If you have bought a new car your car dealer must have suggested a new car insurance policy with it too. Do you know why?
A car insurance policy is mandatory to comply with the provisions of the Motor Vehicles Act, 1988. The Act states that every car which runs on Indian roads should have a valid car insurance policy attached to it. If you are found to be driving without a valid car insurance cover, you face legal penalties which might also lead to imprisonment. That is why when you buy a new car you often get the new car insurance policy bundled in the cost.
Though a car insurance policy is mandatory, you should know the aspects of the cover so that you know exactly what you are covered for. Since you are buying a new car insurance policy, here’s a complete guide to understanding the policy –
Types of new car insurance plans
There are two types of car insurance plans which are available in the market which you can choose from. These are as follows –
Third party liability plans are mandated by the Motor Vehicles Act while comprehensive plans are bought as per your discretion.
Now, let’s understand the coverage under both these types of plans –
Coverage under new car insurance policies
- Third party liability plansThird party liability plans cover any financial liability that you might face in the following cases:
- If your car caused the death of a third party
- If your car caused physical injuries to a third party
- If your car caused damage to the property belonging to a third party
- Comprehensive plansComprehensive car insurance plans, on the other hand, offer a wider scope of coverage which includes the following:
- Financial liability incurred if your car caused the death of a third party
- Financial liability incurred if your car caused physical injuries to a third party
- Financial liability incurred if your car caused damage to the property belonging to a third party
- Damages suffered by the car due to natural calamities. Examples – flood, earthquake, lightning, cyclones, landslides, etc.
- Damages suffered by the car due to man-made calamities. Examples – riots, malicious acts, theft, fire, explosion, etc.
- Damages suffered by the car when it is in transit via road, rail, air or water
- Third party liability plansThird party liability plans cover any financial liability that you might face in the following cases:
Thus, comprehensive plans cover not only the mandatory third party liability but also damages suffered by your car itself. These plans, therefore, offer better coverage and are recommended for your new car.
Moreover, under both third party and comprehensive insurance plans, there is a personal accident cover. This covers the owner/driver of the car against accidental deaths and disablements. If you face any accidental contingency when driving, the personal accident cover would pay a lump sum benefit depending on the contingency that you suffer.
Add-on covers under comprehensive plans
Besides covering the damages to your car, comprehensive plans also allow optional add-on covers. These covers make your car insurance plan comprehensive. You can buy one or more add-on as per your coverage requirement. Each add-on that you choose would require you to pay an additional premium. The commonly available add-ons which are recommended with your new car insurance plan are as follows –
- Zero depreciation This add-on negates the effect of depreciation on your car insurance claims. In case of damages, the depreciated value of the car’s parts is paid by the insurance company while you have to pay the actual cost. This greatly reduces the claim amount and incurs additional expenses for you. When the add-on is opted, the company does not consider the depreciation on the car’s parts. The actual cost incurred in repairing or replacing the parts is covered by the policy.
- Roadside assistanceImagine your car breaking down in the middle of nowhere and you have no help at hand! With roadside assistance add-on, help is just a call away. If the add-on is selected the insurance company promises emergency assistance if your car faces breakdown. You can get assistance for flat tyres, empty fuel tank, loss of car keys, etc.
- Engine protection If your car is submerged in a water-logged area and in starting your car you damage the engine, such damage would not be covered under your car insurance policy. However, the engine protection add-on covers such engine damages and pays the cost of repairs.
- No claim bonus protectionNo claim bonus is a bonus that you get if you don’t make a claim on your car insurance policy. This bonus allows you a premium discount when you renew the policy. Moreover, the rate of bonus also increases after each consequent claim free year. In case of a claim, however, the bonus becomes zero. If you take this add-on your bonus remains intact even after you make a claim.
- Return to invoiceThis add-on pays the invoice value of your car in case the car is theft or damaged beyond repair. You don’t get the depreciated cost but the full value of the car.
- Consumables coverThis add-on covers the cost of consumables incurred in repairing your car. Consumables include oil, lubricant, screws, bolts, etc.
How are premiums calculated?
When you buy a new car insurance plan, you often wonder what your premium rate would be. The premiums of car insurance plans depend on a lot of factors and when you know these factors you would understand the premium being charged. So, here are the factors which affect the premium of your new car insurance policy –
- Make, model and variant of your carThe make, model and variant of your car determines the off-road price of your car. This off-road price is used to calculate the coverage of the policy. Higher the value of the car higher would be the premium. So, if you buy a luxury car or an SUV, your premiums would be higher compared to when you buy an economic hatchback or sedan.
- Fuel typePetrol cars are cheaper than diesel cars and so the premium of your car insurance policy also depends on the fuel variant of your car. Petrol cars have cheaper premiums than diesel ones.
- Type of policy that you buyAs stated earlier, your car insurance policy can be a third party liability policy or a comprehensive package policy. Third party premiums are cheaper than comprehensive plans since they have a limited scope of coverage. So, if you buy a third party plan, the premiums would be lower.
- Location of registration of the carThe registration location also determines your car insurance premiums because the premiums charged for cars registered in metro cities are higher than those charged in non-metro cities.
- Type of car that you buyYou can buy a brand new car or a used one. Brand new cars have a higher value and thus their premiums are high. If you are buying a second-hand car, the premium of a new car insurance policy would be low.
- Add-ons selectedIf you make your car insurance policy more comprehensive by adding add-ons, the premium would increase. Each add-on comes at an additional premium and the number of add-ons that you select will determine your premium.
- Discounts available There are a range of discounts available in car insurance policies. If you are eligible for such discounts your premiums would be lowered. So, the higher the discount that you can avail the lower would be your premium and vice-versa.
New car insurance – 5 common myths v/s reality
When you are buying a new car insurance policy you have various preconceived notions about the plan. You might believe in myths while the real picture is completely different. Let’s bust some of the common myths associated with buying a new car insurance plans –
Myth #1 – I have to buy the car insurance policy from the car dealer
Many believe that since the car dealer bundles up a car insurance policy in the total cost of the car they would have to buy the policy from the dealer itself. This is a myth.
Reality – The dealer bundles up a policy issued by an insurance company with which it is tied-up. You are under no compulsion to buy the policy from the dealer. You can buy a new car insurance policy independently by comparing the different plans available in the market. You just need to communicate to your dealer about your intention to buy an independent policy whereupon the dealer would deduct the cost of insurance from the cost of the car. You can then buy a policy separately for your new car.
Myth #2 – The dealer offers me the best car insurance policy
It is often believed that the dealer offers you the best car insurance policy with your new car and so many individuals buy the policy from the dealer itself.
Reality – The dealer only offers the policy of the insurer with which it has a tie-up. That policy might not be the best car insurance policy because there are other insurance companies in the market too which offer competitive plans. To buy the best policy you should always compare the available plans in the market and choose the one which has the best coverage benefits at the most reasonable premium rates.
Myth #3 – Buying car insurance from dealer is easier compared to buying a policy independently
When you buy a new car, the dealer includes a car insurance policy with the other formalities of buying the car. As such, it seems like an easy way to buy the policy from the dealer itself.
Reality – Buying a policy independently is not as hard as it seems. There are various online websites which allow you to compare and then buy the best policy for your car. You can buy a new car insurance policy online with some simple clicks of your mouse or Smartphone. The complete process is done online and you can even pay the premiums online. Thus, you can buy the plan yourself easily and also ensure that you get the best coverage.
Myth #4 – Cashless claims can only be availed if I buy the policy from the dealer
Many individuals believe that since the dealer is selling the car insurance policy, they would be able to get cashless claim facility easily. If they buy independently, their claims might not get settled on a cashless basis.
Reality – Cashless claims are offered by all car insurance policies if you take your car to a networked garage. So, it is not mandatory to buy the policy from your dealer. You can buy the policy yourself and still get the benefit of cashless claim settlements.
Myth #5 – The add-ons suggested by the dealer are a must
Many often dealers include a range of add-ons in the car insurance policy. You might believe that these add-ons are in your best interests and you buy them without thinking too much. This, however, is not recommended.
Reality – You should buy only those add-ons that you need. The dealer might include the add-ons unnecessarily which you might not need. This would also increase the premium. You should, instead, understand the add-ons and choose those which you need. For instance, if your area has no water-logging problem, an engine protection add-on would not be required.
How to buy a new car insurance policy?
Now that you know all the important aspects of a new car insurance policy, here’s how you can buy the policy –
- Buying offline through car insurance agents or the insurance company
- Buying online through websites after comparing
Though both the options allow you to buy a car insurance policy, the online mode allows you to buy the best policy. It is because when you buy online you can compare the different plans and buy the most suitable one. Turtlemint is an online website which allows you to buy car insurance policies online in an easy manner. Here are the benefits why you should choose Turtlemint to buy car insurance –
- Turtlemint’s platform is simple and user-friendly. You can buy a new car insurance easily by following some quick and easy steps
- You can get personal assistance in case you face any problems and queries when buying a car insurance policy. Turtlemint’s team would contact you and personally guide you to choose the best policy and buy it online
- Turtlemint is tied-up with all the leading general insurance companies which offer the best car insurance policies. Thus, through Turtlemint’s website you can ensure that you buy the best policy available in the market
- The payment gateway of Turtlemint is encrypted and secured. You can securely pay the premium online without the risk of frauds or data theft
- Turtlemint also helps you in case of car insurance claims. When you face a claim all you have to do is call up Turtlemint’s toll-free helpline number 1800 266 0101 or send an email at email@example.com . Turtlemint’s team would then coordinate with the insurance company and help you get the settlement of your car insurance claim easily and quickly.
So, if you are buying a new car, buy a new car insurance policy on it independently through Turtlemint. You would also fulfil the legal requirement of having car insurance and also get to enjoy the above-mentioned benefits.
Frequently Asked Questions
- Can I buy a new car insurance policy if I buy a second-hand car?Yes, you can buy a new car insurance policy on a second hand car if the previous owner’s policy is not relevant.
- Do car insurance premiums have any tax benefits?No, the premiums paid for a car insurance policy does not give you any tax benefits.
- What is the term of car insurance plans?If you are buying a new car insurance policy on a vehicle bought on or after 1st September 2018, you would have to avail a mandatory three year third party cover. The own damage cover can be availed for one year or for three years as per your requirements.
- What premium discounts are available in car insurance plans?Under car insurance plans you get the premium discounts for the following factors –
- If you have installed safety devices in your car
- If you have modified the car for the usage of a disabled person
- If you have a membership of a recognized automobile association
- If you choose a voluntary deductible.
- Can I cancel a new car insurance policy?Yes, a new car insurance policy can be cancelled any time after you buy the plan. When you cancel, a part of the premium paid is refunded back depending on the period after which you cancel the policy.