New vs. old car insurance: key differences
Differences between purchasing insurance for new and old cars
Everyone hopes to buy a car at least once in their lifetime. Many people spend all of their life's savings to get the car of their dreams. Most consumers buy new cars; however, others choose used ones instead, depending on their needs. Yet purchasing a car after much study and expenditure is not the final step. According to the Motor Vehicles Act (1988), every owner of a four-wheeler is required to purchase at least a third-party new car insurance to be in compliance with the law.
However, with the expansion of the used automobile industry in India, it is now feasible for consumers to buy the car of their dreams for a much lower price. Purchasing a secondhand car and getting the old car insurance for it are both simple processes. You should be aware that the cost of insuring a used automobile vs. a new car differs noticeably.
Difference between new and old car insurance
New Car Insurance | Old Car Insurance |
The Insured Declared Value (IDV) of new cars is greater. As a result, the amount of the premium related to IDV is greater than that of used automobiles. | The price for this component is smaller since the IDV of secondhand cars is lower. |
Modern safety features will be included in new vehicles. Hence, the danger of theft of these cars is negligible. This aspect will reduce the amount of the insurance premium. | Since they lack a strong security system, used cars are more frequently targeted by burglars, increasing their risk, and eventually, insurance premium amount. |
New automobiles are less likely to experience breakdowns and other unanticipated incidents that cost a lot of money. As a result, insurance rates are reduced. | Breakdowns and total loss scenarios are very common with old cars. This suggests that there may be a higher premium. |
It costs more to repair newer cars. Thus, premiums for insurance can be a little higher. | Breakdowns and total loss scenarios are very common with older vehicles. This suggests that there may be a higher premium. |
Which kind of car has less expensive insurance: new or used?
It's true that a new car's list price is often more than a used car's, but insurance costs aren't always comparable. Characteristics like cutting-edge safety equipment, easily replaceable parts, and other elements can make new car insurance less expensive. The replacement cost of a new car is, however, determined by the insurance companies using the factory price rather than the original purchase price. Higher rates might result from this.
A car experiences the opposite of depreciation when it is regarded as valuable by the niche automotive market. The cost of replacement and insurance are greater for exotic or unusual items. Considering possible premium variations by the manufacturer is important if you're determined to purchase a new car.
Conclusion
Regardless of whether you have chosen to purchase a new or used car, it is a wise idea to compare different insurance plans online. In this manner, you will be able to secure the ideal insurance that provides the best coverage at a set price.
Moreover, keep in mind to obtain comprehensive car insurance coverage so that you do not have to face an emergency.
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