Buying a new car is a big decision. You may do your research about the different types of models, its features, and its price and choose the best car that suits your needs. But, your research must also include selecting the right insurance policy for the vehicle. Read on to know more about why you must purchase insurance for your newly purchased car.
No matter the type of car you purchase, be it a standard vehicle or an SUV (Sports Utility Vehicle), it is paramount that you insure the car before driving it on the road. In India, as per the Motor Vehicles Act, all car owners must purchase an insurance policy; it is a legal requirement. Driving without valid insurance is illegal, and it can attract a hefty fine. Apart from complying with the law, you must purchase insurance for your new car to keep your asset protected from risks like accidents, natural calamities, theft, etc.
In India, most insurance companies offer two types of insurance policy – Third Party Insurance and Comprehensive Insurance. The former is a basic policy and mandated by law. Under the policy, the insurer is liable to compensate for the loss occurred to the third-party’s vehicle and physical injury resulting from an accident involving your insured vehicle. The comprehensive policy, on the other hand, offers a broader coverage and it protects against third-party liabilities as well as damages to your car.
Now that you are aware of the types of car insurance policies you can buy, you must know the benefits of purchasing insurance for your new car.
1. Protection against accidental damages
Depending on the type of insurance policy you hold, you get protection against damages caused by the accident. If you have third-party insurance, the insurer will compensate for the losses you may cause to the third-party’ vehicle. If you have comprehensive coverage, the insurer is liable to pay for the damages to the third-party as well as to your car.
2. Protection against theft or total damage
Car theft can cause immense emotional stress as well as financial strain. If you have a comprehensive car insurance plan, you shall receive compensation (equal to the IDV of the vehicle) from the insurer. Similarly, if your car gets damaged beyond repairs due to an accident, the insurer will compensate for the loss equal to the IDV. The IDV or the Insured Declared Value is the maximum amount the insurance company pays in the event of car theft, and it is determined at the time of purchasing the insurance.
3. Protection against natural calamities
Natural calamities like rain, storm, earthquake, floods are unpredictable and can occur at any time causing severe damage to life and property. If your car gets damaged due to any natural calamity, your car insurance policy will come in handy to fix the damage and get compensation for the repairs.
4. Add-on covers
When you buy a comprehensive car insurance policy, you have the liberty to purchase add-on cover, which is an additional coverage option that extends the scope of your regular policy. It also allows you to personalize your policy to suit your specific needs. Some of the popular add-on covers that people purchase include, zero depreciation cover, roadside assistance, engine protection cover, no claim bonus protection, return to invoice, key replacement cover, engine and gear box protector, downtime protection, etc.
No Claim Bonus is the reward offered by the insurers for not filing a claim during the policy year. The benefit offered is in terms of reduction in the premium amount or increase in the sum insured upon renewal of the policy. The NCB keeps increasing for every year of not filing a claim. So, if you do not file a claim for five years, then upon renewal of the policy, you may get a 50% discount on the premium.
6. Increases the resale value of the car
While purchasing a car insurance policy for your new car, you may not be thinking about resale. But, after a few years, when you wish to sell the car, you would surely want to get good value. And, one of the best ways to fetch a good price while trying to sell your car is to have a comprehensive insurance cover. A higher-IDV (Insured Declared Value), and a policy with add-on covers will signify to the buyer that you really care about your car and maintain it in top condition, and you can quote a higher price while selling your car.
7. Obliging with the law
In India, as per the Motor Vehicles Act, all car owners must mandatorily have at least a valid third-party insurance cover always. Driving without a license is an offence, and it can attract a hefty fine. So, when you purchase insurance for your new, you not only protect your car from damages but also comply with the law. While it is mandatory to purchase a third-party cover, experts recommend buying comprehensive insurance as it helps you get wider coverage. Although the premium for a comprehensive cover may be slightly higher, it is a worthy investment considering the amount you can save in the event of an unfortunate accident.
8. Peace of Mind
Lastly, when you have car insurance for your new vehicle, you can have peace of mind knowing that your priced asset is sufficiently protected against accidental risk.
A lot of insurance buyers in India think of car insurance as a compulsion, but you must consider it as an investment that provides you several benefits as mentioned above. So, if you have recently purchased a new car or if you are planning to buy one, make sure that you get an insurance cover at the earliest. There are many reputed insurance companies in India like HDFC Ergo that offers a wide range of plan to suit the various needs of the customers at a competitive premium. You can compare the various plans and choose the one that best suits your specific needs.