Ritesh Sabharwal CFP®

W.M.W #20: Same policy. ₹2,000 cheaper. Here’s how

Reading time: 5 minutes - November 1, 2025

↓

Hey Reader

Here's something that happened to my friend last week:

• "I'm renewing my car insurance. My agent quoted ₹15,000 for Tata AIG. But I found the same policy on Tata Neu app for ₹13,000. Should I buy online or stick with my agent?"
• His agent immediately warned him: "Don't buy online! When you file a claim, the surveyor will take weeks. I can get things done faster."
• Here's what my friend discovered when he called Tata AIG directly - the claim settlement process is exactly the same whether you buy through an agent or online. The surveyor, the approval, the settlement timeline - all centrally managed by the insurance company.

This isn't just about saving money on premiums. It's about understanding what you're actually paying for, what coverage you really need, and how to not get fooled by insurance myths. Let me break it down.

The Agent vs Online Myth: What Really Happens

Let's address the elephant in the room first.

• What agents tell you: "Buy through me. When you have an accident, I'll personally ensure your claim gets processed faster. Online buyers wait for months."
• The reality: Insurance companies have centralized claim processing teams. Whether you bought the policy from an agent, a bank, or an app - the process is identical:
  • You file a claim (online portal, app, or phone)
  • Insurer assigns a surveyor from their empanelled list
  • Surveyor inspects the damage and submits report
  • Claims team approves based on policy terms
  • Garage does the repair (cashless) or you get reimbursed
• The agent cannot:
  • Choose which surveyor gets assigned
  • Override the claims team's decision
  • Speed up the survey or approval timeline
• What the agent CAN do:
  • Help you fill claim forms if you're not tech-savvy
  • Follow up on claim status on your behalf
  • Guide you through the documentation

But here's the thing - most insurance companies now have excellent customer support, mobile apps, and helplines. You can do all of this yourself in 10 minutes.

The numbers don't lie:

Tata AIG has a 99% claim settlement ratio. That means 99 out of 100 claims get settled regardless of how you bought the policy. The same goes for other top insurers like HDFC Ergo, ICICI Lombard, or Bajaj Allianz.

So why pay ₹2,000-₹5,000 extra to an agent when you're getting the exact same coverage and service?

Understanding Policy Types: What Do You Actually Need?

There are three main types of motor insurance, and choosing the wrong one can either leave you under-protected or paying for coverage you don't need.

• Type 1: Third-Party Insurance: Damage or injury your car causes to others
• Type 2: Comprehensive Insurance: Third-party liability + damage to your own car
• Type 3: Own-Damage Insurance: Only damage to your own vehicle

The Real Cost Drivers: What Affects Your Premium?

Let me break down each cost factor.

1. Insured Declared Value (IDV): This is your car's current market value - what the insurer will pay if your car is stolen or completely destroyed.
   • Higher IDV: ✅ Larger payout if car is stolen or completely destroyed. ❌ Higher premium
   • Lower IDV: ✅ Lower premium ❌ Smaller payout if car is stolen or completely destroyed.
2. No Claim Bonus (NCB): This is your reward for not making claims. It accumulates like this:
   • 1st claim-free year: 20% discount
   • 2nd claim-free year: 25% discount
   • 3rd claim-free year: 35% discount
   • 4th claim-free year: 45% discount
   • 5th claim-free year onwards: 50% discount
3. Voluntary Deductible: This is the amount you agree to pay from your pocket before insurance kicks in.
   • Example: Repair cost: ₹20,000 Voluntary deductible: ₹5,000
     You pay: ₹5,000 Insurance pays: ₹15,000

Add-On Covers: Which Ones Actually Matter?

Add-ons increase your premium, but some are absolutely worth it. Let me rank them by importance.

Must-Have Add-Ons

1. Zero Depreciation Cover: Normally, when you claim for repairs, the insurer deducts depreciation from replaced parts. A bumper or headlight that costs ₹10,000 new might get you only ₹6,000 after depreciation. With zero dep, you get the full ₹10,000.
   • Real example: Accident repair bill: ₹80,000 Without zero dep: You get ₹52,000 (35% depreciation) With zero dep: You get ₹80,000. You paid ₹3,000 extra in premium but saved ₹28,000 in the claim.
2. Engine Protection Cover: Covers engine damage due to water ingress (driving through flooded roads) or oil leakage. Standard policies exclude this.
   • Engine repairs can easily cost ₹50,000-₹1,50,000. This add-on is cheap insurance against expensive repairs.

Nice-to-Have Add-Ons

• Roadside Assistance: Towing, flat tire help, emergency fuel delivery, battery jump-start. Many credit cards and car manufacturers already offer this for free. Check before buying.
• Return to Invoice (RTI): If your car is stolen or damaged beyond repair, you get the full invoice value (what you originally paid), not the depreciated IDV. After 2-3 years, the gap between invoice value and IDV shrinks, making this add-on less valuable.

Choosing the Right Insurer: Beyond Price

My friend saved ₹2,000 by buying online. But how do you know you're buying from a reliable insurer?

1. Claim Settlement Ratio (CSR): This is the percentage of claims the insurer approves.
   • Top performers (99%+ CSR):
     • Tata AIG: 99.06%
     • HDFC Ergo: 99.26%
     • ICICI Lombard: 98.54%
     • Bajaj Allianz: 98.23%
   • What this means: Out of 100 claims, 99 get settled. The 1% rejection is usually due to fraud or policy exclusions (like drunk driving).
2. Network Garages: Look for insurers with 5,000+ network garages for cashless repairs. Top insurers have 8,000-10,000 garages across India.
   1. With cashless facility:
      • You drive to network garage
      • Garage does the repair
      • Insurer pays garage directly
      • You pay zero (except deductible)
   2. Without cashless:
      • You pay garage ₹50,000 upfront
      • File reimbursement claim
      • Wait 2-4 weeks for insurer to pay you back
3. Digital Experience: In 2025, your insurer should have:
   • Mobile app for policy management
   • Instant claim filing via app
   • Live claim status tracking
   • 24/7 customer support via chat
   • If they're still asking you to "visit the branch with physical forms," run away.

The Online vs Agent Debate: My Final Take

Here's my honest recommendation:

Buy online if:

• You're comfortable with apps and online forms
• You can read and understand policy documents
• You're okay managing claims yourself (it's actually easy)
• You want to save ₹2,000-₹5,000

Stick with an agent if:

• You're 50+ and not tech-savvy
• You want someone to handle all paperwork
• You're willing to pay ₹3,000-₹5,000 extra for hand-holding
• Your agent has genuinely helped you with past claims (rare, but some agents do)

But even if you use an agent, ALWAYS compare their quote with online prices first. Many agents quote 20-30% higher knowing customers won't check.

👉 Action Step

Your car insurance renewal is coming up (or already overdue). Before you blindly pay your agent:

1. Check your current policy document - note your IDV, NCB%, add-ons
2. Visit 3 comparison sites (Policybazaar, Coverfox, Turtlemint)
3. Get quotes for the same coverage
4. Add Zero Depreciation if your car is less than 5 years old
5. Check insurer's CSR and network garages
6. Buy from whoever gives the best price with 99%+ CSR

Those 20 minutes of research can save you ₹2,000-₹4,000 this year. Over 10 years of car ownership? That's ₹20,000-₹40,000 saved.
​
And if your agent calls asking why you didn't renew through them, just say: "I compared online and found the same policy ₹3,000 cheaper. Can you match that price?"

Watch how quickly their "exclusive" quote becomes flexible.

Connect with me on LinkedIn, I write every day to help you make smarter money decisions👇

​