What does a high risk auto insurance policy include?
The risk associated with driving is an important factor that impacts the cost of auto insurance. The higher the risk, the higher the coverage and therefore, higher premiums. Indirectly, high risk translates to a high premium. An auto insurance policy covering high risk will include a customized comprehensive policy with add-ons as per the requirement of the policyholder. Most insurance companies that offer the best auto insurance for high-risk drivers have their own list of risk factors that make someone a high-risk driver.
What makes you a high risk driver?
Insurance companies define a high risk driver as someone who is more likely to file a claim or cause an accident, which will cost the insurer the money to be paid as a claim. There are many risk factors for auto insurance that count and make you a high risk driver.
- Frequent traffic violations: If you are a traffic offender who often gets challans for drunken driving, overspeeding and other traffic violations then you come in the category of a high risk driver and you are more likely to cause accidents and make frequent insurance claims.
- Using cell phones while driving: Using cell phones while driving is a major reason for accidents these days. Distractions during driving may shift your focus and you may lose control of your vehicle.
- Road trips and rallies: If you are a biker who loves to go on long road trips or a car rally regular, you automatically come in the high risk category. If you are mostly on road, you are more exposed to the risk of accidents. Bikes and cars meant for road trips also are modified to have high engine capacity and high-speed limits which adds to the risk.
- Commercial vehicle drivers: If you are a truck or bus driver, who is mostly travelling on road, you come in the high risk category. In India, as per statistical data, trucks and buses are involved in maximum cases of road crashes. Overloading, exhausted drivers, bad road conditions, driving at high speed on highways are some common reasons for accidents.
- Location: Your location or city also determines the risk. Some places may have more chances of theft than others. Some may have high traffic, a high number of vehicles, and therefore, a high probability of accidents. For instance, in Banglore, Chennai is considered high risk location compared to Bhopal and Indore.
Add-Ons for high risk auto insurance:
There are a number of add-ons available to make your basic comprehensive insurance plan suitable to cover high risks.
- Roadside Assistance Cover: This add-on offers assistance for any breakdown while you are on road. The insurance company provides on-the-spot repair for anything from a flat tyre to a dead battery.
- Repair of fiber, glass, plastic, and rubber parts: With this add-on, you can get any of the mentioned parts repaired or replaced at a network garage of the insurer. This does not affect your NCB.
- Emergency transport and hotel expenses: In case of a small accident in the middle of a journey, this add-on ensures that you are not stranded. It pays for your hotel stay and travels back home if your vehicle is in repair.
- Key replacement: This add-on covers the cost of key replacement if your keys are lost or stolen or your car has been broken into. It also covers labour charges.
- Engine Protection: It protects the engine against damage and covers the cost of replacing and repairing parts of the engine including the cost of consumables.
- Tyre Protection: This add-on covers any accidental loss or damage to tyres and tubes.
- Consumable Expenses: This add-on covers the replenishment of consumables due to an accident. The consumables include engine oil, lubricants, gearbox oil, screw, nut and bolt, grease, distilled water, and similar items excluding fuel.
- Return to Invoice: If a car is stolen or there is a total loss, the insurer is paid the difference between the sum insured and the invoice value of the car.
- Zero Depreciation Cover: It covers the amount of depreciation that is deducted on the replaced parts under the own damage claim.
These add-ons enhance your insurance plans to cover uncertain happenings while travelling. Your basic insurance plan can be easily converted into a high risk auto insurance plan by including these riders.
Future of auto insurance in India
In India, you can not answer how long are you considered a high risk driver because there is no tracking of driving records or history. It is very easy to get cheap insurance for bad drivers here because there is no system in place to check someone’s driving history or traffic violation records. Western companies use technologies like IoT, AI, and telematics to keep a track of driving-related data. With digitization and integrated technologies, it is much easier for insurance companies to keep a track of the driving pattern of their clients. In the Indian context, insurance based on driving patterns is still a new concept and is being proposed in Indian markets as well.
With the latest technology trends, usage and driving-based insurance will soon come into the picture. Such technology will help insurance companies to identify good and bad drivers and charge premiums accordingly. It will not just help the auto insurance sector but will help in checking traffic violations also. It will directly impact your driving record and the cost of your insurance. As a result, drivers will be more responsible and there will be a reduced number of road accidents and deaths due to accidents. There will be no scope of fraudulent claims saving a lot of time and money for insurance companies.
Digital platforms using blockchain technology are also helping in improving the reach of the insurance sector and customer engagement. With the advent of these technologies in India, we can expect a complete makeover of the auto insurance sector in near future.