Pros And Cons Of Buying Motor Insurance From A Car Dealer

When you are looking to buy a new car, you will also be reading up about the various car insurance policies in the market. But when the car dealer makes it easy to buy a policy by bundling the insurance with the car sale, then you would be really tempted to purchase it from the dealership itself. However, before you take a hasty decision in this regard, you should weigh out the pros and cons of insurance purchase through the dealership.

Advantages Of Buying Motor Insurance From A Car Dealer:

The process of buying insurance from a car dealer certainly saves the customer a lot of time. This is predominantly because the car dealer would be aware of the intricacies in the policy and would advice the customer on the most appropriate plan. The customer also does not have to approach an agent or visit the branch office of the insurer for the insurance purchase.

  • The entire process of insurance purchase is streamlined and more convenient when it is through a dealership.
  • The customer may receive bundling discounts on the purchase of the car and the insurance from the car dealer.
  • The dealership will be able to offer the customer a policy that incorporates all the risks he/she wishes to cover. Following this, the customer is not required to approach an insurer for his/her coverage needs.
  • The customer can get in touch with the car dealer to get clarifications on the coverage or at the time of claims. The dealer will efficiently assist the customer in such matters.

Disadvantages Of Buying Insurance From A Car Dealer:

Some car manufacturers enrol with an insurance intermediary and dictate aspects such as claims and servicing. Others negotiate with the insurance company directly. All in all, car dealers usually make a lot of money through the sale of insurance.

You should know that buying insurance from a dealership has its own set of disadvantages:

  • The car dealer will have tie-ups with specific insurance companies. The customer will be able to purchase the insurance solutions provided by these companies only. However, the online mode of insurance purchase helps the customer select from a wide range of insurance companies offering extensive coverage.
  • The car dealer may not offer the best price on insurance. So, while customers save a lot of time through this purchase, they may not really save money. Car dealers work with insurance providers on a commission basis. So, the customer may be required to pay higher premiums than what they would pay if the insurance was purchased through another mode.
  • The process of buying car insurance from a dealer does not give you the opportunity to compare plans between insurers. This is, in fact, a crucial step in the process of deciding on an insurance policy.
  • Dealerships may include voluntary excesses or add-on covers under your auto insurance policy without specifically highlighting it. You should be alert and read through the policy coverage carefully before signing on the dotted line. In case your policy has a high value for voluntary excess, you will be required to pay a large part of the claim amount. Having add-on coverage that is not useful to you will only result in an increase in the premium you pay, without any other benefits.

The Final Word:

Although the standard procedure to buy motor insurance for decades has been through insurance agents, alternative modes of insurance sales have gained immense popularity these days. The modern customer requires instant gratification; so the lag between the purchase of a car and its insurance has become more of an inconvenience. With the introduction of online policies, the customer is able to buy a suitable plan online at the comfort of his home.

It is possible to buy online car insurance policies through neutral financial websites or from the insurance company’s website directly. Online policies are also cheaper than offline plans and can be renewed/maintained easily. The premium payments can be done effortlessly online, in a very secure manner.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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