Motor Insurance: Look beyond your car dealer to buy insurance

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Some dealers at times sell insurance on the pretext of promising discounts on subsequent renewables.

While the insurance landscape has undergone a sea change and customers are buying what they need, as far as car insurance goes, it continues to be sold rather than purchased. Many of you continue to opt for insurance ascribed by dealers because you think it is hassle-free. While this may be true, you do not realise that the premium you are shelling out is around `5,000-8,000 more in comparison to what you will be paying if you bought your car insurance online.

Therefore, you must consider the following factors when buying insurance for a brand new car.

Cost comparison

For instance, dealers charge around Rs 35,000 for a mid-size sedan with 1.6L engine. However, if you search online, coverage for similar specifications is Rs 26,000. In the case of SUVs with a standard 2.2L engine, the dealer insurance will set you back by up to Rs 70,000. However, purchasing a policy online for similar vehicle type will not cost you more than Rs 45,000.

Some of the dealers are known for encouraging you to buy insurance from them. They may suggest that you may lose your cashless claim privileges or lose certain aspects of your warranty or that insurance is free within the whole package of car purchase. This is not true.

In fact, Insurance Regulatory and Development Authority of India (Irdai) has prescribed elaborate rules in this regard and no dealer can refuse to give you cashless facility as long as your insurer has a tie-up with them. In fact, warranty is also extended by car manufacturers and the dealer has no role to play on deciding what will be covered as part of your warranty basis where you purchase your insurance.

Too many add-ons

It is seen that a pre-determined package of add-ons were given to customers irrespective of the type of usage or requirements. For example, if you are not staying in a low lying/flood prone city, engine protector may not be of much use. Similarly, if you are purchasing a car from the smaller segments, consumables cover/key & lock replacement cover may be a choice basis the premium that it commands.

If you or your family members drive the car, there is no point of taking a Paid Driver Legal liability cover. If you/family members have adequate personal accident insurance policy or have a life insurance policy with adequate accidental disability coverage, you may want to take a relook at the un-named passenger cover.

No claim bonus

Another critical factor you must consider at the time of buying insurance from your car dealer is No Claim Bonus (NCB). It is a discount on premium offered by your insurer if you do not make a single claim in the previous policy year which can go up to 50% after five claim-free years.

Some dealers at times sell insurance on the pretext of promising discounts on subsequent renewables. You are entitled to an NCB irrespective of where you purchased your policy from and it has got no correlation with your car dealer. In fact, you are authorised to an NCB even if you change your insurer in the succeeding year, as long as you have had a claim-free year. Even if you decide to change your insurer after a year, NCB bonus will be still offered as long as you have a claim-free year.

Buying a car from a dealer is the only option you may have, but this is not the case with motor insurance. It is suggested that you conduct a research on motor insurance; what features it should have, how much Insurance Declared Value it should offer and what will it cost so that you can question your insurer when he offers you an insurance plan. This way you can increase the protection offered by the insurance package at a much lower price.

So, how can you buy insurance without taking physical possession of the car? The process is simple: All you have to do is call your dealer and ask for the engine, chassis number of the car you are purchasing and the RTO under which it will be registered. These details will suffice for buying the policy that you truly need for your car. Once insurance is done, the same can be shared with your car dealer, who will get your car registered.