Before taking your brand-new car on its first drive, one crucial step is ensuring you have the right protection against unexpected costs and risks on the road. With so many policies, coverage options, and add-ons available, choosing wisely requires careful thought and understanding.
From meeting legal requirements to exploring comprehensive cover, every decision affects your long-term peace of mind. In this guide, we share essential tips to help new car owners make smart, confident choices. Secure the right insurance for a new car and enjoy every journey knowing you are well-protected from the very start.
The Importance of Insurance for a New Car
Owning a vehicle brings freedom and convenience, but it also comes with responsibility. Insurance for a new car offers financial protection against accidents, theft, fire, natural disasters and third-party liabilities. Without it, even a minor mishap could lead to significant expenses.
In India, having at least third-party liability cover is mandatory, but opting for comprehensive protection is highly recommended.
Types of Car Insurance
When selecting insurance for a new car, it is important to understand the policy types available:
1. Third-Party Liability Insurance
This is the most basic form of insurance and is legally required. It covers damage to another person’s property or injury to someone else, but does not cover your own car.
2. Own Damage Insurance
This type of policy protects only your car from accidental damage, theft or fire, but does not cover third-party liabilities.
3. Comprehensive Insurance
This combines both third-party and own damage cover in a single plan, offering the most complete form of protection. For new vehicles, comprehensive insurance is usually the most suitable choice.
Many new car buyers opt for bundled plans, which may include multi-year third-party coverage along with a one-year own damage policy.
Understanding Insured Declared Value (IDV) and No Claim Bonus
A key term to know when buying insurance for a new car is the Insured Declared Value (IDV). This is the maximum amount your insurer will pay if your car is stolen or declared a total loss. It is determined by subtracting depreciation from the manufacturer’s listed price. Accessories can be included in the IDV after adjusting for their depreciation value.
The IDV directly impacts the premium. An increased IDV generally leads to a higher premium, while a decreased IDV lowers the premium but might result in smaller claim settlements. Choosing the right IDV ensures you receive fair compensation without overpaying for your policy.
Another important feature of insurance for a new car is the No Claim Bonus (NCB). This is a discount offered on the own damage premium when no claims are made during the policy year. The bonus typically starts at a lower rate in the first claim-free year and gradually increases over several consecutive claim-free years.
NCB is linked to the policyholder, not the car. This means it can be transferred to a new vehicle or a new insurer. Some policies offer an NCB protection add-on, allowing you to keep your bonus even after making a claim, under certain conditions.
Useful Add-ons for Better Coverage
Customising insurance for a new car with add-on covers can enhance protection. Common and valuable add-ons include:
1. Zero Depreciation Cover
Ensures you receive the full cost of replacing damaged parts without any deduction for depreciation, which is especially useful for new vehicles.
2. Return-to-Invoice Cover
Provides compensation equal to the original invoice value of your car in the event of total loss or theft, bridging the gap between IDV and the car’s purchase price.
3. Roadside Assistance
Offers help in case of breakdowns, flat tyres, towing needs or fuel shortages, giving peace of mind on long drives or in remote areas.
4. Personal Accident Cover
Delivers financial assistance in case the insured individual is injured or passes away as a result of a car accident.
Selecting add-ons depends on your driving habits, location and the value of your car.
The Claims Process
Understanding the claim procedure is crucial when holding insurance for a new car. For own damage claims, inform your insurer immediately after an accident or loss. A surveyor may inspect the damage, after which repairs can begin. Many insurers have tie-ups with network garages that offer cashless repairs, removing the need to pay upfront.
For third-party claims, the process often involves legal steps to assess liability. Maintaining accurate records, photographs, and reports will help in a smooth claim settlement.
Renewing Your Policy
Timely renewal of insurance for a new car prevents a lapse in coverage and helps retain benefits. Renewing before the expiry date avoids extra inspections or penalties. It also allows you to review your coverage, adjust the IDV, and select new add-ons if required.
A lapsed policy can lead to financial risks and the loss of accumulated NCB, so setting reminders for renewal is highly advisable.
Tips for Selecting the Right Cover
When finalising insurance for a new car, consider the following:
- Opt for comprehensive coverage to protect against both own damage and third-party risks.
- Select a realistic IDV to balance claim payout and premium cost.
- Review the insurer’s claim settlement ratio to gauge reliability.
- Check the network of cashless garages for convenient repairs.
- Choose add-ons based on your driving needs and the age of your car.
- Ensure accurate and complete disclosure of details to avoid claim rejections.
Keep Your New Vehicle Protected
Choosing insurance for a new car is an essential responsibility that safeguards your investment, meets legal requirements, and provides financial security in unforeseen situations. Understanding different policy types and customising coverage with add-ons allows you to tailor protection to your needs.
Online insurance brokers like Jio Insurance Broking Ltd offer expert guidance to help compare options and select the most suitable insurance for a new car. Making informed decisions ensures comprehensive coverage, so you can drive with confidence, knowing your new vehicle is protected against unexpected events.