A Mercedes here, a BMW there: it’s no more uncommon to find high-end cars on Indian roads thanks to the emerging economy. The demand for luxury cars has led the segment expanding considerably from 4,000 units in 2007 to 33,000 units in 2014. The numbers are expected to only increase in the future.
Motor insurance is a necessity for all cars, especially since the law requires you to get one. However, the basic insurance that the law demands is just not good enough if you have a very expensive set of wheels in your garage. Recently there was an incident where a Lamborghini Gallardo went up in flames. Its instances like this that you will need to protect yourself from by getting the best possible cover that you can get.
There are two types of motor insurance that you can buy:
- Third-party liability coverage: This insurance covers injuries/damages that you cause to someone/something.
- Comprehensive insurance This insurance is an extensive coverage which includes car damage, theft and personal accident expenses.
Third-party coverage is the bare minimum that you can purchase and that is expected of you by law. It is not adequate coverage; a comprehensive insurance is necessary because you need cover for both the expense caused by damage to you and damage caused by you. If you own a luxury car (such as Mercedes, Audi, Jaguar etc.) or if you are planning on spending on one, make sure that you get additional covers as well. The ones that are recommended are:
- Engine and electronic circuit cover: It is essential that you get an EEC cover for your high end car because work on the engine can burn a big hole in your pocket. The frequent rains in India can cause damage to the engine and electronic circuits, which your regular insurance will not cover.
- Registration/invoice cover: In the event of your car being stolen or great damage to it, this add-on cover will make sure that you are paid the invoice value of the car (including first-time registration charges and road tax).
- Consumables cover: This cover makes sure that you don’t spend on consumables, which are parts that can be replaced. Whether it is damage due to wear and tear or due to accidents, this cover will take care of the costs. For example, the cost of getting new tires and replacing your car’s bumper can be a significantly large number if your car is a high end one. With the consumable cover, you will not have to worry about these and other similar costs.
Insurance premiums and claims for Luxury cars: Over the last few years, the insurance premiums for high end cars have been increasing steadily. Since April of this year, insurance premiums for third-party cover has been raised by a shocking 30% if you have a car that is more than 1500 cc.
Since you are spending a huge amount on your luxury car in the first place, doesn’t it sound like a good idea to pay a little extra and protect your investment on the long run? There are so many options out there for a comprehensive cover. The best thing that you can do is do your research well to compare prices and then make your decision. Get a good deal to make sure that you can withstand the fall if it comes to it.
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GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017