repairs.
A surveyor was deputed by the insurance company to assess the quantum of claim amount which will be incurred to repair or replace the damaged parts. The surveyor concluded that the total bill amount would be around Rs.3 Lacs and Michael’s car insurance policy is eligible for the same.
Michael got his car repaired and got his car home without paying any hefty amount from his pocket due to the car insurance policy.
Finally when calculated he found that he had paid Rs.1 Lac as premiums for the past 4 years and claimed Rs.3 Lacs from the insurance company for repairs.
The amount he claimed is 3 times the amount he paid and he understood that insurance is an investment and not an expense. The premium paid by him might be utilised in the future for repair of his car in case of any accidents. The 4 wheeler car insurance costs are on the rise each year due to the increase in Third party insurance costs. This increase is attributed to the increase in claim amount settlement in the third party cases by the insurance companies.
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