Car Insurance Guide for First-Time Buyers

Everybody dreams of owning their car someday. The chances are that you have already done your research on the make and model, the colour and even the accessories you want to get with it. However, there is one other aspect that is highly important in the car purchasing process that most first-time car buyers might not be aware of. Selecting the right car insurance for your new sweet ride!

If you plan on taking your car out for a ride on the streets of India, then it is mandatory for you to purchase car insurance. Otherwise, you can be slapped with a hefty fine. So, it is imperative that you put the same amount of thought into your car insurance as you did in your car.

Selecting the perfect car insurance can be nerve-wracking. What type to get, what should be the premium, what is the procedure, etc. Here is a complete car insurance guide for people buying a car for the first time. 

Why do you even need car insurance?

First things first, what is the reason behind the need for car insurance?

1. Car insurance provides the car owner with cover for damages to and loss of the car.
2. Car insurance offers indemnity for the losses incurred towards third-party damage.
3. Car insurance has a provision for add-on covers for occupants and a paid driver.
4. Car insurance also offers 24*7 free roadside assistance etc.

It is mandatory and highly recommended that you get motor insurance for your car so that accidents and unforeseen circumstances should not leave you in a monetary crisis. 

What are the types of car insurance?

Depending on the coverage, car insurance can be of two different types.

1. Liability Only or Third-party Insurance

Liability-only insurance only provides cover for legal liabilities of the third party in case of an accident. The government has made it compulsory for car owners to have liability-only insurance for their car at least.

1. Comprehensive Motor Insurance

Comprehensive motor insurance provides cover for the owner’s vehicle aside from the third-party damages. In addition, this type of car insurance policy also covers any damages caused by man-made or natural reasons.

Buying the type of insurance is a personal choice; however, it is always recommended that you choose comprehensive coverage as it provides you with security under almost every circumstance. 

How does car insurance work?

Understanding the workings of any insurance policy can be very confusing, especially when it is your first time buying a vehicle. Here is a simple example that will help you understand how car insurance actually works. 

Let us suppose that Mr X has bought car insurance for his newly purchased car. Mr X will have to pay a yearly premium in order to keep his car insured every year. Now in the case of any unforeseen accidents, he will receive the coverage amount according to the guidelines of his insurance policy.

However, with a host of insurance providers, Mr X is eligible for a No Claims Bonus on the next premium he has to pay. The No Claims Bonus in simple terms is a discount on the premium of the renewed car insurance, which can range from 20% to 50% depending on the renewal year. 

Moreover, Mr X can also get add-ons on his car insurance that facilitate him with extra services, like engine protection cover, tyre cover, key replacement cover, paid driver cover, occupants’ cover, etc., depending on the insurance company. 

Understanding IDV (Insured Declared Value)

IDV or Insured Declared Value of the vehicle is the factor on which the value of the insurance policy is based. The IDV is approximately equal to the market value of the vehicle and can be calculated based on the showroom price of the given vehicle. People buying a car for the first time should be aware that when they renew their car insurance, the IDV of your car will get reduced because of the rate of depreciation.

How do you get car insurance?

Planning on buying your first car and not sure about to get car insurance for it? In India, it is mandated to purchase four-wheeler insurance while purchasing the car.

You can use a car insurance premium calculator which allows you to input your details and get a quick premium quote for your car. In today’s day, there are many car insurance policies available on the internet, and you can easily compare and decide which insurance suits your needs perfectly.

So, make sure you protect your car before you even get it out of the showroom.