Insurance is like a spare tyre. You may not require it, but not having one is not an option.

Things to Remember When you Buy a New Car and A Car Insurance Policy

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With the festive season round the corner, banks are offering attractive car loan rates and companies are slashing vehicle prices. So it is the optimum time to shop for your dream car, and an appropriate car insurance.

Here are a few things to ask yourself when you buy a new car.

  • Do you really need a big car?

    The answer to this clearly depends on your financial situation. It should be noted that the value of a car would depreciate to 50% within a span of three years, and this could go on for 5 years. If you are a salaried individual the car loan interest is also not deductible.

    So, you need to identify the appropriate type of car to purchase after careful consideration.

  • When is the right time to invest in a car?

    Car dealers have specific targets set for the end of every quarter, in the months of March, June, September and December. Buying a car at the end of a quarter is not recommended because, once the targets are met, dealers might be reluctant to offer good deals on subsequent purchases.

  • Petrol or Diesel?

    The fuel cost of petrol is higher than diesel; however, petrol cars are less expensive than diesel cars. Also, the maintenance costs of diesel vehicles are higher when compared to petrol cars.

    If you travel for more than 1500 km every month, you should ideally opt for a diesel car.

Choosing the right Car Insurance

In India, a car insurance is mandated by the Motor Vehicles Act. Purchasing a car insurance is beneficial in claiming for damages to your own vehicle, in the case of an accident. You can also claim for insurance if your car is stolen. This is included in the Comprehensive Cover that all policies provide.

Additionally, an insurance pays for the damages caused by you to a third-party vehicle. This is part of the third-party liability cover that is offered by car insurance policies.

Insured Declared value (IDV)

The insurance premium that you have to pay is determined by the Insured Declared Value (IDV) of the car. The IDV is essentially the market value of the car at present, and it is directly proportional to the insurance premium on the vehicle. Hence, a lower IDV corresponds to a lower insurance premium, and vice versa.

No Claim Bonus

On purchase of a car insurance, the policy documentation would have mentioned a factor called No Claim Bonus (NCB). This is the discount that the insurer provides you for not making any claims in a year. This discount is deducted from the premium for the subsequent policy year. The discount offered is usually between 20-40% on the premium amount. An attractive feature of the NCB is that it gets accumulated over the years, as long as there is no disruption in the renewal of the policy.

Zero Depreciation Insurance

An ordinary car insurance policy deducts the depreciation on a car and then reimburses the claim. If you have opted for a Zero Depreciation Policy, then the claim is reimbursed completely, irrespective of the car’s depreciation rate. The cover includes the plastic parts as well. However, this policy is allowed for the initial years only.

Cashless Policy

In the case of a cashless insurance policy, the car-owner needs to pay a part of the expenses for repair. Insurers have tie-ups with a vast number of car care providers in the country. These are called Network Garages. If the car is repaired at one of the network garages, the insurance company pays the garage directly and the car-owner just has to bear the mandatory charges. The insurer deducts the amount of depreciation on parts of the car based on the usage of the vehicle, and a flat 50% for the plastic parts.

An attractive feature of the cashless policy is the quick and hassle-free car repair process, and the fact that the owner needs to contribute only a small amount towards it.

Add-on covers

Most car insurance policies clearly specify certain situations or driving factors that are not included in the policy cover. Expenses caused by wear and tear, damages caused to the car while it was used for illegal purposes, damages incurred while the driver was under the influence of alcohol, and willful damages caused to the car by the owner are some examples of these exclusions.

However, some of these can be included in your car insurance policy by purchasing add-on covers. Exclusions such as wear and tear expenses can be added to the coverage at the cost of a higher premium.

Voluntary Excess

This is the amount that is absorbed by the car-owner when he makes a claim. When you decide to choose this option, it is possible to decrease the premium paid for own-damage up to 35%. Voluntary excess is usually lesser than the NCB amount that you will be eligible for the following year.

It is important to note that buying a car insurance policy online is cheaper; so it is ideal to purchase one directly from the insurer’s website or from a financial services aggregator. Also do a good amount of research before you make a choice.

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

Car Insurance Reviews

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  • Tata AIG Car Insurance
    "Satisfied policy"
    0.5 5.0/5 "Blown Away!"
    TATA AIG is the best company to take the car insurance. Since long time i have taken this insurance. The customer care people used to call me to renew the policy and they used to policy renewal letter. I will do payment through online. Several times i have claimed the policy and i have received very good response.
    Was this review helpful? 1
    , hyderabad
    Reviewed on Jan 18, 2019
  • Universal Sompo Car Insurance
    "Excellent Service"
    0.5 5.0/5 "Blown Away!"
    I had taken this insurance policy a long time back and it has been a good insurance policy. I had been paying the premium online and the payment method has been convenient. There has been a claim made once and the claiming method has been simple.
    Was this review helpful? 0
    , navi mumbai
    Reviewed on Jan 18, 2019
  • New India Car Insurance
    "Comprehensive benefit policy"
    0.5 5.0/5 "Blown Away!"
    My car insurance was taken from New India. I don't speak with their customer care since i don't require it. I had a claim experience which is a easy process without any tension. As per their policy, the maximum claim amount settled. Since they are providing good services i have opted this policy. They have given me a road side assistance and bumper to bumper facility.
    Was this review helpful? 0
    , chennai
    Reviewed on Jan 18, 2019
  • Bajaj Allianz Car Insurance
    "Good to Go with Bajaj"
    0.5 4.0/5 "Great!"
    The conditions and the insured which they are providing is good, I have insured Ford Car with Bajaj Allianz, the premium amount is reasonable but they can reduce it. Its 1.5 year old year but still the insurer providing 24 hours service, cash less garages and they have tie up with many centers, the response is great.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 17, 2019
  • ICICI Lombard Car Insurance
    "Premium should be standard as per market"
    0.5 4.0/5 "Great!"
    I never used the policy if something happen I claim it, I didn't interact with the customer care but I get the reminder message for car renewal. I have insured my maruthi Suzuki riz with ICICI Lombard, The premium is higher but still they are good.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 14, 2019
  • HDFC Ergo Car Insurance
    "Very good"
    0.5 5.0/5 "Blown Away!"
    Even my car was insured with HDFC Ergo. It is a second-end car and have chosen the third party insurance. I have not done any claim so far. The premium is reasonable. It offers bumper to bumper facility and road side assistance. The policy period is 2 years.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 14, 2019
  • Tata AIG Car Insurance
    "Good Insurer"
    0.5 5.0/5 "Blown Away!"
    My financier suggested the Tata Aig general insurance, the premium is economical for the car policy. I have honda amaze car it got insured with them. The insurance company is providing 24 hours service, cash less garages, brake down service for the tenure of four years. On time I got the papers from the Tata Aig.
    Was this review helpful? 1
    , tirupur
    Reviewed on Jan 10, 2019
  • Tata AIG Car Insurance
    "Good Insurer"
    0.5 5.0/5 "Blown Away!"
    My financier suggested the Tata Aig general insurance, the premium is economical for the car policy. I have honda amaze car it got insured with them. The insurance company is providing 24 hours service, cash less garages, brake down service for the tenure of four years. On time I got the papers from the Tata Aig.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 10, 2019
  • National Insurance Car Insurance
    "Excellent Service"
    0.5 5.0/5 "Blown Away!"
    I had taken this Insurance policy for my Maruti Car and i had been paying the premium on an annual basis. The premium amount has not been too high and there has been cash less garages available with this insurance policy. Their customer support has also been helpful at times.
    Was this review helpful? 1
    , pune
    Reviewed on Jan 09, 2019
  • ICICI Lombard Car Insurance
    "Nice Policy"
    0.5 4.0/5 "Great!"
    My car was insured with ICICI Lombard. Last year i have purchased this insurance policy. My wife has referred me about this policy. I pay the premium amount of Rs. 13500. They have given me a convenient IDV value. I had no claim experience so far.
    Was this review helpful? 0
    , new delhi
    Reviewed on Jan 09, 2019
  • New India Car Insurance
    "Need to improve the service"
    0.5 3.0/5 "Satisfactory"
    I'm not satisfied with the service provided by new India. I have bought the car insurance policy. They closed their branch on every weekends hence its difficult to renew the policy. I have been paying the premium amount of Rs. 14000 which is a competitive price. They have given the IDV value of Rs. 1.50 lakhs.
    Was this review helpful? 0
    , mangalore
    Reviewed on Jan 09, 2019
  • New India Car Insurance
    "Average Car Insurance"
    0.5 3.0/5 "Satisfactory"
    My car insured with the New India Insurance company. I have been renewing the policy with the same company for 3 years. I have paid the premium amount of Rs. 7000 and they have offered me a satisfied coverage value. The documentation process was fine
    Was this review helpful? 0
    , mangalore
    Reviewed on Jan 09, 2019
  • review Car Insurance
    "Its Good"
    0.5 3.5/5 "Pretty good"
    Last year I had car policy with Bharthi axa whenever I try to renew it ask my poliy no, whenever I mention the same, it shows the its incorrect. If I try to reach the customer care its not reachable. I done the claim, some minor damage back side of the car, they have processing fee 1500. Remaining all taken care by the insurer.
    Was this review helpful? 0
    , bangalore
    Reviewed on Jan 08, 2019
  • ICICI Lombard Car Insurance
    "Great Policy"
    0.5 4.0/5 "Great!"
    ICICI Lombard has a good brand value hence i have selected the car insurance policy with this card and the dealer has also recommended about this policy. I pay the premium amount of Rs. 9000 and this is a 100% coverage with bumper to bumper facility. I'm not sure about the IDV value. Its easy to renew the policy.
    Was this review helpful? 2
    , new delhi
    Reviewed on Jan 08, 2019
  • ICICI Lombard Car Insurance
    "Good"
    0.5 5.0/5 "Blown Away!"
    Previously my car was insured was with ICICI Lombard and it was offered by the showroom. I got a call from the representative for the policy renewal as reminder. I got the insurance paper. I have not done done a claim. It is a comprehensive with zero dep. The premium was high so changed my insurer.
    Was this review helpful? 1
    , mumbai
    Reviewed on Jan 08, 2019
  • Future Generali Car Insurance
    "Good"
    0.5 4.0/5 "Great!"
    I have taken a car insurance from Future Generali through online portal. The premium was reasonable and also they have provide bumper to bumper facility. The policy period is one year. There is no interaction between the customer service. I just gave my car for the claim so no experience.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 08, 2019
  • Oriental Insurance Car Insurance
    "Good insurance company"
    0.5 2.0/5 "Expected more"
    Dealer has referred me about this oriental car insurance when i purchase the vehicle. They have rejected the claim since the copy of FIT is not available. They have given me a coverage value upto Rs. 6 lakhs. For the past 3 years i have been renewed the policy with the same company.
    Was this review helpful? 1
    , chennai
    Reviewed on Jan 07, 2019
  • Iffco Tokio Car Insurance
    "Good Policy and you can try"
    0.5 4.0/5 "Great!"
    Two months before, i have taken my car insurance policy with Iffco Tokio. Its a PAN India agreement policy for my Maruti Car. I don't remember about the coverage value. This is a zero depreciation policy. I paid the premium amount of Rs. 6500. I have not seen any add on and cashless garage facility.
    Was this review helpful? 1
    , chennai
    Reviewed on Jan 07, 2019
  • Reliance General Car Insurance
    "Its Excellent"
    0.5 4.0/5 "Great!"
    My brother is working with Reliance hence I took my two wheeler policy from this insurance company. I have hyundai accent car, they are providing cash less garages for the damage. I have zero depreciation bumper to bumper policy for the term of one year.
    Was this review helpful? 0
    , mumbai
    Reviewed on Jan 07, 2019
  • Reliance General Car Insurance
    "Good Policy"
    0.5 5.0/5 "Blown Away!"
    My car insurance policy was taken with reliance. The dealer has provided me a policy with this policy. This is a 100% coverage value which covers the bumper to bumper facility, They have given me a IDV value of Rs. 11 lakhs. I pay the premium amount of RS. 33000.
    Was this review helpful? 0
    , thane
    Reviewed on Jan 04, 2019
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