Should you buy car insurance from dealer?

POSTED BY Vandana Manwani ON April 9, 2019 COMMENTS (24)

Myth: As car insurance is mandatory, I have to buy it via car dealer !!

Reality: It is mandatory to have valid car insurance but, not mandatory to buy the same from your car dealer.

image on buying car insurance via dealer

Buying car insurance is mandatory under the motor vehicle act, 1988. As it is mandatory car dealers bundle up insurance with other services and quote it all to you in one invoice. But, insurance can be separated and you can choose an insurance company on your own. Most of the people buy it via a dealer, either because they are unaware of separating insurance from car purchase cost or they just seek convenience as getting it via dealer is much easier and convenient.

But, now the time has changed. With the help of the internet, it has become very easy to compare different insurance plans online and buy the best suitable as per your requirements. So, no question of hassling in the lengthy paper process. It is not like you should never buy car insurance via a dealer, there are disadvantages as well as advantages.

Advantages of buying car insurance from a dealer :

No doubt the process of buying insurance from a car dealer certainly saves you a lot of time. And there are a few more advantages of buying it via dealer:

  • The entire process of insurance purchase is streamlined and more convenient when it is through a dealer.
  • You may receive bundling discounts on the purchase of the car and the insurance from the car dealer.
  • You can get in touch with the car dealer to get clarification on the coverage or at the time of claims. The dealer will efficiently assist you in such matters.

Disadvantages of buying car insurance from a dealer :

A very limited number of options: A dealer is there to sell the car and not insurance. So, he won’t be able to offer you too many options when it comes to insurance. If he has a tie-up with two or three insurance companies, so he will be able to offer policies only by those companies. And this will limit you from selecting the best option that you can avail by doing your own research.

Premiums can cost more: As buying car insurance via dealer will be offline so it’s very obvious that it will be costlier than what you can get from online mode. In spite of this, car dealers enter into tie-ups and arrangements with insurance companies for which they get the commission, which can go as high as 40%. This will have an impact on the policy price, and for you, this can translate into high premiums.

Add-ons offered may not fit your requirement: Car insurance add-ons must be chosen keeping in mind the specific requirements of the car and its owner. As car insurance premium is recurring cost, to attract more buyers, a dealer may provide you basic insurance plan which will be cheap but, even then if you compare the premium of the same plan online you will find it cheaper, eg. if insurance via dealer costs Rs. 25000, it will cost Rs. 15000 if bought online. (40% costlier).

The main intention of the car dealer is to earn extra by bundling up all for you in one basket. As insurance is the basic requirement for every car buyer, he may influence you to take insurance from him, which may be very basic insurance not having important add-ons required.

It must be noted that add-ons are extra covers that can be opted to enhance the protection offered by a basic car insurance plan. Knowledge about what add-ons are suitable is important. Few essential add-ons that can be included to the base plan are:

  1. #Zero or Nil Depreciation: This add-on offers complete coverage without factoring in the depreciation of parts like plastic, fiber, rubber, and glass.
  2. #Engine Protection Cover: This add-on cover provides protection against damage to the car’s engine due to water ingression leading to hydro-static lock.
  3. #Roadside Assistance Cover: This add-on provides emergency roadside assistance services such as help in changing the flat tyre, roadside repairs, emergency fuel refilling and towing facility.
  4. #Return to Invoice: This add-on ensures that in the event of complete loss or theft of a car, the policyholder gets the car’s original invoice value and not just the Insured declared value.

So, it’s suggested that you should go for an insurance policy which should provide extra coverage to your car, by allowing you to customize it as per your needs.

Final Word :

Who doesn’t want ease and convenience? When we buy a car, we feel like ending up all the proceeding in one place. However, if you are internet savvy, hassle in buying insurance is not a question for you.

Click to rate this post!
[Total: 1 Average: 5]

24 replies on this article “Should you buy car insurance from dealer?”

  1. Pulak Kumar says:

    This article will definitely help me out, as I’m planning to buy car. I will go and check for online car insurance which is hand-crafted for me.

  2. Bala says:

    Info given in this article is 100% true

    When I bought my car I informed the Dealer that I will buy the Insurance myself – though he was hesitant to do that as Dealers always take care of new car registration that includes Insurance – but I insisted on it which saved me more than Rs 2000/-

    Only thing you need to do is take an insurance cover online or by talking to some Agent of your preferred Insurance company and they will issue the policy – WITHOUT REGISTRATION NUMBER BUT MARKED AS NEW CAR. in the Policy Document.

    Handover this Insurance policy to the Dealer and he will submit the Documents along with the Insurance Policy to RTO. This is a must. WIthout Insurance RTO will not accept the registration request.

    By doing this extra bit of work you will save a lot of money depending on the car model and as mentioned in the article you will have the flexibility to decide the add-on covers and co-pay clause as per your requirement.

    1. Jagoinvestor says:

      Thanks for sharing that Bala πŸ™‚

  3. Vicky Joseph says:

    Hi Vandana,
    Thank you for sharing this informative article. I learned new things from you. It helped me a lot and I hope that it will also help others. I appreciate your efforts.
    Have a good day ahead.

    1. Jagoinvestor says:

      Great to hear that !

  4. wow, I think everyone has to read your article, well explain things πŸ™‚ keep it up.

  5. MADHAB CHANDRA MAITI says:

    IF I DO NOT ARRANGE CAR INSURANCE FROM DEALER, THEN WHAT IS THE PROCEDURE TO ARRANGE INSURANCE FOR CAR SO THAT CAR CAN RUN IMMEDIATELY AFTER PURCHASE. I LIKE TO PURCHASE A CAR IN THE YEAR 2021

    1. Jagoinvestor says:

      You can buy car insurance without getting registration number. You need to buy it online or through some agent, it requires details of car model and engine, Insurance document will be marked as a new car.

      The Insurance policy gets issued within seconds online and you need to submit it with dealer, he has to send all the documents to RTO for passing

      Thanks,

      Vandana

  6. Vishwas Tejnath says:

    Sorry – one off the topic comment. Couldn’t find any other place for commenting ….. Financial calculators aren’t working anymore ?

    1. Jagoinvestor says:

      Hi Vishwas

      You will see them back by next week.. πŸ™‚

      Manish

  7. Pradeep says:

    The dealer doesn’t offer an insurance, he forces you by saying the registration wont happen without the insurance in place. This article doesnt say how we can separate out the process of registration and buying insurance. Which of the two should happen first, if registration should happen first then its not at all possible to say no to the dealer.
    He will say RTO wont sign without insurance.
    Can you explain in detailon this?

    1. Vandana Manwani says:

      Hi Pradeep

      Thanks for your comment.
      Hi Pradeep,

      You can buy car insurance cover online or by talking to some Agent of your preferred Insurance company and they will issue the policy – WITHOUT REGISTRATION NUMBER BUT MARKED AS NEW CAR in the Policy Document. It requires the details of model and engine

      Handover this Insurance policy to the Dealer and he will submit the Documents along with the Insurance Policy to RTO. This is a must. Without Insurance RTO will not accept the registration request.

      Vandana

      Vandana

  8. Rajender Sharma says:

    Very crisp and informative article for new car buyers.Must read.

      1. pichai says:

        if we do not buy the insurance from the dealer we have to drive the vehicle away from the dealer to the insurance company or to our home when the car will not be covered under any insurance.If unfortunately the car is hit by another vehicle or we hit some one then we will not get any thing from the insurers as we have not insured at all..

        1. Jagoinvestor says:

          Not true . If you are ready with all your research, then buying a car insurance takes not more than 10 min online and the policy gets issued immediately (PDF)

          Manish

          1. Pradeep says:

            SC has ordered 3 years insurance to be bought during registration itself, else no registration possible.
            Now how can you tell the RTO officer that you will buy insurance online after registration?
            Will he sign?

            1. Vandana Manwani says:

              Hi Pradeep,

              You are right. Therefore, You can buy car insurance cover online or by talking to some Agent of your preferred Insurance company and they will issue the policy – WITHOUT REGISTRATION NUMBER BUT MARKED AS NEW CAR in the Policy Document. It requires the details of model and engine

              Handover this Insurance policy to the Dealer and he will submit the Documents along with the Insurance Policy to RTO. This is a must. Without Insurance RTO will not accept the registration request.

              Vandana

  9. Rohith H M says:

    One of the things not covered in this article is that some car companies like Maruti Suzuki have their own insurance aggregator and they offer all the riders mentioned here. However the premium price will be costlier than those found online. As suggested in the video it is advisable to go with dealer provided insurance in the first year and switch to online insurance aggregators like policy bazaar, coverfox, acko etc.

    1. Jagoinvestor says:

      Good point Rohith !

  10. Steven says:

    So I am breaking the law if my car doesn’t have insurance…(apart from a Green slip)
    Unless the car has an at fault accident, how would anybody know whether my car is insured or not…

    1. Jagoinvestor says:

      They wont come to know πŸ™‚

      There are many people who do not renew their insurance ! … But you will have to pay heavy fine if you are caught without insurance

Comments are closed.

 

Categories

About Jagoinvestor

Jagoinvestor is a financial literacy website which is working towards empowering investors to take better financial decisions and make informed choices while buying financial products and living a good financial life.

Join 1,60,000 readers + FREE Ebook

Never miss the valuable emails from us. Subscribe now and get a highly valuable ebook containing the best of our content.

Things we do

We have various things to offer to investors which can help them to gain knowledge and work on their financial life.

Join 1,60,000 email subscribers

FREE Video Lessons directly in your email daily

144 page PDF ebook with best articles from Jagoinvestor

Get future articles directly on your mailbox + updates


6 PART VIDEO COURSE

FREE 

 

 

You are subscribed for FREE Course now, Check your Email

CONGRATULATIONS

Join 1,60,000 email subscribers

FREE Video Lessons directly in your email daily

144 page PDF ebook with best articles from Jagoinvestor

Get future articles directly on your mailbox + updates


6 PART VIDEO COURSE

FREE 

 

 

You are subscribed for FREE Course now, Check your Email

CONGRATULATIONS