What to Know About Insurance When Buying a New Car

Even though purchasing a new car can be a thrilling experience, it is important not to overlook one crucial aspect: car insurance. To protect your investment from any unpredictable situations, it is essential to know about the intricacies of car insurance. Here is a simple guide to assist in understanding car insurance while buying a new vehicle.

Get the Basics Right

Car insurance is an agreement between an individual and an insurance company that provides insurance coverage for vehicles. On receiving the premium amount, the insurance company will cover specific expenses in case of damage, theft, or accidents involving your car.

In India, it is required by law to have third-party car insurance. It includes payments for harm or injuries to others, excluding damage to your personal vehicle. Choosing full coverage insurance is advised because it includes protection for both third-party losses and any damages to your own car.

Types of Car Insurance

• Comprehensive Insurance:

Both third-party claims and damages to your vehicle are covered. While more expensive, the extensive protection offered can provide peace of mind.

• 3rd Party Insurance:

As the minimum required by law, this covers damages to others but leaves your vehicle unprotected. Although cheaper, this option could expose you to additional costs if the vehicle sustains damage.

What Influences Your Premium?

• Car Make and Model:

Higher premiums are typically attracted by high-end vehicles due to increased repair costs.

• Age of the Car:

Older cars generally come with lower premiums because of reduced market value.

• Location:

Living in metropolitan areas can lead to higher premiums due to greater risks of accidents or theft.

• Driving History:

Lower premiums can be earned by maintaining a clean driving record, as it suggests a lower risk to insurers.

• Coverage Type:

  Extensive protection is provided when one acquires a comprehensive car insurance, even though it costs more.

Also Read: Understanding Different Types of Car Insurance Coverage

The No Claim Bonus (NCB)

The No Claim Bonus (NCB) serves as an incentive for drivers who exhibit responsible behavior on the road. If there are no claims filed within the policy year, policyholders can receive a discount of up to 50% on their own damage premium for the next year. This helps to save money and promote safer driving behaviors.

Understanding Insured Declared Value (IDV)

The maximum amount that the insurance company will pay out in the event that the vehicle is declared stolen, or a total loss is the IDV, which represents the car’s present value. Better coverage is provided by a higher insured stated value; nevertheless, the premium is usually higher. It is critical to strike the ideal balance between scope and expense.

Exploring Add-ons and Riders

• Zero Depreciation Cover:

Full compensation is provided without accounting for depreciation, making this a smart choice for new car owners.

• Engine Protection:

Covers engine damage from specific issues like waterlogging—a real concern in some areas.

• Roadside Assistance:

  Provides peace of mind if the vehicle breaks down.

Choosing the Right Insurance

• Compare Policies:

You will come across a good car insurance policy after scouting through different plans and their quotes both online and offline.

• Assess Premium vs. Coverage:

Ensure the policy meets protection needs, rather than simply opting for the cheapest option.

• Check Claim Settlement Ratios:

This indicates how effectively an insurer handles claims—an essential factor in the decision.

• Read the Fine Print:

Comprehend what is covered and not covered to prevent unexpected surprises in the future.

• Consider Your Driving Patterns:

Regular drivers or individuals in high-risk locations could see greater advantages with comprehensive insurance.

Insuring Your New Car

Though dealers commonly provide insurance at the time of sale, it may not always be the most advantageous option. Make sure to compare quotes from different providers as many of them have fast online quotes available for a more efficient evaluation of options.

Don’t Forget Your NCB Transfer

When upgrading from an old car, transferring the No Claim Bonus to the new policy can lead to significant savings. Insurers should be notified about the NCB transfer during the purchase process.

Navigating the Claims Process

1. Insurers should be notified immediately after an incident.
2. A police report should be filed if needed, especially for theft or major accidents.
3. A claim form should be submitted to the insurance company.
4. Necessary documents, such as a driving license and car registration, must be provided.
5. The insurer should inspect the car to assess the damage.

Conclusion

Getting the proper insurance for a new car is just as important as buying the car itself. By understanding the fundamentals, conducting comparisons, and making knowledgeable choices, both vehicle and financial protection can be guaranteed. Always aim for a balance between coverage and cost to find the ideal policy.

Reach out at 1800 266 9693, email support@elephant.in, or visit Elephant.in to explore car insurance options!
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.| EL/BLOGS/24-25/18