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How long do I have to insure a car after purchase?

Wondering for how long you have to insure a car after purchase? No worries, in this article we will discuss everything about car insurance. Currently, the government has made it compulsory for all car owners to insure their car for at least 3-5 years. Long-term premium payments will initially cost high to consumers but will save them from future renewals. In July 2018, the Supreme Court announced that third-party insurance for a new car would be for 3 years. As the vehicle becomes older, its depreciation accelerates. In such conditions, most consumers skip the annual renewable process or can prefer to buy a policy that doesn’t cover all types of risks. Such an initiative of the government has improved penetration in the overall sector. Such a decision of the Supreme Court has removed the question of insured and uninsured, and the insurance covered on third-party vehicles will become bigger and better.

Choose the right car insurance.

In India, all car owners must buy car insurance as per Motor Vehicle Act. This insurance plays a pivotal role while claiming damage in case of an accident. Such insurance also works if your car is stolen. This aspect is covered in Comprehensive Cover, which all companies provide.

Insurance is also liable to pay if a third-party vehicle is damaged because of your vehicle. This part is covered in third-party liability coverage, which all insurance companies offer.

Insured Declared Value (IDV)

The insurance premium you are supposed to pay is decided by Insured Declared Value (IDV). It depends on the market value of your car and it depends on the insurance premium of the car. Also, low IDV indicates low insurance premiums and vice versa.

No Claim Bonus

While purchasing the insurance policy for your car, the insurance company will introduce you to the No Claim Bonus (NCB). This is the discount your insurance company will provide you if you don’t claim any amount in a year. This discount is around 20-40% on the premium amount. Also, this NCB amount accumulates yearly, as long as you keep renewing your policy.

Zero Depreciation Insurance

Many car insurance policies deduct the vehicle's depreciation value and refund the claim. If any consumer opts for Zero Depreciation Policy, you can expect a complete refund of the claim, irrespective of your car’s depreciation rate. Such insurance also covers the plastic parts of the car. However, such a policy is only applicable for the initial years.

Cashless Policy

Insurance companies have tie-up with different network garages. If you repair your car in any network garage, the insurance company will pay directly to the garage owner, and you need to pay for the mandatory charges. If you have opted for the cashless policy, you must pay a partial amount for the repair expenses.

The most attractive aspect of the cashless policy is its easy repairing procedure and the fact that you need to contribute only a small amount.

Add-on covers

Many car insurance policies specify the things that will not be covered. Such circumstances include:

  • Wear and tear is caused to the car when used for an illegal purpose.
  • Damages were caused to the car when the driver consumed alcohol.
  • Willful damages were caused to the car.

However, buying an add-on cover can also cover the above situation. Wear can be included in your expenses if you pay a higher premium.

Voluntary Excess

This amount gets absorbed if the car owner makes a claim. When you choose this option, you can reduce the premium paid for your damage by 35%. The amount of Voluntary Excess is less than the NCB, which will become eligible next year.

Some factors to consider while buying car insurance in India

In India, most car owners buy car insurance because it is mandatory. They never compare different insurance plans, and their decision to buy car insurance is based on the low premium cost. But such negligence often leads to inadequate coverage.

Buying car insurance is as important as buying a car for yourself. So, if you have a car, you must know about different aspects of car insurance and compare different insurance companies' offers while making a decision.

Third-party insurance is mandatory.

As per the Motor vehicle Act, all owners must have third-party insurance. Driving without insurance is a punishable offense, and you may have to pay for that. So, ensure that you have an insurance policy for your car each time you drive.

Usually, most car dealers provide third-party insurance to their customers. Such insurance only covers the damages caused to the third party because of your car. It protects from third-party vehicle injuries, disability, or death, irrespective of who is driving your car. This policy will never pay for the injuries that happen to you or anyone present in the car while driving, and the damages to your car will not be covered.

It is better to go with a comprehensive package.

One of the better options is to look for different car insurance policies online and choose the one that provides comprehensive coverage. As compared to third-party coverage, a comprehensive package provides wider coverage. It covers third parties and the damage caused to you or your car.

Over to you!

I hope you understand a lot about car insurance and how important it is for you. You must take insurance as soon as you buy a car.




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