When you have set your sights on purchasing a car, new or used, one of the main factors that you would be looking at is the cost of the vehicle. However, the cost of your car insurance policy is an equally important variable that needs to be accounted for at the time of a vehicle purchase. It should be noted that the age of the car that you have decided to purchase influences your motor insurance rates to a great extent.
Motor Insurance On New Cars
It is understood that new cars attract greater insurance premiums, as they have a higher market value and are more costly to repair. Nevertheless, there are certain factors that are responsible for driving down insurance rates of new cars.
Listed below are salient features of the purchase of auto insurance for a new car:
- New cars are usually equipped with the latest safety features, contributing to lower insurance rates.
- While purchasing a car insurance for a new vehicle, you will only need to furnish the car?s RC book and license for the purpose of identification or verification.
- The insured declared value (IDV) of a new car is a prime factor that determines the cost of its auto insurance. For a new car, the IDV is determined as 95% of the ex-showroom price.
- When you are looking to insure a new vehicle, you would be eager to protect it with add-on covers such as the Zero Depreciation cover, Return to Invoice cover, etc. Insurance providers offer attractive rates on these add-ons for the benefit of policyholders.
- In case you have accumulated a No-Claim bonus from your previous auto insurance, you can transfer it effortlessly to the insurance of your new car. This is particularly useful when you have accumulated an NCB that would give you a discount of around 50% on your car insurance premium.
- When you are buying car insurances, it is best to explore options online for the most competitive rates. You can also compare policies at the websites of neutral third-party financial vendors, and make a well-judged decision.
Auto Insurance On Old Cars
Older vehicles are usually not updated with the latest safety features. Hence, they are more prone to theft and vandalism. This makes the car insurance on these vehicles dearer, as the rate of premium is directly proportional to the risk of theft.
When you make a decision to buy a used vehicle, you should check the car?s Vehicle Identification Number (VIN) and identify whether the car was ever stolen before. You should also look to purchase a comprehensive car insurance policy that would offer you protection against thefts, fires, and vandalism, apart from accidents.
Prominent features of the purchase of motor insurance for used vehicles include:
- The documentation required for insuring a used vehicle includes the car?s inspection certificate, the RC book that indicates the transfer of ownership of the vehicle, and the valid driving license of the new owner.
- The IDV of the car that is based on its age, brand, and model determines the premium that a car owner pays for its insurance. A new car undergoes depreciation by around 10% every year till it becomes 5 years old. After this, the insurer evaluates the car?s condition and comes into an agreement on the IDV with the car owner. The premium is subsequently determined based on the IDV.
- Insurance providers stop issuing add-on insurance coverage to cars that are more than 5 years old. Some insurers do not offer certain add-ons to cars that are older than 3 years.
- The No-Claim bonus that has been accumulated from your previous insurance policy can be transferred to your current auto insurance. This is very useful when you have managed to accumulate an NCB that contributes to a 50% discount in subsequent premium.
- Used car insurance is expensive. Hence, it is recommended that you research thoroughly for the most lucrative quotes from insurers before settling on an appropriate coverage.
In summary, irrespective of whether you have purchased an old or a new car, you need to ensure that it is safeguarded with the right insurance coverage that fits your requirements and budget.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017