What Every First-Time Car Buyer Needs to Know About Auto Insurance

| Updated on March 27, 2024

Buying your first car is a lifelong memory. Thanks to easy repayment methods, most young earners are fulfilling this dream early in life. Although having your own car brings a lot of excitement, there are some important aspects you need to be mindful of. While safe driving and following traffic rules are crucial, having the right motor insurance is nonetheless significant. If you or someone you know are buying their first car, the following things should be kept in mind when purchasing a car insurance policy

Top 9 Things a First-Time Car Buyer Needs to Know

When you are buying a car for the first time, you must consider some prominent factors as they will help you take a better decision while choosing the right car for you. Listed below are a few pointers that you must keep in mind when buying a car insurance policy for the first time. 

Understand the Different Types of Policies and Choose What You Need

There are broadly three types of car insurance policy covers that you can opt for.

  1. Third-Party Liability Insurance
  2. Having third-party motor insurance is compulsory under the Motor Vehicle Act of 1988. This car insurance policy provides coverage for the claims or liabilities that occur because of an accident in which a third-party property or individual is involved. The own damages, however, are not covered. 

  3. Standalone Own Damage Insurance
  4. Unlike third-party insurance, this car insurance policy provides coverage for the damage faced by the insured vehicle in an accident. You can buy this standalone coverage only if you have a third-party car insurance policy.

  5. Comprehensive Insurance
  6. A comprehensive car insurance policy is a combination of standalone damage and third-party liability insurance. This car insurance policy provides coverage for the damages caused to the third party as well as for the own damage to the insured vehicle. The policy includes coverage for explosions, fires, natural calamities, thefts, etc. It is also known as ‘All in One Insurance’, and also offers the inclusion of add-ons. 

Do your Homework and Compare Different Policies Online

Before purchasing any car insurance policy you must understand what you need. You must do your research and compare the different policies available. You can do your homework online and easily compare policies on the basis of the types and add-ons by the insurer, exclusion, and inclusion of the plan, claim process, sum insured, deductibles, etc. Especially in Texas, where car insurance rates can be quite high, it is important to look for cheap car insurance that meets your budget and needs.

Do Not Miss Reading the Fine Print

You must read the car insurance policy documents thoroughly before signing them. You must very carefully check every term and condition mentioned and understand if they are suitable for you or not. In case of any doubt, you should ask help from an expert to understand the inclusions/ exclusions properly. Reading and understanding documents properly would help in avoiding any legal conflicts when you would be filing for the claim. Do not shy away from taking help from an expert to understand jargon/ terminology.

Understand Every Add-on, Pick What You Need

Many insurance companies offer different add-on covers for the comprehensive car insurance policy that helps in increasing the advantages you would get from the insurance coverage. Here is a list of the Add-ons:

  1. Passenger Coverage
  2. Return to invoice coverage
  3. Tyre Protection Coverage
  4. Zero Depreciation Coverage
  5. Consumable Coverage
  6. Gearbox and Engine Protection Coverage

Choose a Reliable Brand

When you choose the right insurance company, your insurance journey can be very simple and smooth. Keep in mind the following pointers:

  1. Prefer a Brand with a High Claim Settlement Ratio
  2. The claim settlement ratio is the proportion of claims that were resolved by the insurance provider to all claims that were filed. The greater the claim settlement ratio will be, the more likely it is that your claims will be resolved.

  3. Prefer a Brand with a Bigger Network of Garages
  4. Network garages are a unique network of garages run by your insurance provider where you can obtain any repairs or other services needed because of any damages caused due to an accident to your car without having to pay upfront.

    In order to increase your ability to use cashless services, you should inquire about the network garages an insurance company has before using their services.

  5. Good Ratings and Review

You must check and compare the reviews and ratings of the insurance company before buying its car insurance policy. The better the reviews, the better services are provided.

Always be Honest with Your Insurance Provider 

Many first-time vehicle insurance purchasers have a tendency to give false information about their driving record and age in an effort to lower the cost. However, when it comes time to file a claim, such actions could prove to be an expensive oversight. Your car insurance policy would be canceled if the insurer determines the information to be false. Therefore, it is highly suggested that you be honest and offer correct and detailed information on the application form.

Resale Value of the Car

You need to understand the resale value of the car when you are buying a car for the first time. Cars have generally a depreciating value in the coming years, so you should opt for a good brand that gives you a good value in return when you will resell it. The best one will be that which gives an amount approximately to the car’s original price.

Safety Features

Safety features must be considered appropriate if you are a first-time car buyer. The crucial features including Electronic Stability Control, Braking and Steering, Autonomous Emergency, and other related features must be checked thoroughly. You can’t ignore this aspect ever as recently the government has made specific norms that are mandatory to be taken care of by the four-wheelers owners.

Geographical Region 

If you are living in a metropolitan city, the insurance costs are going to be higher. Accordingly, if you are buying car insurance in a non-metro and a rural-specific region, the insurance costs will be lesser. Hence, the geographical region is the deciding factor that increases or decreases the premium cost of your car.

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