A car is one of the most important purchases of your life. While sometimes one may not be able to buy a brand new car, they can still reap the benefits of owning a car by buying a refurbished second-hand car. Getting a second-hand car helps you save a lot of money as they come at a lesser price. Irrespective of the age of your car, car insurance is a must to keep it well protected. It is the best way to offer financial security to your car as well as cover damages and losses. Third-party car insurance is mandatory as per Indian Motor Vehicle Act but it is better to get a comprehensive car insurance policy to offer all-around protection.
Understanding a second-hand car insurance
As the name suggests, second-hand car insurance is offered by an insurer for a second-hand car. This insurance is the same as new car insurance, however, some add-ons may change and not be available with older cars.
In return for the premium paid by the car owner, the insurance company agrees to pay for damages and liabilities sustained during the tenure of the policy. This also includes claims made by a third party for damages or injuries in an accident where your second-hand car was involved. The insurance also helps with legal support in case of damages sustained to your car by a third-party vehicle.
Why should you insure your second-hand car?
As per the Motor Vehicles Act, of 1988, driving a car without valid third-party insurance is a punishable offence. But this is not the only reason why you should have second-hand car insurance with you. Here are some more!
- Third-party risks: In case of any damages caused to a third party during an accident, you need to bear not only the cost of repairs but also cover for medical expenses of injured people. In case of death or disability of a third party, you may also need to cover for the same.
- Theft of car: In case of theft, you are left with a huge financial loss. Car insurance for the second-hand car will help cover the loss by compensating as per the insured declared value. This can help you arrange the money to buy a replacement vehicle.
- Coverage against natural calamities: Your car may get damaged by rockslides, landslides, earthquakes, and floors. These natural disasters occur without a warning and car insurance can protect your financial losses that arise out of such events.
- Protection from vandalism: You park your car on roads and it is very often that it gets scratched by a random passerby out of malice or a road protest going on. These events can also leave the car damaged. Having comprehensive second-hand car insurance can ensure your car is protected from such scenarios.
- Coverage against a collision with a stray animal: In case of a collision with a third-party person or vehicle, your insurer agrees on to pay for the sustained damages. But while you may not be aware, your car is also covered against damages and dents sustained by a collision with animals on road.
- Coverage for fire: A car fire can be very devastating and lead to total irreparable damage to your car. With a comprehensive second-hand car insurance policy, you can be sure of being compensated financially for the losses.
While many of these scenarios may seem a little far-fetched, these are not impossible. While there is no way to predict such scenarios, you can try to be more prepared and secure your car with car insurance.
How is the premium calculated for second-hand car insurance?
The method of premium calculation for second-hand car insurance remains the same as that of a new car. The insured declared value is based on the vehicle’s total age. In case, a car is older than five years, the IDV is dependent on a value mutually decided by the car owner and insurer.
Here are some other factors that decide the premium of second-hand car insurance:
- Engine’s cubic capacity
- Insured Declared Value
- Original age of the car
- No claim bonus, if applicable
- Any other applicable discounts
- Use of the car – personal or commercial
Deductions in second-hand car insurance
Second-hand car insurance has certain compulsory deductions. The value of the cubic capacity of the engine is decided by IRDAI. Additionally, you can also opt for some voluntary deductions which will reduce the premium of your car insurance.
Things to keep in mind when buying second-hand car insurance
- It is important to get the previous policy transferred under your name. Besides the car ownership, the policy also should reflect you as the owner. Additionally, failure to do so will not let you change the policy terms during the tenure. This means you would not be able to alter the policy as per your needs.
- You can also opt to purchase a fresh insurance policy. In that case, ensure that the IDV of the car is correctly calculated. Getting a lower IDV means that the premium for your car insurance would be lower but so will the coverage.
- Verify that the claim history given by the previous owner is correct. Simply call the insurance provider and check the details using the insurance number.
Irrespective of the fact whether you have invested a significant amount or you bought your second-hand car at a fairly discounted price, do not forget to secure your buy with a comprehensive car insurance policy. When you purchase second hand car insurance, ensure that your coverage and benefits add to your requirements. Also do not forget to get the correct IDV for your car to get adequate coverage.
Disclaimer: The aboveinformation is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.