Buying Car Insurance for the First Time? Things You Should Keep in Mind

Posted on: Jul 4, 2025 | 3 mins | Written by: HDFC ERGO Team

Buying Car Insurance for the First Time? Things You Should Keep in Mind

Getting car insurance for beginners can seem daunting because there are many terms and various choices to consider. Understanding the key factors to consider can help you choose a policy that will provide you with adequate coverage at a cost-effective price. Take a look at the following ultimate guide to know which factors you should take into account while choosing the car insurance:

Importance of Buying Car Insurance

Consider purchasing car insurance to stay financially protected from accidents, theft, or damage. It also keeps you in line with the third-party motor law and gives you peace of mind. It takes care of being liable for damage caused by a third party and accidents involving you, by providing cashless repairs and quick claim settlements. In conclusion, it guards your car, money, and belief in being a good driver.

Key Features to Consider

Car insurance for first-time buyers comes with questions and doubts. Hence, it is vital to consider the following features:

1. Know the Different Kinds of Car Insurance

• Third–Party Liability Insurance
The law under the Motor Vehicles Act requires you to have Third-Party Liability Insurance mandatorily to compensate the loss against injuries or damages suffered by a third party. It does not protect against natural or man-made damage to your own car.

• Comprehensive Insurance
You should buy this type of policy for enhanced protection against accidents, damages caused by natural events, theft, and third-party damages.

2. Check the Insured Declared Value (IDV)

IDV value refers to the current market price of your car and represents the maximum amount you can receive in the event of its loss or theft. A larger IDV provides greater protection with larger payouts, but also requires a higher premium. Selecting an IDV that matches the actual value of your car will help you get comprehensive protection without paying more for the insurance.

3. Assess the Claim Settlement Ratio

The claim settlement ratio indicates the percentage of claims an insurance provider settled against the total claim settlement requests received. Select an insurance provider with a higher claim settlement ratio to ensure a hassle-free claims settlement process.

4. Consider Add-On Covers

Knowing about the add-on covers is essential to ensure enhanced protection. These are small plans that policyholders often tag with their basic car insurance plan. Please note that each add-on has different prices and features. And yes, they can be different from insurer to insurer. Research them carefully to make an informed decision.

5. Analyse the Premium Vs. Coverage

While a lower premium may be attractive, it is essential to consider what coverage the plan provides. Often, car insurance policies with lower premium rates feature limited coverage benefits. Hence, compare different policies and understand their unique inclusions and exclusions, as well as their prices. This will help you achieve comprehensive protection without straining your finances.

6. Look at the Network of Cashless Garages

Very often, insurers partner with garages, so customers don’t have to make upfront payments for repair services at the garage. If you choose the one with a wide network, you can use cashless services with ease, which can help lower your repair costs. Before coming to a conclusion, examine the list of your insurer’s network garages to find ones in your area or near your workplace.

7. Consider the Voluntary Deductibles

You decide on a voluntary deductible, which you pay yourself before the insurance company reimburses the claim. Picking a bigger voluntary deductible might reduce your premium, but make sure you feel comfortable paying it if you have to file a claim.

8. Know About the No Claim Bonus (NCB)

If you do not file a claim on your insurance during the term, you get a discount on your premium at the time of annual policy renewal. You can avail the benefit of a discount of up to 50% of the premium when you do not file a claim in a policy year.

9. Confirm the Policy Portability

Thanks to policy portability, you can change insurance companies without forfeiting benefits, such as No Claim Bonus (NCB). If you find the current insurance provider’s services or plans unsatisfactory, you can switch to someone else offering better terms. Begin the process before your existing policy expires to ensure a smooth transition.

10. Assess Customer Support Services

Being able to resolve customer issues effectively is very important during emergencies. Select an insurance provider that maintains open lines of communication to ensure prompt responses. Review online reviews or testimonials to understand what users say about the company, and verify how promptly they respond. And yes, you should also check if you can call them at any time.

11. Pay Attention to Exclusions

Not all types of damage or losses are covered under every insurance policy. There are always things the insurer will exclude from the policy. Very often, insurance companies refuse coverage when the driver is under the influence of alcohol/ intoxicants, the vehicle is involved in a crime, or the damages come from participating in adventurous activities. Learning about these prevents disputes during a claim settlement.

12. Think About Online Buying of Policies

Getting covered with online insurance is simple, and allows you to understand various benefits or features. Most often, policyholders get them at affordable rates compared to traditional policies. Such platforms allow you to review terms and conditions and compare from provider to provider. This way, you can make a well-informed decision without any influence.

13. Review the Insurer’s Reliability

A reliable insurer handles claims well and provides good customer service. Hence, research their claim settlement ratio along with their financial position. Further, check their online reviews or testimonials to know what others have said about them.

14. Check for any Available Discounts

Anti-theft devices, deductibles, and offers, among other factors, typically open doors to discounts from insurers. However, these do not apply to third parties. Ask about available discounts to lower your premium while maintaining the same coverage level.

15. Read the Terms and Conditions of the Policy

Scrutinise the policy document very carefully before the final purchase. Get familiar with the important terms, conditions, what is included, and what is excluded. If there’s any jargon in the terms, obtain an explanation to avoid future problems.

16. Being Compliant and Guaranteeing Peace of Mind

Since third-party car insurance is mandatory in India, having an active policy protects you against any legal hiccups. Yet, more importantly, insurance helps you feel secure because you are ready for any accidental expenses.

Conclusion

Selecting a suitable car insurance policy involves reviewing details such as the types of coverage and researching the insurer’s reliability. You should invest some time in comparing policies to get one that truly suits your requirements. Furthermore, consider your affordability and unique needs to ensure you receive the optimal benefits from the chosen policy.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

• Why IDV is Important in Car Insurance

• Comprehensive vs Third-Party Car Insurance

• How to Lower Your Car Insurance Premium

• Understanding No Claim Bonus in Car Insurance