For new and first time car buyers, buying insurance after the first year can become a trick exercise. Not many first time buyers are aware of the intimacies of insurance as it is generally given for free for the first year at the time of purchase by the dealer. Buying car insurance is very easy, but overpaying for your insurance is even easier. Insurance companies are waiting for customers who are ignorant about insurance and are great at selling you expensive insurance. Educating yourself on the basics of buying insurance will help you in saving lots on your insurance premium. Car insurance is made up of two components:
- Total own damage premium = Premium paid to recover damages when your own car gets damaged
- Liability Premium = The liability premium consists of
- Basic third part liability
- Personal accident (PA) cover for owner driver
- Legal Liability (LL) to person for paid driver/ operation maintenance
The liability premium is typically fixed as this is governed by law and hence cannot be negotiated.
The total own damage premium is based on the assessment of the motor insurance company provider and provides enormous scope for negotiation.
The car insurance companies overcharge you the premium by manipulating the IDV i.e the Insured's Declared Value.The premium is calculated on the basis of the IDV (the selling price of the vehicle after the deducting depreciation for very year).
Insurance companies do not depreciate the car to show its correct value and hence charge you a high premium. At the time of selling you the insurance they will tell you that your car is in a good condition and hence the depreciation should be lower and hence you end up paying a high premium. Please note that at the time of damages the claims are paid on the market value (based on the actual condition of the car) and not on the IDV.
So when selling you an insurance the insurance company will tell you that your car is worth say 5 lakhs and insure you with an IDV of 5 lakhs. However at the time of paying claims they may assess the real value of your car as say 4 lakhs and pay you based on a 4 lakh value and not a 5 lakh value. Avoid over insuring your car, assess the market value of the care and insist that a value close to the market value be the IDV.
A good place to start when buying insurance is policybazaar. You can start and enter the car details and compare the premiums. The comparative premium rates offered by various insurance companies are a starting point for you to understand the going market rate.
Once you have the base rates known to you, ensure that the IDV is aligned to the market value, call up all the insurance companies and negotiate hard with all of them. Don't be shy of haggling over price, i.e. one insurance company against the others. Tell the insurance company about the quote you have got and ask them to better it. You can do two or three rounds of negotiations and bring down the price. To be able to negotiate it is better that insurance is bought in person and not online.
The total own damage premium is based on the assessment of the motor insurance company provider and provides enormous scope for negotiation.
The car insurance companies overcharge you the premium by manipulating the IDV i.e the Insured's Declared Value.The premium is calculated on the basis of the IDV (the selling price of the vehicle after the deducting depreciation for very year).
Insurance companies do not depreciate the car to show its correct value and hence charge you a high premium. At the time of selling you the insurance they will tell you that your car is in a good condition and hence the depreciation should be lower and hence you end up paying a high premium. Please note that at the time of damages the claims are paid on the market value (based on the actual condition of the car) and not on the IDV.
So when selling you an insurance the insurance company will tell you that your car is worth say 5 lakhs and insure you with an IDV of 5 lakhs. However at the time of paying claims they may assess the real value of your car as say 4 lakhs and pay you based on a 4 lakh value and not a 5 lakh value. Avoid over insuring your car, assess the market value of the care and insist that a value close to the market value be the IDV.
A good place to start when buying insurance is policybazaar. You can start and enter the car details and compare the premiums. The comparative premium rates offered by various insurance companies are a starting point for you to understand the going market rate.
Once you have the base rates known to you, ensure that the IDV is aligned to the market value, call up all the insurance companies and negotiate hard with all of them. Don't be shy of haggling over price, i.e. one insurance company against the others. Tell the insurance company about the quote you have got and ask them to better it. You can do two or three rounds of negotiations and bring down the price. To be able to negotiate it is better that insurance is bought in person and not online.
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