Comprehensive auto insurance has become the preferred insurance option, with 97% of buyers opting for the same in Q1FY23.
According to data from the General Insurance Council, the total premium written has increased year on year over the past two years. Especially with the first quarters of FY21 and FY22 ravaged by Covid-19, there is an increase in overall written premium of over 30% during FY23 compared to FY22. This is reflected in both the premium written for “personal damage” and “third parties”.
Selection of plans according to the age of the car
For newer cars (0-7 years old), comprehensive car insurance is the preferred option for the majority of customers looking for end-to-end protection for their vehicles, but for older vehicles (10-15 years ), a third party insurance selection rate goes up to 50%. This is also reflected in the preference for additions in the car’s lower age segment.
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Ashwini Dubey, manager of auto insurance renewals, Policybazaar.com, told FE that the rate of third-party insurance pick-up increases as the car ages. “The majority of customers tend to purchase liability insurance as the car ages to save money. Also, since the oldest car is often a second limited-use car, customers seem to prefer opting for liability insurance to save money,” he said. “For these customers, floating plans and pay-as-you-go plans would be extremely beneficial as they would provide additional coverage of their own damage/theft protection at minimal cost.”
Selection of supplements
“Zero Depreciation Cover” remains the most popular add-on, followed by “Engine Protection Cover” and “Roadside Assistance”, “Consumables” and “Return on Invoice” cover. For new vehicles, the “zero depreciation coverage” selection is over 90%, according to the data. “Most customers opt for multiple add-ons including zero amortization, engine protection coverage, return-to-bill coverage, consumables, etc., at the time of policy purchase,” said Dubey said.
Data shows that more than 50% of customers opt for “zero depreciation coverage” until the car is three years old, and it remains the most chosen option until the car is five years old . The “Roadside Assistance” add-on remains popular beyond that, until the car is seven years old.
Customers living in metropolitan cities (Delhi, Mumbai, Pune, Kolkata, Chennai, Bengaluru, Hyderabad, and Ahmedabad) tend to opt for comprehensive plan rather than third-party plan, even for a car over 10 years old. The selection of add-ons is also higher in metropolitan cities and continues until a higher age of the car.