If you know about car insurance policies or have one, you must be aware that the age of your vehicle is closely related to it.In fact, the age of your car is an important factor in determining what your insurance premium is going to be.
Now even though many people know what’s mentioned above, they may not have the complete knowledge about what role the age of their vehicle plays in their car insurance. So to clear away your doubts and also add to your knowledge, here is a take on the relationship that exists between the age of your car and the insurance your buy for it.
Related terms
Zero depreciation cover
Just like every other tangible object out in the world, even your car is exposed to the ravages of time. This simply means that with the passage of time, your car will undergo damages which cannot be helped. The condition of different parts of the car and quality of performance it offers eventually deteriorates. A lot of the wear and tear that your car undergoes happens due to usage, apart from other reasons including accidents. The more the depreciation of your car, the more will its value fall.When reimbursing claims under a car insurance policy, insurance providers factor in the level of depreciation that your car has undergone, and fix the final sum to be paid out accordingly.
Now there are various add-on covers that car owners can buy alongside their comprehensive car insurance policy to enhance their coverage. Zero depreciation cover is one such additional cover that new car owners can buy alongside their car insurance. The biggest advantage of purchasing this cover is that it ensures that the entire repair amount is reimbursed without any depreciation value being factored in.
Insured Declared Value
Insured Declared Value or IDV refers to the maximum amount up to which you can make a claim under your car insurance policy.
For calculation purposes, the Insured Declared Value at any given point of time equals to the current value of your car in the market minus the deprecation that it has undergone. IDV for accessories within the car that were not factory-fitted is normally calculated separate while the expenses related to registration and the paid is excluded from IDV.
With time, the requirements of car insurance policy holders also changes.
0-5 years
New cars have higher IDVs and insurance premiums. The simple reason behind it is that any damage or loss caused to your new car will result in higher expenses for repair. Apart from that, when your car is still new; it holds a very high resale value. So, if at any point of time you want to dispose of your vehicle by selling it, you can expect to get good returns. However, to ascertain that this happens, you will need to ensure maximum security for your car too, and this is where comprehensive car insurances come into the picture.
Having a comprehensive car cover means your car is covered against expenses related to damage or loss occurring due to various natural and man made causes. Apart from that, such a plan also pays for third party liability along with providing a personal accident cover.
Another advantage that cars in this age group have is the availability of zero depreciation cover. By paying a little extra, new car owners can ensure that they receive complete claim amount without any deduction made on the grounds of depreciation of the car or its parts.
5-10 years
If your car is in the age group of 5 to 10 years, it still has good numbers of years ahead of it. Vehicles in this age group still hold good resale value. So, opting to buy a comprehensive cover for such a car still makes sense, even if you do not get the benefit of zero depreciation. That said, some of the best car insurance companies (IFFCO Tokio for instance) offer bumper-to-bumper cover for an extended period (7 years in case of IFFCO Tokio).
Hence, by re-evaluating your insurance plan during renewals and making thorough researches and policy comparisons will help you choose the best car insurance online.
10+ years
Now one could say that a car that has surpassed 10 years post-sale is old, and you wouldn’t be wrong in your assessment. We also cannot ignore the fact that the age of fitness (safe to be plied on public roads) for a diesel car in India is 10 years, and 15 years for petrol cars. Cars that fall in this age group may have high depreciation rates; that is why people opt for third party cover instead of comprehensive car insurance. Everything said and done, having the latter wouldn’t hurt.
We hope that your queries regarding car insurance and the age of your car are covered, and you can utilize the knowledge to make better decisions when purchasing or renewing your insurance policy.