The car you choose directly impacts your insurance premium. Premium models typically have higher premiums, while smaller, more economical cars cost lesser.
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The festive season in India, spanning from Navratri to Diwali, is a time for joy, new beginnings, and big purchases. Many take advantage of the festive offers and auspicious dates to buy new cars. While the excitement of a new vehicle is unmatched, it’s essential to take a step back and ensure you make informed decisions, especially regarding insurance. A well-chosen policy can safeguard your investment and prevent financial strain.
Here are five important considerations before you make your car purchase this festive season:
- Evaluate your insurance coverage options:
Before you get the keys to your new vehicle, it’s vital to assess the type of insurance coverage that best suits your needs. The three main categories; third-party liability, own damage, and comprehensive coverage, each offer different levels of protection. Comprehensive coverage, while more expensive, covers you against a wide array of risks including theft, fire, accidents, and natural disasters – crucial during the hustle and bustle of the festive season.
For example, a comprehensive policy might cost Rs 15,000 annually, while basic liability insurance could cost as little as Rs 3,500. Balancing coverage and premium affordability is key, especially as festive season expenses pile up.
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- The make and model impact:
The car you choose directly impacts your insurance premium. Premium models typically have higher premiums, while smaller, more economical cars cost lesser. Luxury cars could see premiums soar to even in lakhs annually. During the festive season, car manufacturers and dealers often bundle insurance offers, but it’s crucial to weigh these deals against long-term costs and coverage limits. Always opt for an insurance plan that complements your car’s make, model, and your budget.
- Consider your driving history:
Your driving record plays a significant role in determining your insurance premium. The ‘Pay As You Drive’ (PAYD) insurance model is gaining traction, where your driving habits directly influence your premium. Unlike traditional motor insurance, which often bases premiums on general risk factors, PAYD focuses on how much you drive. If you drive less than 10000 KM in a year you could earn you discounts up to 25% on your premium.
For instance, if your base premium is Rs 20,000, if you drive less than 2500 KM in a year your premium could reduce to Rs 15,000, ‘Pay as You Drive’ insurance is a great option for people who don’t use their car regularly, like occasional drivers, seniors, or those working from home. It allows you to save on premiums by only paying for the distance you drive. With its flexible and user-friendly features, PAYD offers a practical solution for budget-conscious drivers looking for full protection without the high costs of traditional car insurance.
Weigh the benefits of a higher deductible:
Opting for a higher deductible can lower your upfront premium, but it also increases your out-of-pocket costs in case of a claim. For example, choosing a Rs 10,000 deductible instead of Rs 2,000 might reduce your premium from Rs 30,000 to Rs 22,000 annually. However, in the event of an accident, you’ll need to pay the first Rs 10,000 of repair costs.
During the festive season, when expenses tend to be higher, this balance between immediate savings and potential future costs is worth careful consideration. A higher deductible can work for some, but make sure it fits your overall financial situation.
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- Shop around for the best deals:
While festive offers often include attractive insurance packages, it’s wise to compare quotes from different insurers. Sometimes the convenience of paying in EMIs could cost more in the long run. For example, paying Rs 22,000 over 12 months with 10% interest will eventually total Rs 24,200 to Rs 2,200 more than paying upfront. With festival spending in full swing, such additional costs can add up.
Additionally, if you’re purchasing a car through financing, consider bundling offers that include both loan and insurance packages. However, don’t compromise on coverage in exchange for minor savings on EMIs.
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Additional tips to keep in mind:
- Look for festive offers: Many dealers offer perks like free insurance or extended warranties during the festive season. While these can save you money upfront, always read the fine print to understand what’s really included and whether it meets your needs.
- Post-purchase coverage: Festive seasons often bring increased traffic, raising the likelihood of minor dents and scratches. Opt for a policy that includes hassle-free repair for small damages without affecting your No-Claim Bonus.
- Policy flexibility: Review whether your insurance plan allows for policy customizations. This could include roadside assistance, engine protection, or even cover for accessories, which can be crucial if you live in areas prone to theft or vandalism during the busy season.
Conclusion:
Buying a car during the festive season is an exciting milestone, but making informed decisions about insurance is equally important. By considering these key factors like coverage type, car model, driving history, deductible options, and competitive pricing, you can ensure that your purchase is protected, and your financial stability remains intact.
Note: Readers are informed that the costs mentioned are for illustrative purposes only. Please consult with insurance providers for accurate quotes tailored to your specific needs.
