Use below Interactive page to understand about the insurance and insurer which you should look for before buying new car.
Your Guide to New Car Insurance
An interactive tool for first-time car buyers in India.
The Essentials of Car Insurance
Welcome! If you’re buying a new car, insurance is a mandatory step. It’s not just a legal requirement under the Motor Vehicles Act, 1988; it’s your financial shield against accidents, theft, and disasters. This section covers the fundamental types of policies you’ll encounter.
Third-Party Liability Cover
This is the bare minimum legal requirement. It protects you financially if your car causes injury, death, or property damage to someone else (a ‘third party’).
- Covers legal liability for injury or death to a third party.
- Covers property damage to a third party up to ₹7.5 Lakh.
- Does NOT cover damage to your own car.
Comprehensive Cover
This is the highly recommended choice for a new car. It includes the mandatory Third-Party cover and adds protection for your own vehicle.
- Includes all Third-Party benefits.
- Covers damage to your own car from accidents, theft, fire, floods, riots, etc.
- Protects your significant financial investment in your new car.
Mandatory Personal Accident (PA) Cover
IRDAI mandates a PA cover for the owner-driver. This provides compensation (up to ₹15 Lakh) for accidental death or disability, ensuring you are also protected.
Decoding Insurance Jargon
Insurance policies have unique terms. Understanding them is key to knowing what you’re paying for and what you’ll get in a claim. Here, we break down the most important concepts in a simple, interactive way.
Insured Declared Value (IDV)
IDV is the current market value of your car and the maximum amount your insurer will pay if it’s stolen or damaged beyond repair (total loss). It’s the ex-showroom price minus depreciation. A correct IDV ensures you’re fairly compensated. Try the slider below to see how depreciation affects your car’s value.
Depreciation: 5% (within first 6 months)
This simulation is for educational purposes to illustrate the concept of depreciation.
Deductibles
A deductible is the amount you agree to pay out-of-pocket for each claim before the insurer pays the rest. There are two types.
Compulsory Deductible
Mandatory and fixed by IRDAI. It’s typically ₹1,000 for cars up to 1500cc and ₹2,000 for cars above 1500cc. You have to pay this on a claim.
Voluntary Deductible
This is optional. If you agree to pay a higher deductible voluntarily, your insurer will give you a discount on your premium. It’s a trade-off: lower premium for higher out-of-pocket cost during a claim.
No Claim Bonus (NCB)
NCB is your reward for safe driving! It’s a significant discount on your Own Damage premium for every year you don’t make a claim. It accumulates over time.
For minor damages, it’s often smarter to pay out-of-pocket to protect your NCB discount, which could save you more money in the long run.
Build Your Policy: Smart Add-on Covers
A standard comprehensive policy is great, but add-ons give you specialized protection. For a new car, some add-ons are almost essential. Click on each cover below to learn what it does and decide if it’s right for you. Think of this as customizing your car’s financial safety net.
Select an add-on above to see its details.
How to Choose Your Insurance Partner
The company you choose is as important as the policy itself. A low premium is tempting, but an insurer’s reliability during a claim is what truly matters. We’ll look at key data points like Claim Settlement Ratio (CSR) and Solvency Ratio to help you make an informed choice.
Claim Settlement Ratio (CSR)
CSR shows the percentage of claims an insurer has paid out of all claims received. A higher CSR (ideally above 90%) suggests the company is more likely to approve and pay your legitimate claims. The chart below shows the CSR for various insurers (within 3 months, FY 2023-24).
Solvency Ratio
This ratio indicates an insurer’s financial health and its ability to meet long-term claim obligations. IRDAI requires a minimum ratio of 1.5 (or 150%). A higher ratio means the company is more financially stable and can be trusted to pay claims even in difficult times.
Other Important Factors
Cashless Garage Network
Check the size and reach of the insurer’s network of approved garages. A large network means you can get repairs done without paying upfront; the insurer settles the bill directly. This is a huge convenience.
Customer Service & Reviews
Data is important, but so are real-world experiences. Look up online reviews and feedback. Good customer service and a smooth claim process are invaluable when you’re under stress.
Navigating the Process: Claims & Renewals
Knowing what to do after an incident and how to keep your policy active is crucial. This section provides simple, step-by-step guides for the two most common procedures: filing a claim and renewing your policy online.
How to File a Claim
Notify Insurer Immediately
Call your insurer right away (within 24-48 hours). This is the most critical step.
File an FIR (if needed)
Required for theft, major accidents, or third-party injuries.
Document Everything
Take photos/videos of the damage and the scene.
Surveyor Inspection
The insurer will send a surveyor to assess the damage. Cooperate fully.
Submit Documents
Policy, RC, License, Claim Form, FIR copy etc.
Repair & Settlement
Use a cashless network garage for convenience or get it repaired and claim reimbursement.
Easy Online Renewal
Never let your policy lapse! It’s illegal to drive without one, and you’ll lose your NCB. Online renewal is simple:
- ✓ Visit the insurer’s website or an aggregator portal.
- ✓ Enter your previous policy and vehicle details.
- ✓ Review your coverage, adjust IDV, and select add-ons.
- ✓ Pay the premium online via card, UPI, or net banking.
- ✓ Receive your new policy instantly in your email.
Final Pro-Tips for Smart Buyers
You’re now equipped with the core knowledge to make a great decision. Here are a few final tips to ensure you get the best value and protection for your new car.
1. Compare, Compare, Compare
Never take the first offer, especially the one from the car dealer. Use online portals to compare quotes from multiple insurers. You can save thousands.
2. Don’t Chase the Lowest Premium
The cheapest policy isn’t always the best. It might have a low IDV or lack crucial add-ons. Aim for the best coverage at a reasonable price.
3. Read the Fine Print
Understand the exclusions—what is NOT covered. Knowing this beforehand prevents surprises during a claim.
4. Install Anti-Theft Devices
Insurers offer discounts for ARAI-approved anti-theft devices as they reduce risk. It’s a win-win.
5. Drive Responsibly
Your driving record is your biggest asset. Safe driving protects you, others, and earns you that valuable No Claim Bonus.
6. Set Renewal Reminders
Don’t risk a policy lapse. Set a reminder on your calendar a week before the expiry date to ensure continuous coverage.
