Things to Consider When Buying Car Insurance for Your New Car

If you have recently purchased a new car and are still deciding when and what type of car you should be buying, then this article will help you make the decision. You can learn all about car insurance when purchasing a new car.

If you are planning to buy a car you can search for different car models online as per your requirements and find a car that fits your budget. Here is a checklist that will help you in buying the right car. There are a number of things that you need to decide such as EMI’s, maintenance charges, car insurance etc. In India 3rd Party car Insurance is mandatory, but it is suggested that you buy a comprehensive policy to enjoy a safe ride.

Firstly Decide Between a Big Car and a Small Car?

There are a number of factors that help you decide the type of car you should buy. It will depend if you are a bachelor or if you have a nuclear or a joint family. And if you are taking a car loan then you will to pay the interest as well. So, depending on your budget and requirement you can decide if you want a hatchback, SUV or a Sedan.

Even the value of your car insurance cover depreciates with each passing year. Thus, buying a car is not a short-term affair. It is a long-term affair that requires planning so that it can serve the required purpose.

Deciding Between the Diesel/Petrol/CNG Variant

You will have to decide between the petrol and diesel variant. However, deciding the one can be a difficult choice due to the following reasons:

  • Fuel cost of CNG and Diesel cars is lesser than petrol cars
  • Petrol cars are cheaper than Diesel and CNG cars
  • Maintenance of Diesel/ CNG cars and their service and the cost of spare parts is quite expensive and servicing costs) are on a higher side as compared to petrol cars.
  • If your monthly driving is more than 1200 Km, then it is better to opt for Diesel and CNG variants.

Car Insurance in India

In India, it is compulsory to buy car insurance for all the car owners. It offers protection against any loss or damage that may incur while driving on the road. To avail the coverage benefits you will have to pay the premium on an annual basis. The cost of the premium is based on the Insured Declared Value stated by the car owner. Actually, IDV or the Insured Declared Value of your car is equal to the current market value of the vehicle. If the IDV of your car is more, then the insurance premium for your car will also be more. And the IDV of your new car will be more and it will depreciate in the years to come. You can easily calculate the premium online using a car insurance calculator on the insurer’s site.

As the premium is expected to rise every year, you can avail a 20 to 50 percent discount with a No-Claim-Bonus option. Motor insurers offer No claim bonus to the policyholders for not filing a claim during the policy period. NCB can be availed at the time of policy renewal. It starts from 20% and can range up to a maximum of 50 percent in a span of five years.

Coverage Provided in a Car Insurance Policy

There are a number of motor insurance companies in India such as HDFC Car Insurance, SBI Car Insurance, Tata AIG Motor Insurance and the cost of the premium and the coverage provided will vary from one insurer to another. Usually, car insurance policies cover the following risks-

  • Accidental injuries resulting from an accident while driving
  • Help is provided in case the vehicle breaks down in the middle of the road
  • Loss or damage caused to a third-person, vehicle or property by the insured vehicle
  • Some insurers also provide emergency medical assistance in the middle of the road
  • A collision causing physical damage to the insured car
  • Roadside assistance in case of an emergency situation

The Different Types of Car Insurance Plans

There are two types of car insurance policies that are available in India. One is 3rd Party car Insurance and the other is comprehensive car insurance. Both of them are explained below:

1. Third-Party Car Insurance

A car insurance contract is between two parties i.e. the policyholder and the insurance company. A third-party can be anyone including a person or property other than the insurance provider and the policyholder. Third-parties covered under car insurance include pedestrians, passengers, any other driver, vehicle, and animals and even third-party property.

It is the most basic and essential form of car insurance that is required in India. It offers coverage against any legal liabilities or any loss or damage by your car for which you are liable to pay to a third-party.

Majorly it covers-

  • Loss or damage to a third-party resulting from an accident, theft and fire
  • Legal liabilities arising due to accidental injuries or death of a third party

For any of the above-mentioned circumstances, the insurer will offer compensation as per the scope of coverage mentioned in the policy wordings.

2. Comprehensive Car Insurance Policy

A comprehensive car insurance policy is recommended for those who want to avail the maximum benefits from their car insurance scheme. If your car is new you must opt for this tone. This type of car insurance policy offers coverage to both the policyholder and the third-party in case of loss or damage resulting due to an accident, theft, fire, natural calamities, and vandalism.

Simply put, it recompenses for accidental bodily injuries and accidental death of a third-party by your car. It also compensates for damages caused to your own car from an accident.

There are other add-on benefits that you can opt for such as roadside assistance, agency repair, towing assistance, car refueling etc.

Before finalizing a comprehensive car insurance policy, you should read all the terms and conditions of the policy. For example, the coverage provided by Bajaj Car Insurance will be different from SBI car insurance and likewise. Since car insurance policies may differ in terms of the coverage provided, you need to check the policy wordings for the following benefits-

  • Emergency medical assistance in case of accidental injuries
  • Benefits provided to the passengers and driver (including employees)
  • Agency repair service in registered workshops
  • Emergency car replacement service
  • Emergency roadside assistance
  • No-claim discount percentage

3. Add-on Benefits That You Can Avail From Your Car Insurance Policy

You can opt for additional benefits in a comprehensive car insurance policy. And for new cars, it is always better to opt for some add-on covers to ensure timely assistance in case of a road emergency.  However, they may vary from one insurer to another. Usually, the add-on covers that are provided are listed below.

  • Vehicle Towing Assistance- In the event of an accident or collision, you can seek towing assistance from the insurer. Your new car will be towed to the nearest garage where you can get the repair work done.  Usually, the towing charges are covered, but this depends on the insurer.
  • Repairing Assistance – In case your new car breaks down in the middle of the road, you can get immediate on-site repair support from the insurer. The insurer may compensate the fees charged by the mechanic depending on the plan that you have purchased. But the cost of the replacement of the parts shall be borne by you.
  • Dead Battery – In a scenario where your car’s battery runs down in the middle of the road then you can seek assistance from your insurer to jump-start the engine. Then, you can easily get your car repaired at the nearest garage.
  • Removal and Extraction of Car – In case your car breaks down, the insurer will provide crane assistance for extraction of the car from the area of damage.
  • Refilling – Imagine your new car running out of fuel in the middle of the road and there is no petrol pump nearby. What will you do? If you buy this add-on cover, you can get emergency fuel assistance from your insurance provider. The cost of the fuel will be covered or not that will depend on the insurer.
  • Car Unlocking Support – Nothing can be more annoying than forgetting your car keys inside the car. With this add-on cover, you can get immediate assistance from the insurer to unlock the car.
  • Agency Repairs – When buying a new car especially if it is a luxury car, then you should opt for agency repair cover. When there is a road emergency your car will be repaired at any of the authorized workshops. This will save you a lot of money and ensure timely repair.
  • Assistance for Flat Tyres – In case the tyres of your car go flat while driving then assistance will be provided to replace the tyres. It is suggested that you carry a repair kit in your new car.
  • Emergency Vehicle Transportation Assistance – If your new car is immobilized or is in the workshop for repair after an accident or collision then with this add-on benefit you will be provided transportation assistance to help you travel back home.

While completing your car insurance paperwork after purchasing your dream car, be informed that you can get a new car insurance policy from top insurance providers instead of buying it from a dealer.


If you have prior knowledge about car insurance and the scope of insurance coverage then it will be easier for you to make a choice and also make an informed choice. It will help you find the best policy for your new prized possession.

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