Choosing the right car insurance is not just about finding the cheapest premium. It is about selecting a policy that protects you financially, complies with legal requirements, and supports you when you need it the most. With rising repair costs, increasing traffic density, and unpredictable weather conditions, the importance of having the right coverage has never been greater.

Many car owners buy insurance in a hurry, often renewing the same policy every year without reviewing whether it still meets their needs. This can lead to underinsurance, rejected claims, or unnecessary expenses. To help you make a confident and informed decision, here are the eight most important factors you should consider when choosing car insurance in India.

1. Type of Coverage: Third-Party vs Comprehensive

The first and most important decision is choosing the right type of policy.

Third-party insurance is legally mandatory and covers damages or injuries caused to others. However, it does not cover any damage to your own vehicle.

Comprehensive insurance includes third-party liability as well as coverage for your own car against accidents, theft, fire, natural calamities, and vandalism. For most private car owners, comprehensive insurance offers far better financial protection and peace of mind.

If your car is valuable or frequently used, choosing comprehensive coverage is usually the smarter option.

2. Insured Declared Value (IDV)

IDV represents the current market value of your car and is the maximum amount the insurer will pay in case of total loss or theft.

A higher IDV increases your premium but ensures better compensation during major claims. A lower IDV reduces premium but may leave you undercompensated if your car is stolen or damaged beyond repair.

The ideal approach is to choose an IDV that closely matches your car’s real market value. Avoid selecting very low IDV just to save premium, as it can result in heavy financial loss later.

3. Add-On Covers That Match Your Needs

Add-ons enhance your base policy and protect you from expenses that are otherwise excluded.

Some of the most useful add-ons include zero depreciation cover, engine protection, roadside assistance, return to invoice, consumables cover, and NCB protection.

However, not every add-on suits every driver. Your driving habits, parking location, city conditions, and car age should guide your selection. Choosing only relevant add-ons helps balance premium and coverage effectively.

Smart add-on selection can reduce claim-related stress and significantly lower out-of-pocket expenses.

4. Claim Settlement Experience and Support

Insurance becomes truly valuable at the time of claim. Smooth claim processing and reliable support matter more than minor premium differences.

Before choosing a policy, consider how easy it is to register claims, the availability of customer support, and the overall transparency of the process. Digital claim filing, faster inspections, and network garages for cashless repairs improve convenience.

A policy with poor claim support can turn an already stressful situation into a major problem, even if the premium was low.

5. Network Garages and Cashless Repair Facility

Network garages allow you to get your car repaired without paying upfront, as the insurer directly settles the bill with the workshop.

A wide network ensures that you can easily find authorized garages near your home or workplace. It also reduces paperwork and speeds up repairs.

Before finalizing your policy, check whether preferred service centers or nearby garages are included in the insurer’s network. This plays a big role in claim convenience.

6. No Claim Bonus and Its Protection

No Claim Bonus (NCB) is a reward for claim-free driving and can reduce your premium significantly over time.

If you make even a small claim, your accumulated NCB can be lost. This is where NCB protection add-on becomes valuable, as it allows you to retain your bonus despite making limited claims.

If you have built up a high NCB, protecting it can lead to substantial long-term savings while still allowing you to claim small repairs when needed.

7. Policy Terms, Exclusions, and Conditions

Many claim disputes happen because policyholders are unaware of exclusions and conditions.

Every policy has specific terms about what is covered and what is not, such as driving without a valid license, commercial use of private vehicles, delayed claim reporting, or damages caused under intoxication.

Understanding these details helps avoid unpleasant surprises during claims. Always review exclusions, deductibles, claim limits, and add-on conditions before purchasing or renewing a policy.

A few minutes of reading can prevent major disappointments later.

8. Premium Value, Not Just Premium Price

While premium is important, choosing insurance purely based on lowest price can be risky.

Two policies with similar premiums may differ greatly in coverage quality, add-on availability, network garages, and claim support. Instead of focusing only on how cheap the policy is, evaluate what you are actually getting for the amount you pay.

The goal is to find a plan that offers strong protection, reliable service, and fair pricing, not just the lowest number on the screen.

Conclusion

Choosing car insurance should be a thoughtful decision, not a rushed annual task. The right policy protects you from unexpected financial shocks, reduces stress during accidents, and ensures legal compliance at all times. By evaluating coverage type, IDV, add-ons, claim support, garage network, NCB benefits, and policy terms, you can select insurance that truly matches your needs.

Platforms like Square Insurance simplify this process by allowing you to compare multiple plans, customize add-ons, and understand coverage details clearly before making a decision. When chosen wisely, car insurance becomes not just a legal requirement, but a reliable financial safety net that supports you through every journey.

Frequently Asked Questions

1. Is comprehensive car insurance mandatory in India?

No, only third-party insurance is legally mandatory. However, comprehensive insurance is strongly recommended because it also covers damage to your own vehicle.

2. How do I know which add-ons I really need?

Your driving frequency, city conditions, parking safety, and car age should guide add-on selection. For new cars, zero depreciation and engine protection are usually useful.

3. Does choosing a higher IDV always mean better insurance?

Higher IDV means higher claim payout in total loss cases, but it also increases premium. Choose an IDV close to your car’s actual market value for balanced protection.

4. Can I change my coverage or add-ons during renewal?

Yes, renewal is the best time to review your policy, update IDV, add or remove add-ons, and adjust coverage based on your current needs.