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New Car Insurance

Just booked the new car that was on your wish list? It’s time to complete the motor insurance formalities before taking home your new beauty.

Your car dealer may offer a good policy, but you need to make sure it’s the right one for you.

Quick Guide to Buying New Car Insurance

Why choose comprehensive insurance?

When it's your car bought from your hard-earned money, why do you want to cover only a third-party?
Buying a comprehensive insurance covers both third-party liability as well as your own car damages and injuries.
We’d say that’s much better because it covers:

Bodily injury Liability

For death claims against you if your car injures and kills someone.

Property damage liability

For someone’s property damage caused due to an accident that was triggered by your car.

Own car damage

For damages caused to your car owing to an accident, natural calamities, or theft, fire, and several other man-made disasters.

Physical injuries (Personal accident cover)

For reducing your financial burden caused due to expenses from drastic accidental injuries.

Why buy add-on covers?

Your car may be your most prized possession at the moment.

Especially if it’s your first car, you want to make sure that you pamper it endlessly
and enhance your comprehensive car insurance policy with:

Zero Dep Cover

The replacement parts may burn a hole in your pocket if your car is stolen or damaged. That’s where your Zero Dep cover is your superhero! Make a claim and your insurer will help you fulfill your claim without deducting any depreciations.

Invoice Cover

Having an invoice cover is essential if you want to get its ‘on road price’ covered by your insurer. Your car damages caused due to an accident while you are still paying the car loan will also get compensated if you have this cover.

Engine Protect Cover

This is recommended for all brand new vehicles. If you engine breaks down due to non-accident, this add-on comes to your rescue.

NCB Protect Cover

You are rewarded with No Claim Bonus (that reduces your premium) for an accident-free year. An NCB Protect cover saves you from losing your NCB even after you make one claim in the year.

Passenger Cover

Travelling on a long journey with your family is enthralling. Don’t let your dear family members be left without any financial cover. Adding a passenger cover may slightly increase your premium. But at the end of the day, your family is priceless.

What affects your premium?

Factors on which you may have minimum control have direct impact on your premium. Your age, gender, location, driving record and some other factors determine your premium.

How does your car model affect your
cost of insurance?

Apart from the above factors, your premium will be partly based on the cost of the car. The fancy the car, the higher the premium. It’s simple as that!

New Car Insurance Myth Buster

  • Buy car insurance through the dealer.

    FACT: Most people believe that when you buy a new car, you need to buy insurance from the dealer itself. But, you never know how dishonest they could be just for the sake of selling a whole bunch of new things.
    Buying car insurance is crucial, but not necessarily from the dealer. It is recommended to get quotes from other sources and compare them with that of the dealer.

  • I get the best quotes of car insurance from my dealer.

    FACT: Your insurance dealer sells new cars. Not car insurance! He could be biased in his opinion of pitching the insurer with whom he has a tie-up or the one who pays him highest commission. Unfortunately, there is no guarantee that the particular insurer could be the best in terms of service quality level. Claim settlement ratios, add-ons, and several other factors have to be kept in mind before choosing your insurer. That requires research.

  • The first quote that the dealer gave to me is the best quote he can give.

    FACT: First things may always seem exciting. After all, it’s the first time you’re opting for it. But, you could do much better than that. With a little extra research, you will realize that first quote is way higher than market rates. Compare car insurance online to get better quotes.

  • You need all the add-ons proposed by the dealer.

    FACT: The add-ons you wish to buy entirely depends on your requirements. To earn better commissions, your dealer may be tempted to push for add-ons that you may not need. Just get the primary ones that are essential for you. If you are a new driver, the zero dep cover comes handy. This infographic can make things simpler for your understanding.

  • My dealer is giving me a free/Re.1 car insurance deal. It can't get better than this.

    FACT: Free insurance no longer exists! All discounts that dealers, insurance brokers, and agents can pass on to the customers is pre-approved by IRDA, before it is out in the market. Choose at your own discretion instead of becoming prey to foolish schemes. If your dealer says he is giving something free, he could be billing you for the insurance under some other head.

  • Buying insurance through a dealer can get me freebies such as a free car wash or free servicing.

    FACT: No freebies can justify the right insurance policy for your new car! Value added services such as free wash, free servicing, etc. should be provided to you irrespective of whether you purchase car insurance from him or not. Don’t let freebies lure you into buying a policy from him.

  • I am entitled to benefits such as cashless claim, quick survey etc. only if I buy my insurance from my car dealer.

    FACT: Not buying insurance from your dealer can still make you eligible for cashless claim settlements, quick survey, genuine part usage, quality assurance and other benefits. After all, these benefits are offered by the insurance company and not the dealer.

Choose specialists in the ‘business of selling insurance policies’ to get the best new car insurance.

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Frequently Asked Questions

If I am buying a new car, how should I transfer my existing policy cover to the new vehicle?

If you have sold off your old car and are buying a new car, you cannot transfer the existing policy to the new vehicle. However, what you can do is transfer the No-Claim Bonus (NCB) of your existing policy to your new car.

For that, you would have to contact your insurance company for the same. Usually, your insurer would ask you to submit necessary documents like sale letter of old car, third party insurance paper for old car, NCB document (if applicable) etc.

Note that there may be variation in premium rates and change in underwriting criteria for a new vehicle. The premiums are determined on the basis of the car model and manufacturing year and if you are eligible to receive NCB (provided you have had claim-free years).

Keeping these in mind, the IDV would be different and hence the premiums would change. So, do not expect the premium rates to stay the same.

If I am looking to purchase new car insurance online, once I visit a website, what information do I need to fill from my end?

Generally, you don’t require any documentation while filling inputs to receive quotes online. However, we always recommend keeping details of your previous expired insurance policy and Car Registration RTO, and car model handy at the time of buying a policy.

This is just for reference, in case you need to add the information.

I wrecked my car recently while parking and want to claim car insurance online? How should I go ahead?

Check out the procedure for car insurance claims in India.

Note: In case of accidents, you first need to file an FIR with the police and then carry on with the same remaining steps.

Here in case of wrecking your car while parking,

  • Immediately call your insurance broker or the insurance company as soon as possible
  • Do not tow the vehicle until someone from the inspection team arrives and inspects the vehicle to assess damages before the repair work is done.
  • Ask them how to proceed and what forms or documents will be required to support your claim.
  • Your insurance company may require date, time, and a detailed description of how the accident occurred.
  • Supply all the information and documents that your insurer requires to process your claim (Car Registration Papers, Driving License. In case of accidents, you also need to submit an FIR copy)
  • Keep records of all your expenses as a result of the accident which may be reimbursed under your policy.
  • Keep copies of your paperwork intact. You may need it for reference later.

If I have recently purchased a new car, should I get add-on covers with my car insurance policy? If yes, then which add-ons are a must-have for me?

Yes having add-on covers is equal to extra protection for your car. All you have to do is pay a little extra and get add-on covers as per your requirements.

Zero Depreciation cover is an absolute must have for all new or relatively new cars. Also known as Bumper-to-Bumper cover or Nil Depreciation cover costs somewhere between 5 – 10% of your standard premium. It does not take into account depreciation on car parts. It prevents you from spending a lot of money from your pocket for replacing parts of your car in the event of an accident.

The other add-on covers that you can opt for are the Invoice Cover and Roadside Assistance (RSA) add-on cover.

I am seeking online insurance for car. I wanted to understand how is the premium of new car insurance determined?

The premium for your car insurance is calculated on different factors for the Own Damage cover (Comprehensive cover) and the Third party cover.

The Own Damage cover Premium is calculated basis the following:

  • The IDV (Insured Declared Value) of your car (the value of your car that will be compensated to you in case of theft or total damage)
  • The make and model of the car
  • Your car’s manufacturing year
  • Your geographical location
  • The applicable No Claim Bonus, accumulated over claim free years
  • Any add-on benefits you wish to opt

The Third party cover shields you from loss or injury you cause to a third-party (the calculation is based on the engine capacity). You may also apply for the Personal Accident cover, which will protect you from accidents. The premium amount would have the PA cover and service charges would be reflected in it.

What if I plan to cancel my new car insurance policy? In such a case, what should I do?

In this case, you need an alternate policy. Driving on the road without an insurance policy is not an option. Because by law, it is mandatory to have third-party insurance policy. So, if you aren’t willing to buy a comprehensive plan, you should atleast opt for a third-party plan.

However, note that though the third-party plan is offered by insurance companies, we always recommend a comprehensive plan for you and your car’s safety.

I read somewhere that claims shouldn’t be made on minor damages. This could help me save my NCB discount. But then how do I figure out up to what level of damages fall under “minor damages”?

It is true that you would lose your accumulated NCB if you make even a single claim not matter how small the damage should be.

There is no such ‘level’ of minor damages. This is something you need to figure out and judge. If you there are only minor scratches or if at all the mirrors or indicators are broken and can be easily replaced, then in such cases don’t make a claim.

If the expenses for damage repairs are way too high to be borne by you, then in such a case it’s alright to make a claim and lose the NCB discount.

I paid Rs. 8 lakh for my car. So, why has this ex-showroom price/the money that I paid for my car not been covered?

As per market depreciation, all cars are depreciated each year at a certain percentage based on the age of the car. The depreciated value of your car is the primary factor that determines the Insured Declared Value (IDV) of your car.

This is the schedule to arrive at your car’s IDV:

Age Of Vehicle Depreciation % For Calculating IDV
Upto 6 Months 5%
6 Months to 1 Year 15%
1 - 2 Years 20%
2 - 3 Years 30%
3 - 4 Years 40%
4 - 5 Years 50%

As you see, when it comes to new car, the depreciation value is around 5%.

It is due to this reason that you receive an Insured Declared Value (IDV) that is less than the price you actually paid while purchasing your car.

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New Car Insurance