Why is New Car Insurance So Expensive in India?
Why is New Car Insurance So Expensive in India?
Published on July 03, 2023. EST READ TIME: 3 minutes
Car insurance is compulsory in India. As soon as you purchase a vehicle, you need to get insurance coverage for it. This is why car insurance plans are in such demand and all the motor insurance companies in India offer these plans. There is a difference in the price of the different plans as various parameters such as the age and the model of the car play a deciding role. But why exactly are new car insurance policies so expensive? Let us find out about it in the article below.
Reasons Behind Higher Car Insurance Prices for a New Car
As mentioned above, there are some deciding factors that push up the new car insurance price. Some of them include:
1. More prone to thefts
A new car is very attractive and therefore, more at risk of being stolen. This makes it a risky proposition to insure the vehicle and the insurance provider charges for the additional risk. This is one of the most important reasons why you pay a higher premium when you buy a comprehensive car insurance plan for a new vehicle.
2. Higher IDV
The IDV, or the insured declared value, is the current market price of the car. You need to declare the IDV when purchasing the motor insurance cover. If you lose the car to theft, fire or any damage beyond repair, the insurance provider will pay you the IDV amount with which you can purchase a replacement vehicle. Since the IDV of a new car is very high, the car insurance premium is also high as the two are directly proportional to each other.
3. Expensive repairs
Another reason for the high premium of a new car insurance policy is the repair costs of a new car. After a road accident, the insurance provider pays for the repairs. Since the repair costs are bound to be high, the insurer charges a higher premium to keep itself covered for high payouts.
4. Age of the vehicle
A new car doesn't have a lot of depreciation. This is why it has a higher value. The car insurance costs are proportional to the amount of depreciation and this is precisely why you need to pay an extra car insurance premium for a new vehicle.
As you can see, there are some very logical reasons why the price of a new car insurance policy is high as compared to an old car. If you have a new vehicle, get the best policy to keep it safe and protected at all times.
How to Calculate New Car Insurance Premium?
Gone are the days when you had to run behind insurance agents or make several trips to the office of your insurance provider simply to understand how your car insurance coverage was priced. These days, you can use very beneficial and convenient online tools and understand the cost of your motor insurance coverage in just a few minutes. If you have a new car and are in the process of looking for a new insurance cover, you can very well check the premium before you make a purchase. Visit the portal of any insurance provider and enter the details regarding your car in the online premium calculator. You will see the price of the comprehensive car insurance plan for the car, based on its make and model number.
How to Reduce New Car Insurance Premiums?
While the new car insurance price can go up, there are some intelligent ways in which you can reduce the price as well. Here are some easy hacks:
1. Explore your options
As soon as you buy your car, the dealer will offer you a car insurance policy. Do not blindly buy the policy from your car dealer as that may be more expensive than the other options available. Instead, compare the available policies and see if you find a cheaper option. In all probability, you will and this will lower the new car insurance price.
2. Get safety gadgets
As mentioned above, a new car is more at risk for theft and this is why the car insurance premium is high. Install some anti-theft safety gadgets in your vehicle and make it safer. When the insurance provider notices these and understands the reduction in risk, the premium amount will be reduced too.
3. Check for any available discount
You may be eligible for several discounts. At times, insurance providers offer discounts for special celebrations, holidays, etc. You may also have some eligibility discounts so discuss the options with your insurance provider and then make a purchase.
4. Select a proper IDV
You need to be logical when selecting the IDV for your car. Play safe, but don't hike up the IDV too much as then you will have to pay a much higher premium. Keep it at a reasonable amount, stay safe and pay a moderate car insurance premium.
5. Filter your riders
Riders are add-on covers that you can attach to your comprehensive plan. They are very handy and offer added coverage such as engine protection, roadside assistance, etc. However, you have to pay extra for every rider, so filter the riders and choose only the ones that are of the best use to you. This will help you to keep the price to a minimum while getting all the relevant covers as well.
As you can see, there are some valid and legitimate ways in which you can lower the price of your motor insurance plan even when you buy a brand new policy, so see how you can apply these hacks when you look to get the insurance cover.
Conclusion
You cannot rely on a basic third party car insurance cover when you have an expensive, new car. The new car insurance price may be on the higher side, but when you compare it to the covers you get, you will understand the rationale behind the pricing. Get a good policy and keep your vehicle protected. Try to apply the tips mentioned above and reduce the cost of the policy, but do not compromise on the coverage at any cost.
Disclaimer : The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales
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