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lasa

Information Regarding Vehicle Insurance

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Guys,

I'm on verge of getting a brand new car and planning insurancing of the vehicle. What i need to know is what are the pros and cons of insurancing vehicle for exact purchase amount or closest lower value? E.g: - If car is 17.95 lks. What are the pros and cons of insuraing vehicle for 17lks or 17.95 lks?

Thank you...

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Yeah, I wanted know this too, because I insured my car 1 lakh less than the actual value :)

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Simple thing behind this is, say a car met with an accident and damaged to condemn owner will be paid only upto the insured amount as the fully payment..

If it is a brand new one better go for the full amount.

cheers!!

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Simple thing behind this is, say a car met with an accident and damaged to condemn owner will be paid only upto the insured amount as the fully payment..

If it is a brand new one better go for the full amount.

cheers!!

Thx mate

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You question is quite simple but there is a lot more to it.

The basic principle of Insurance is that the insurance company should be able to pay for any accidental damage and put the car back in to its original condition.

Therefore what you pay for the car is irrelevant and whats important is the market value or replacement value of the car. This means if you buy a Maruti 800 ( just giving an example, its a good car ) and insure it for Rs 3 Million, and bust the car beyond repair ( get it condemned ) the insurance company will still not pay you Rs 3 Mil, they will only replace the car for you by paying the market value of a Maruti.

The exact opposite is when you under insure it, which most of us do since the premium is a direct variable of the sum insured. This is ok as long as its not a big difference you can get away with it, but if you meet with a big accident most insurance companies will do a investigation to determine if the car is under insured and they will then only pay a proportion of the value by charging a under insured penalty, which maybe more that the premium you saved.

This is the risk you take, so you need to see how you want to take the gamble. In most small accidents they will not bother with a investigation as the cost and admin process is not worth a small payout.

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