Hello Readers,
In the previous blogs regarding the basic steps of buying a new car, I discussed about how one should deal with the dealer and then make the payments.
In this section, we would go over a little detail on how you can save few thousands of rupees from insurance - Yes! Savings from Insurance. Let us discuss in detail.
As I mentioned, it is good to go for B2B or Zero Dep (depreciation) insurance for your new car. For a Rs 10 Lakh car, you may need to shell out Rs 4500 additional for your B2B. That gives you a lot of peace of mind.
A. Choosing the Insurance Company:
Every dealer has one or more an insurance agents attached to them - these agents can be from private general insurance (specifically car insurance) companies or from nationalised insurance companies like National Insurance, SBI General Insurance etc.
1. Please get the name of insurance companies and then you should talk to those agents.
It is important to talk to the agent to understand the break-up of the amount that you are paying for.
Let us assume, you are paying Rs 25,550 for the insurance - so you should know what the various components are constituting this amount. It is important to understand how the final amount is coming up.
Let is take a deeper look.
Car insurance has several components:
a) IDV (Insured Declared Value) Amount
b) OD Premium
c) TP Premium
d) Depreciation Cover
e) Consumables Cover
f) Hydrostatic Lock Cover
g) Road side Assistance Cover
h) Other Add-on Covers
Let us go over them one by one and understand how the total premium is calculated.
a) IDV (Insured Declared Value) Amount
IDV amount is the insured amount of the car. In case of total loss of the car (due to accident or theft etc), this is the amount that you would get back from the insurance company. By rule, it should be 95% of the Ex-Showroom price of the car at the minimum. Please note down the IDV value that the insurance agent is assuming for your car. you can opt for a higher IDV even (max being 100% of Ex-Showroom price)
The premium calculation is based on the IDV value, so it is important to note this down.
b) OD Premium
This is the Owner-Driver premium amount. This is the largest chunk of all the components of premium.
Loss or damage to vehicle, Personal Accident cover (driver) is covered under this. Typically, insurance companies provide a large %-age of discount on this - like 30% or 40% or even 50%. So, you should ask the agent to share what %-age he is providing as discount.
c) TP Premium
This is the Third Party liability cover - this is also mandated by rule. The portion of thr premium is smaller in amount - typically one to three thousand, again depending on the IDV
d) Depreciation Cover
e) Consumables Cover
These are part of B2B covers and get added once you opt to B2B (ZeroDep) cover.
f) Hydrostatic Lock Cover
In case you car gets into a flood, this might help you - depending on the insurance company the benefit may vary - this is optional
g) Road side Assistance Cover
Road side assistance is typically provided by the car manufacturer, so you may not need this, so purely optional
h) Other Add-on Covers
The insurance company may offer many other benefits - please understand what they mean, how to utilise them, would you really and actually be using them and then opt for them
This is the Owner-Driver premium amount. This is the largest chunk of all the components of premium.
Loss or damage to vehicle, Personal Accident cover (driver) is covered under this. Typically, insurance companies provide a large %-age of discount on this - like 30% or 40% or even 50%. So, you should ask the agent to share what %-age he is providing as discount.
c) TP Premium
This is the Third Party liability cover - this is also mandated by rule. The portion of thr premium is smaller in amount - typically one to three thousand, again depending on the IDV
d) Depreciation Cover
e) Consumables Cover
These are part of B2B covers and get added once you opt to B2B (ZeroDep) cover.
f) Hydrostatic Lock Cover
In case you car gets into a flood, this might help you - depending on the insurance company the benefit may vary - this is optional
g) Road side Assistance Cover
Road side assistance is typically provided by the car manufacturer, so you may not need this, so purely optional
h) Other Add-on Covers
The insurance company may offer many other benefits - please understand what they mean, how to utilise them, would you really and actually be using them and then opt for them
On top of it there will be service tax and other cess amounts to get you the total amount.
Once you know the complete details of all these, please note down the branch details the agent is associated with. Call up the branch separately and get a quote from them; compare the details and amount - if you can negotiate, you would see a difference!
Now, call up other car insurance companies, including the nationalised ones. Tell them the dealer location, your PVD office (vehicle registration office) location, IDV value and various covers that you would like to go with. Take three quotes and re-negotiate. I am sure, you will see a 20% difference in the final premium amount!!
Please remember, the dealer has nothing to do with the insurance premium and insurance policy that you get. They make money if you go with their pet agent - so you need to be careful and put a little extra effort. And believe me, it would not take you more than a day to get this done!
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