Insuring a car, whether it’s used or new, is important. Just like a new car, a used car requires auto insurance, which is mandated by law. Insurers have special policies for used cars that suit their needs well.
Most car owners buy a used car to save money and in doing so, may not purchase insurance. Therefore, it is important to buy at least one, as it is required by law for every new or used car in India. Let’s see why you shouldn’t bypass this purchase.
Why is it important to insure your used car?
The insurance of used cars should be given priority over the insurance of new cars because they always have an element of surprise. After the expiration of the warranty period, the only financial assistance you can rely on in the event of an accident is insurance.
Here are a few factors why choosing auto insurance for your used car is important.
1. Keep in mind the use of the car – Unlike new cars, used cars have already undergone wear and tear. The maintenance requirement is more in used cars. In view of this, it is important to take out insurance to cover any unforeseen expenses that the maintenance of the car might entail. Insurance rightly prepares you against thick and thin.
2. Helps you prepare for past car accidents (if applicable) – When buying a car and doing your due diligence, the previous owner can avoid a difficult conversation by skipping out on critical issues relating to the car. In such cases, insurance is the means by which you can have the car repaired and fitted with parts.
3. Must comply with legal requirements – According to the Motor Vehicle Act, all vehicles must have at least third party liability insurance when driving on Indian roads. This insurance must be taken out at all times by the person driving the car. Anytime you are asked to produce this you should be able to do so and if you cannot you may be asked to pay a hefty fine for the same. Third party insurance is for damage to the other person’s vehicle or property and you have a financial liability to them.
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Checklists to consider when buying used car insurance
1. Based on the intended use of the car: The intended use of your car will decide whether you should just purchase third party auto insurance or comprehensive insurance.
If you plan to use the car regularly or take it on road trips or long trips out of town, comprehensive insurance may be more useful. However, if you plan to drive it infrequently within city limits, third party auto insurance is sufficient as it will provide maximum coverage depending on usage and your feature needs. It includes coverage for the insured car as well as for the driver in the event of an accident. Third party auto insurance only covers repairs or property of the other party involved. It can also cover the driver of the insured car according to the policy taken out.
2. Consider the age of the car: When purchasing insurance, it is important to remember that the car has likely been damaged and that wear on the engine and parts is guaranteed. The number of kilometers and the year of registration are reliable indicators of the use of the car. The premium will depend on it and you should consider policies that offer better coverage, such as comprehensive insurance.
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3. Purchase insurance at a reasonable premium: The premium is the deciding factor for most. Who doesn’t like a good deal? The premium for depends on the details of the car like the date of registration. The premium varies depending on the coverages you choose and the corresponding factors are also affected. IDV, deductibles, co-pay percentage all affect premiums significantly.
4. Analyze the accidental history of the car: Claims made over the past year are a great indicator of the type of maintenance a car needs. If your used car is in great shape and you plan to use it around town, you don’t need to invest in covers like breakdown assistance. If you bought a used car, the non-claim bonus goes to the previous owner as it goes to the driver. The seller must transfer the insurance policy to your name within 2 weeks of the sale to avoid dismissal of a claim.
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5. Check the no-claim bonus: The no-claim bonus is on the driver and not on the vehicle. This means that if you buy a vehicle you will have to pay the difference of the no claim bonus because it is owned by the previous owner.
6. Analyze the added benefit: When buying used car insurance, there are a few essential additions, like tire protection coverage, which gives you the benefit of protecting and covering tire damage such as splinters, bulges or cuts in all situations. The engine and gearbox protection cover covers any damage to the mentioned in the event of an accident or consequential damage.
7. Know the insurer: Having enough insurer information helps you better understand the settlement process, cashless claims, settlement ratio, etc. These statistics should be evaluated before choosing the insurer. It is advisable to look at the history of the insurer to make sure that you are not falling prey to fraud.
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The underlying feeling of buying insurance for your used car is the same as buying insurance for a new car. It protects you from any future loss and helps maintain your car without burning a hole in your pocket.
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Posted on: Monday, December 27, 2021, 4:30 p.m. IST