Buying a car in your life is probably one of those moments that you cherish forever. And you may get several wonderful tips from your well-wishers on things to remember while buying your first car but there would hardly be anyone who can guide you on the insurance plan you should be buying. You are thinking what’s the need? Your dealer has offered you a nice car insurance plan as part of the overall package and you think it is probably the best deal. But hold that thought. You might just want to go through a few more details that you probably didn’t know about.
Don’t be lazy:
With the advent of ecommerce, a consumer is spoilt for choices. Be it in fashion or gadgets, you always believe in doing a thorough research to choose what’s best for you. So why make insurance an exception. Your car is a hard-earned possession and it should have the best insurance against any kind of damage. But you are too lazy to even go online and go through the myriad of options that different insurers are selling in the market.
Instead, you prefer buying the perfect and cheapest comprehensive plan for your car that your dealer offers without a second thought. After all, who wants to spend their time understanding a complex product like insurance. So, you buy what the dealer sold you. Allow us to explain with an example.
You buy a petrol variant of Maruti Wagon R LX. Your dealer’s ‘comprehensive’ insurance plan comes say with a premium of Rs 10,000. They tell you that the damages will be covered. You are happy because that’s what you want and you sign the document. Your friend also buys a brand new car; the same model from the same dealer but buys her insurance from outside. She chooses a plan by insurer A that gives basic cover with a premium of Rs 6,779. She buys add-ons such as ‘zero depreciation’ for Rs 1325. Her premium goes up to Rs 8,104 only. Now compare your insurance plan with the one that she has. Do you realise you are shelling out a much higher premium for a plan that doesn’t give you any additional feature?
Well, it is a common regret that several first-time car buyers have as they realise that they lost out on a good deal because of their lack of knowledge about different car insurance products available in the market.
Bundled Insurance:
Today, insurers dole out bundled insurance plans for cars. A bundled insurance includes a cover for your basic damages as well as add-ons such as ‘zero-dep’ and ‘roadside assistance’ for a higher premium. Thus, you are well covered in the event of any accident and damage to the plastic components of your vehicle, which is usually available with the dealer but not suggested because the package deal becomes costly and they fear losing out their customers to another dealer.
Currently, several insurers offer plans wherein once you buy an add-on such as zero-dep to the plans, you get other additional services like roadside assistance, engine protection, lock and key replacement etc bundled with the primary add-on.
Even a few dealers have started rolling out add-on covers with basic insurance plan. However, these plans are a little costlier as compared to buying directly from the insurer, since dealers have limited discounts to pass on to the consumer. To better explain, assume that there are heavy rains in your city and your car has managed to scrape through the waterlogged road somehow. You realise your engine has been damaged which will cost at least Rs 70,000. You had to get your engine replaced and when you try to get the bill reimbursed, your insurer denies you. Why? Because you decided not to buy the engine protection cover, as this add-on with the basic cover entailed extra cost.
Not spoilt for choices:
At present, a dealer’s primary objective is to sell cars and not insurance. Hence, they will be unable to offer you different options as far as insurance is concerned. This is so because they have partnered with either two or three insurance companies at a time and hence cannot offer anything else except their plans.
Now the next question you are probably thinking is what if you buy insurance from outside and in the event of any damage to the car, your dealer refuses to service your request? Remember, a dealer cannot say no to you in case of any damage if you have bought an insurance cover from their partner insurance company irrespective of whether it has been bought from him or outside. Any authorised dealer, if has a partnership with an insurer, will not refuse a cashless operation.
However, if you have bought a cover from another insurance company that has not partnered with your dealer, they have the right to decline your request. In such a case, it is best to always look at your insurer’s list of network garages, where you can send your car for repair in the event of any damage. But now a lot of companies have started processing reimbursement within 7 days.
To conclude, in short, you may think you are getting a sweet deal if you buy insurance from your dealer when you buy your new car. But when you dig deeper, you will realise that you are losing out on money and a lot of benefits that your car will need in the future that you could have easily been met had you not been so lazy.
-by Neeraj Gupta – Associate Director, Policybazaar.com
