Buying a new car or motorcycle could be an exciting experience -- from walking into a motor showroom to taking a test drive to understanding new features may bring a thrill to otherwise lackluster daily routine.
But in the excitement of acquiring a new asset, sometimes we forget to look at the finer points of the deal on offer. And the most important of all inclusions is vehicle insurance. In some cases, motor dealers waive off the first year insurance completely or provide a considerable discount.
In such cases, you may not have any choice but to go with the offer. However, in many cases, motor insurance is included in the overall vehicle price along with other charges such as road tax. Therefore, it is always advisable to ask the dealer to specifically mention the amount needed for insurance.
Also, most dealers have tie-ups with insurers and may try to push their predetermined insurance. Many of us end up buying the insurance sold by the dealer without knowing the services offered or the appropriate premium. We are all aware that without insurance you cannot take your vehicle out on the road but it is not compulsory to buy insurance from your vehicle dealer. Following are a few points that you must keep in mind while deciding on the motor insurance:
You can save a significant amount of money by comparing insurance deals available online
It is true that buying insurance from your vehicle dealer is generally hassle-free but you may end-up paying a lot more unknowingly. Dealers are basically point of sales (PoS) for insurance companies as they sell comprehensive insurance to their customer. A dealer generally has a tie-up with a specific insurer and will give you an apparently neat deal without explaining it much. This is because dealers get a commission on every sale. But if you take a few minutes to compare various insurance products on offer from different insurance companies, you can save 10 % to 20% on your insurance premium because buying online will cut the intermediaries off and their fat commission.
You must take care to know about the add-ons
Different insurance companies offer different add-ons which your motor dealer may not tell you and you end up buying a vanilla motor insurance. This is because motor dealers are more interested in selling their vehicles, than finding a good comprehensive insurance cover for your vehicle. Each add-on is designed in such a manner that it saves you some money at the time of claiming insurance. Add-ons like zero depreciation cover, engine protection, roadside assistance, etc. can be made part of your insurance policy at a nominal cost, and come very handy when filing your claim. It is, therefore, advisable that you study various add-ons being offered by insurers before deciding on a particular policy.
You must know how the No Claim Bonus (NCB) provision works
No claim bonus (NCB) is a feature that provides considerable discount on premium offered by your insurer if you do not make a single claim during the policy period. It is generally 20% per year, and can go up to 50% if no insurance claim is made continuously for five years. Motor dealers often say if you purchase insurance from them, they will give a 20% discount on the premium for the next year. But the fact is that NCB is independent and even if you decide to change your insurer after a year, you can still claim NCB from the new insurer. Also, at the time of buying a new vehicle, your motor dealer may not tell you that you are entitled to transfer your NCB from the old vehicle to the new one.
NCB of your previous vehicle remains valid for three years and you can use it while buying a new policy for your new car.
—by Neeraj Gupta- Head of Motor Insurance, Policybazaar.com...