Used Car Insurance – Its Benefits and Significance

Used Car Insurance – Its Benefits and Significance

Journeys are always better when your drives are secured. Purchasing a used car can be a practical and cost-effective choice, providing reliable transportation without the hefty price tag of a brand-new vehicle. However, it’s crucial to understand that owning a used car comes with its own set of considerations, including the significance of having adequate insurance coverage.

Having a car insurance policy gives you complete peace of mind. As we think for our family’s financial protection, the same way, we need to protect our valuable assets, our car

According to Motor Vehicles Act 1988, driving any vehicle, be it new or second-hand without having its insurance is illegal.

What is Used-Car insurance?

Used car insurance coverage is part of a motor insurance policy intended to offer protection to second-hand cars. The benefit of buying insurance for a used car is that it protects the car from all kinds of erratic threats and adversities that might cause damage or loss.

The most popular choice among people in buying used car insurance is a comprehensive insurance policy, as it will give maximum coverage. It not only protects the car but also financially protects the owner of the car from all accidental injuries, damages, and risks. The car owner can claim all the expenses incurred in treatment of accidental injuries from the insurer apart from claiming the expenses incurred in car repairing and maintenance.

Benefits of buying a comprehensive car insurance policy

  • Third-party Legal Liabilities

    In case, a third person damages your car, under the car insurance coverage, for all that damages you are liable to pay for the loss.

  • Protect your car from damages due to natural calamities

    The primary reason for getting your car insured is to offer protection from all kinds of risks like natural calamities, haphazard, floods, etc.

  • Theft of Car

    The comprehensive car insurance policies are best as it protects you against the risk of theft.

  • Man-made calamities

    These include riots, vandalism, fires, etc. Similar to natural calamities, man-made disasters can put a car in an unusable state.

How to choose the best Used Car Insurance Plan

Understand your car insurance requirements

To choose the most collected used car insurance, you must have clarity on your car insurance requirements. It is related to deciding on premiums, the policy type you wish to buy, and the kind of insurance coverage. You can choose a third party liability car insurance policy, comprehensive car insurance policy, or own damage car insurance policy.

  • 1. Coverage offered by car insurance policies.

    Another important factor to keep in mind while choosing a used car insurance plan is coverage it is offering. Always choose and compare insurance plans offline and weigh them against the said requirements. A plan offering the best coverage that too at an affordable premium would be best for your car protection.

  • 2. Claim Settlement Ratio

    One of the main aspects to keep in mind while purchasing used car insurance is checking the claim settlement ratio of the insurer. This ratio is representative of their commitment to the settlement of car insurance claims submitted during the financial year. The higher the claim settlement ratio, the more reliable the insurer will be.

  • 3. Choosing the premium of the selected used car insurance plan

    The premium of the car insurance policy is the cost you are paying monthly or annually to keep your car insured. The premium of the car insured is determined by your car’s age, car’s market value, model, geographical location, etc. Always go with the car insurance plans whose premium fits with the car insurance budget.

    The premium of your second hand car insurance policy depends on the following factors:

    • Insured Declared Value of the car
    • Engine’s cubic capacity
    • Age of the car
    • Geographical location
    • No claim bonus
  • 4. Your car’s age and accumulated depreciation

    Before choosing a car insurance plan, always access the depreciation accumulated on its components because of age and usage. With the passage of years, the Insured Declared Value of a car keeps decreasing, and so does its car insurance premium.

Age of the Car Percentage of Depreciation Declared Value of a Car
0 to 6 months 5%
6 months to 1 year 15%
1 year to 2 years 20%
2 years to 3 years 30%
3 years to 4 years 40%
4 years to 5 years 50%

The documents required to transfer the car ownership and insurance

  • The original registration certificate with the new buyer’s name
  • Form 28, Form 29, and Form 30 bears the sign of the previous owner
  • Car policy copy
  • Insurance certificate
  • Transfer fee and application of Transfer registration certificate
  • NOC from the previous policyholder
  • Old Policy Document
  • No Claims Bonus difference amount, if any
  • Old Policy document

Key takeaways

Old car insurance is significantly less costly than recovery from an unforeseen accident. The best way to protect personal belongings, depreciation costs, and other unforeseen accidental liabilities is to buy car insurance.

Frequently Asked Questions

In how much time can one transfer the car insurance policy?

It usually takes 14 days to transfer the insurance policy. Until the transfer happens, the third-party cover continues. However, if the tenure of 14 days expires, the third-party coverage would cease.

Where to get an RTO form required to transfer car ownership?

You can download the RTO Forms from the Parivahan website or you can also visit the RTO office to get the forms.

Can I opt for third-party cover on the used car?

Yes, you can opt for third-party cover, but any damages suffered by your car would not be a part of it. However, if the car is stolen, you have to bear the loss. Therefore, it is always better to opt for a comprehensive policy.

What is the add-on coverage on comprehensive old car insurance?

A range of add-ons is available as a part of the comprehensive old car insurance plans. Some common ones include zero depreciation cover (provided the car is not more than 5 years old), roadside assistance cover, engine protection cover, NCB protection cover, etc.

Which insurance is better for the 10-year-old car?

Whether one has used their car for 10 years or bought a used car that is 10 years old, one must insure it. Better to choose comprehensive car insurance coverage.

What are the key highlights of comprehensive car insurance coverage?
  • Covers both own and third-party damages.
  • It is a better choice for old cars because it safeguards the owner against liabilities originating from accidental damages and theft.
  • Renewing car insurance on time is always a good idea; when one misses a renewal, they will lose the No Claim Bonus on their car insurance policy.

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