Buy New Car Insurance: Coverage, Cost & Key Benefits

Introduction 

Buying a new car is an exciting milestone. Whether it’s your first vehicle or an upgrade to a premium model, the joy of driving home a brand-new car is unmatched. However, before you hit the road, it is essential to buy car insurance that offers the right level of protection. Securing the right car insurance policy is not just a legal requirement but also a crucial financial decision that safeguards your investment.

 

Why New Car Insurance Is Mandatory

Under the Motor Vehicles Act, every car owner in India must have at least third-party insurance coverage. Without it, driving your vehicle on public roads is illegal and can attract penalties, fines, or even legal complications.

When purchasing a new car, dealerships typically ensure that at least a third-party policy is issued before delivery. However, while third-party coverage is mandatory, it may not be sufficient to protect your own vehicle. This is why most new car owners prefer comprehensive car insurance.

 

Types of Coverage Available for New Cars

Understanding the available coverage options helps you choose the right plan.

1. Third-Party Insurance

This is the most basic and legally required coverage. It protects you against:

• Injury or death of a third party
• Damage to third-party property
• Legal liabilities arising from accidents

However, it does not cover damage to your own car.

2. Comprehensive Car Insurance

A comprehensive policy provides wider protection. It covers:

• Third-party liabilities
• Accidental damage to your car
• Fire damage
• Natural disasters such as floods and earthquakes
• Man-made incidents such as riots or vandalism
• Theft or total loss

For a new car, comprehensive insurance is highly recommended as it protects your high-value asset.

3. Own Damage Cover

If you already have a long-term third-party policy, you can purchase standalone own damage coverage to protect your vehicle.

 

Key Add-On Covers for New Car Insurance

New vehicles often come with advanced features, sensors, and high-end components. Add-ons enhance your protection and reduce out-of-pocket expenses.

Zero Depreciation Cover

Covers full claim amount without deducting depreciation on parts. Ideal for new cars.

Engine Protection Cover

Protects against engine damage caused by water ingress or oil leakage.

Return to Invoice Cover

In case of total loss or theft, you receive the invoice value instead of the depreciated value.

Roadside Assistance

Provides emergency support such as towing, battery jump-start, or fuel delivery.

Consumables Cover

Covers expenses for nuts, bolts, lubricants, and other consumables not included in standard policies.

Choosing the right add-ons depends on your location, driving habits, and vehicle value.

 

How Much Does New Car Insurance Cost?

The cost of new car insurance depends on several factors:

1. Insured Declared Value (IDV)

IDV is the current market value of your car and determines the maximum claim amount. Higher IDV means higher premium.

2. Car Model and Variant

Premium cars or vehicles with higher engine capacity attract higher premiums due to increased repair costs.

3. Location

Cars registered in metro cities may have slightly higher premiums due to traffic density and higher accident probability.

4. Add-Ons Selected

Additional covers increase the premium but offer better protection.

5. Voluntary Deductibles

Choosing a higher voluntary deductible can lower your premium.

Although premium costs vary, new car insurance is relatively affordable when compared to the financial risk of accidents or theft.

 

Benefits of Buying New Car Insurance

1. Financial Protection from Day One

Your new car represents a significant financial investment. Insurance ensures you are protected from unexpected repair costs immediately after purchase.

2. Legal Compliance

Having valid insurance keeps you compliant with road laws and avoids penalties.

3. Protection Against Natural Calamities

India experiences floods, heavy rainfall, and other natural disasters. Comprehensive coverage protects your car from such risks.

4. Peace of Mind

Driving a new vehicle without worrying about repair expenses enhances your confidence on the road.

5. Cashless Repairs

Most insurers provide access to network garages where repairs are done cashlessly, reducing financial stress during emergencies.

6. No Claim Bonus (NCB)

If you don’t make a claim during the policy year, you earn a No Claim Bonus, which reduces your renewal premium.

7. Long-Term Policies

New car owners can opt for long-term insurance plans that lock in premium rates and reduce renewal hassles.

 

Documents Required to Buy New Car Insurance

When purchasing insurance for your new vehicle, you typically need:

• Vehicle registration details
• Invoice copy of the car
• Engine and chassis number
• Identity and address proof
• Previous policy details (if applicable)

For brand-new cars, the dealership often assists in sharing the required information.

 

Online vs Offline Purchase: Which Is Better?

Today, buying car insurance online has become convenient and transparent. Online platforms allow you to:

• Compare multiple policies
• Check coverage features
• Customize add-ons
• Calculate premium instantly
• Complete the process within minutes

Offline purchase through agents provides personal assistance but may limit comparison options.

Choosing a trusted insurer or aggregator ensures smooth policy issuance and claim support.

 

Common Mistakes to Avoid When Buying New Car Insurance

Even experienced buyers sometimes overlook important aspects. Avoid these common errors:

• Choosing only third-party coverage for a high-value car
• Ignoring add-ons like zero depreciation
• Selecting a low IDV to reduce premium
• Not checking network garages
• Overlooking claim settlement support

Being informed helps you make a smarter decision.

 

Why Comprehensive Coverage Is Ideal for New Cars

A new car has higher repair and replacement costs. In the initial years, depreciation is relatively lower, meaning claims can be substantial. Comprehensive insurance combined with zero depreciation cover ensures minimal financial loss during repairs.

For luxury or high-end vehicles, return to invoice add-on provides additional financial security.

 

Conclusion

Buying a new car insurance policy is more than just fulfilling a legal requirement. It is a strategic decision that protects your financial investment, ensures legal compliance, and provides peace of mind. From comprehensive coverage and add-ons to cost considerations and long-term benefits, understanding your options helps you choose wisely.

Selecting the right insurer plays a crucial role in smooth claims and reliable support. If you are planning to buy new car insurance with wide coverage options and competitive premiums, exploring plans from Square Insurance can help you secure your vehicle with confidence and ease.

 

Frequently Asked Questions

1. Is comprehensive insurance necessary for a new car?

While not legally mandatory, comprehensive insurance is strongly recommended for new cars as it covers both third-party liabilities and own damage.

2. What is the ideal IDV for a new car?

For a brand-new vehicle, the IDV should closely match the invoice value to ensure maximum coverage.

3. Can I transfer my old car’s No Claim Bonus to a new car?

Yes, the No Claim Bonus is linked to the policyholder, not the vehicle, and can be transferred to your new car insurance policy.

4. How long does it take to buy new car insurance online?

The process can be completed within minutes if you have all vehicle details ready.

5. What happens if I don’t renew my new car insurance on time?

If your policy lapses, you lose coverage and may also lose accumulated No Claim Bonus if not renewed within the allowed grace period.

6. Does new car insurance cover accessories?

Factory-fitted accessories are generally covered. Additional coverage may be required for aftermarket accessories.