Buying a new car is a really big moment for most people: the result of years of hard work and no small amount of daydreaming. Of course, the worst nightmare of any new car owner is the tiniest scratch or dent on their beloved shiny new car. This is you start thinking about making other adult decisions: new car insurance – what kind should you get? Should you spring for the fancy one with the high premium and all the add ons or get a basic one and save your money?
Very important questions! It’s even more important to know what you’re getting into before you buy new vehicle insurance. As always, we’re here to give you a crash course on new car insurance.
- New car insurance is essentially a financial damage protection cover for one of the biggest investments most of us make in our lifetimes: our cars.
- New car insurance comes in many forms and categories with varying levels of coverage, from comprehensive insurance that covers all damage to you and your car along with others, to third party insurance, which is legally mandated by Indian motor law.
- Choosing the best new car insurance for you will depend on your own specific requirements and how much coverage you are looking for. Like with most financial decisions, there is no one-size-fits-all answer for everyone.
What is New Car Insurance?
New car insurance is exactly what it says on the shiny new tin: insurance for your beloved new car. Of course, in the wide world of financial planning, things are rarely ever as simple as the label on the metaphorical tin. This is the case with new car insurance too: it comes in many forms with many kinds of covers, from comprehensive plans that provide, well, comprehensive coverage, to cheaper third party insurance covers to ensure compliance with Indian motor laws.
This is where car insurance for new cars comes in: it insures and protects your new car even before its wheels hit the road, even before its registered at the RTO. Full protection from the moment you hand over your cheque to the car dealer!
Best Coverage for Your Wheels: What Car Insurance Do You Require?
Of course, when you Google new car insurance – which is how you probably found us, too, hello! – in India, you’ll be presented with such a wide range of choices that it’ll make your head spin right round. So how do you choose the best car insurance for you? How much should you be insured for? Read on to learn more.
As with most financial decisions, you’re ultimately the best judge of what you need, and the best car insurance for you based on your income, where you intend to drive, and what sort of coverage you’re looking for. Car insurance for new cars can broadly be divided into two types: first party insurance plans – also known as comprehensive plans – and third party insurance plans.
Insurance plans are truly named keeping their customers in mind, so a quick look at their names will give you a solid signpost to follow. First party insurance, also known as comprehensive insurance plans, covers the interests of the first party – ie. the car owner – on the road. This means if you accidentally run into a pole or bump someone’s bike and dent your car, your insurance will cover the damages. First party insurance covers usually include third party insurance in their terms as well.
Third party insurance, on the other hand, covers damages caused by your driving to other people and their property. So if you get into a car accident and both cars get totalled, third party insurance will cover damages for the other car, but not yours. According to Indian motor law, every car has to have third party liability insurance to legally ply on its roads. Naturally, this kind of new car insurance price is is lower than comprehensive insurance. However, you save money by leaving your own interests on the road unprotected.
Between the two, comprehensive car insurance wins the contest hands down: it gives your new car insurance in a way that lets you drive worry free, knowing all your interests and damages on the road are covered comprehensively by the plan.
Pros of New Car Insurance
Before you go looking for a good new car insurance quote, here are some important pros you should know about comprehensive new car insurance for your newest baby.
Tie ups with garages for servicing your car.
Many new car insurance policies come with wide garage networks that allow you to use their services seamlessly. The money exchanges hands between your insurance provider and the garage, often in a cashless manner, and you can rest easy knowing you don’t have to worry about money when it comes to taking care of your new car.
No claim bonuses.
Many new vehicle insurance policies have a clause that essentially rewards good driving and a spotless track record by offering payouts if you don’t make claims under their policy. If you’re convinced you’re an excellent driver who has no need for new car insurance, you might be pleased to know that your talent and care will not go unrecognised if you get car insurance for your new car!
Coverage in case of accident.
New car insurance policies protect you – not just your vehicle – in case you get into an accident. If you get injured and are disabled or die, car insurance policies will compensate you. Further, this cover can be added for anyone travelling in your car – without specifying names!
Damage to your new car.
This is one of the most obvious advantages: car insurance for new cars protects you from losses in case your car gets damaged. This includes a pretty wide ranging set of clauses: natural disasters, war,
Third party insurance.
If you buy a comprehensive insurance plan, your new car insurance also covers any harm or damage caused by your car to others – third parties – affected by your driving. This also lets you be legally compliant with Indian motor law.
Who is it for?
While the name might suggest that new car insurance is only for new car owners, that’s not necessarily the case. If you own a car, you should have insurance – not just because third party covers are a legal requirement, but also for your own peace of mind.
You might be sure you’re a great driver – careful, deliberate, and mindful of all traffic laws – and we’d believe you! However, the truth is, the world is unpredictable, and you can’t control whether other people might damage your car. Roads are rife with careless drivers, potholes, accident prone turns, and even theft and robberies: and this is what new car insurance promises to protect you from.
Comprehensive Plan Vs Third Party Insurance
We went over the difference in an earlier section, so we’ll give you a quick lowdown in the form of a table now:
|Factor to consider||Comprehensive Car Insurance||Third Party Car Insurance|
|What kind of damages are covered?||All damages to your car and third parties and their assets are covered.||Only damages to third party assets are covered.|
|What is the premium like?||Given the greater coverage, premiums are higher.||Given the lower scope of coverage, premiums are lower.|
|Is it legally required?||No.||Yes: Indian law mandates that you cover third parties from possible damages before your car hits the road.|
|Does it cover damages to me?||Yes.||No.|
|What if I need more coverage than the standard plan?||Comprehensive plans offer add-ons at extra premiums.||No add-ons are possible with third party insurance.|
Did You Know?
When you take that thrilling step of owning a vehicle, it’s only natural to be concerned with protecting it on the scary roads of India. Seriously, over 4.5 lakh people were injured in India in road accidents in 2019.
Factors to Consider
Alright, so now you know everything there is to know about the different types of car insurance. But which one should you pick? Here are some factors to consider before you buy new car insurance:
What kind of policy have you decided on?
We’ve outlined the perks and features of both comprehensive and third party policies above. If you’re looking for the cheapest premiums on the market, third party insurance gives you minimal coverage and keeps you legally compliant. If you’re looking for more comprehensive coverage, first party insurance is the best choice for you.
What insurance provider will you choose?
Now that you know which new car insurance plan you will get, you can get new car insurance quotes from a number of different providers and find the best fit for you. You’ll also want to consider the features they are offering you: cashless garage services, good customer service, how reliable the provider is, and so on.
Do you want any add-ons?
You have a number of choices for added protection in new vehicle insurance: zero dep insurance, which protects the coverage provided to your car from depreciation, engine covers, insurance add ons, and so on.
What is the IDV you’re being offered?
The IDV in car insurance is the Insured Declared Value of your car, ie. its current market value. It dictates the premium you will pay on your new car insurance as well as the amount you will get at settlement. The lower the IDV, the lower the premiums, but also the lower the payouts.
What is the incurred to claim ratio of your provider?
This ratio essentially tells you how reliable your provider is when it comes to settling claims, and how happy previous customers have been with it. The higher the ratio, the more likely you’ll get your insurance money payout.
Word to Remember
Liability: Liability, in simple words, is the money you’re on the hook for when things get damaged as you’re driving. If you hit someone’s car, you’re liable for the damage to their car: this means you’re responsible for bearing the cost of that damage. New car insurance policies take on this liability – responsibility – onto themselves.
New car insurance – and car insurance in general – acts as a protection cover for your car and lets you rest assured that in case things go awry, your car is covered along with you yourself. New car insurance in particular extends this protection to what is undoubtedly a large and significant investment for most people.
If you’re buying a new car, you want to ensure you are protected from the potential financial losses caused by any mishaps to it – or to you – as you drive. This is what new car insurance does: it provides financial protection in the event the unthinkable comes to pass.
First party insurance, also known as comprehensive insurance, covers all damages caused in case of an accident or harm to your car. This applies to a number of causes, from war and human violence to natural disasters.
If you’re looking to compare new car insurance prices, you can reach out to insurance providers for quotes. However, an easier way to get this information is online, which allows you to compare quotes across providers.
Read more about Commercial Vehicle Insurance.