Insurance policy purchase of new and old car-what should you know

by Kanika Shelatkar Insurance Consultant

Whether you own a new or an old car, you need to take an auto insurance and renew the policy regularly before driving it on Indian roads. It is mandatory to have your four-wheeler insured in India if you want to drive legally. This mandate is under The Motor Vehicles Act, 1988. Neglecting to follow this rule can land you in a legal mess. Besides, it is better to get your vehicle insured.

Purchase of new car insurance vs. old car insurance

Comprehensive policy or third-party policy- which one to purchase?

A third-party policy is simple and compulsory. It does not provide own damage cover against theft, fire, or other disasters. However, a comprehensive policy comprises of the mandatory cover as well as extends own damage cover. New cars are prone to theft, so a comprehensive plan is appropriate, but expensive. You have to consider whether you wish to spend funds for extra protection or spend less money and buy the basic cover?

If you register no claims during the policy term, car insurance premium for insuring an old car will be low due to the accrued No Claim Bonus, a discount for not filing any claim. Also, premium for older car is less compared to a new car due to its low Insured Declared Value.

If you have a new car, you should go for a comprehensive new four-wheeler insurance to get full coverage. If you have two cars, you can opt for a Third-party Liability plan for the older car if it is used less and choose a Comprehensive new insurance plan for the newly-purchased car.

Choosing appropriate add-ons

Keep in mind that you cannot purchase add-ons with a third-party policy. You need to purchase a comprehensive plan for purchasing add-ons. Think of them as additional plans that can be included to a comprehensive base plan.

Add-ons are based on the age and usage of the car. For instance, it is recommended to go for a zero-depriciation add-on if it is new four-wheeler as it removes the depreciation aspect while settling claims. Such a cover might be unavailable for old cars.

Similarly, it is not wise to pay premium for passenger cover add-on if you travel in your four-wheeler solo. Old vehicles tend to have issues, so roadside assistance add-on seems helpful.

Understand the car usage

Before sitting down to compare car insurance online, understand what is the usage of the vehicle. Also, ask the following question:

· Is the car for everyday commute?

· Are you going to use the vehicle for long rides regularly?

· Do your go for road trips often?

· Do you own another four-wheeleer?

· Who is going to drive the car?

· Is the car for personal travel or other passengers are also going to be seated in it?

· Have you been involved in a car accident?

· Is your geographical are vulnerable to floods?

· Is your locality vulnerable to car theft?

Make a note of your answers to the above questions and any other related queries that might come in your head. Base on the answer go with the coverage that is the appropriate one.

Buy car insurance online

You can buy car insurance policy online for a new as well as an old car. It only takes few minutes to buy or renew them online. In some cases, the insurance provider might want to examine your four-wheeler if a substantial time has passed after the lapse of the policy.

It is recommended to compare the policies before purchasing or renewing them. Bear in mind to compare motor insurance based on the premium, extra features, cover and the overall repute of the insurer. Know the terms and conditions completely before purchasing a policy.