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Buying insurance for your second-hand car? Keep these things in mind

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A second-hand car is ideal for those looking to own a four-wheeler on a budget or those who are new to driving and don’t want to end up damaging a new car. However, you’re still required to purchase a car insurance policy, as per the Indian Motor Tariff, 2002. This is a legal requirement to ensure financial protection in case of accidents. But that’s not all. Let’s look at why car insurance policies are necessary for vehicles, second-hand or not.

Why should you insure your second-hand car?

According to the Indian Motor Vehicles Act, getting your vehicle insured is mandatory. However, it is third-party car insurance that is compulsory. This is the type of insurance that covers financial costs related to any damage done to a third person or their property as a result of an accident involving your vehicle, wherein you are at fault. This ensures that all cars on the road can offer that financial protection in case they are at fault for causing an accident.

But this protection is limited in nature since it doesn’t take into account the damage done to your own vehicle. To fund repairs on your own car, you will then need to shell out from your own pocket. To avoid that, you can take comprehensive car insurance, which is a combination of third-party insurance and own damages cover. The own damages car insurance protects you financially against damagesdone to your vehicle as a result of an accident, natural or manmade calamity or theft.

Things to look out for when insuring your second-hand car

Before you choose from different car insurance policies for your second-hand car, there are some factors you need to keep in mind –

a) Lower IDV –

A used car will always have a lower Insured Declared Value (IDV) than its newer counterpart. And that factor helps in lowering your premium as well.

b) Security risks –

Older cars are generally considered less safe as safety standards improve with each generation of cars. As a result, this could increase your car’s insurance premium.

c) Incidence of breakdowns –

Older cars are more likely to suffer breakdowns and total loss. This can inflate the premium.

d) Cheaper to repair –

Second-hand cars are generally cheaper to repair, unless they are rare currently or their production has stopped entirely.

So, while buying car insurancepoliciesfor second-hand vehicles, make sure you do the following.

1. Transfer car insurance policy

You can transfer the third-party car insurance policy from the previous owner to your name. This must be done within 14 days of transfer of ownership of the vehicle, else you will need to buy a new insurance policy. You will be required to furnish details such as the old insurance policy, the original registration certificate, and the application form for transfer of ownership. Or you can do your own research and buy a fresh policy that suits your needs.

2. Check previous claim history

Checking previous claims history will help you verify the car’s health and history that you would have gotten from the previous owner. Instances of damage and the repairs carried out will be mentioned, so you’ll know the potential problemareas of the vehicle.

3. Car inspection

Get the second-hand car thoroughly inspected to check its age, any damage, distance travelled, etc., to arrive at the right IDV and premium. Do not be tempted to lower the IDV beyond the specified range, as it could also lower your benefits if or when the time comes. Also, the inspection will give the insurer a fair idea about the current condition of the car, resulting in an accurate IDV and premium calculation.

Conclusion

To sum up, instead of simply transferring the last owner’s third-party insurance to your name, it’s best to conduct your own research and find the policy that best suits you. Moreover, if you have NCB accumulated from a previous policy, you can use the discount while availing the new policy for this vehicle. Learn about the car’s history and cross-check with the insurer to ensure you’re not being short-changed.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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