Most people believe that it is mandatory to buy insurance for new cars from the car dealer. However, this is not true. It is definitely a hassle-free option, as you don’t have to research the various options available and compare them. The car dealer may also include add-ons in the policy, which may include free services, car covers, etc.
But there’s a catch. Since the auto dealer arranges everything on your behalf, the premium might shoot up a bit. People tend to agree to this, as it saves their time and effort, but if you take out a little time to compare various auto insurance policies available, you will definitely find a better deal. Not only that, but you can also choose the add-ons that you really require.
This lowers your premium amount, as you get to decide the add-ons of your policy.
In this article, we will have a brief look at the pros and cons of buying insurance from the dealer and compare it with insurance bought from outside.
Pros and Cons of Buying Insurance from Car Dealer
Buying an insurance policy from the Car Dealer has its pros and cons. Even though the process is streamlined and hassle-free, it is a good idea to consider the positives and negatives of buying it from the car dealer.
The process of buying insurance is very convenient. Every detail has already been taken care of by the dealer.
You might as well be offered a bundling discount, as you would be buying the car as well as the insurance from the same dealer.
Whenever the need arises, the auto dealer also initiates the claim settlement process.
The car dealer would always be available to explain to you the details regarding coverage, claims, and any other queries.
The cost of premiums can go higher than insurance bought from outside, sometimes as high as 40%. This rise in the amount of premium is due to the commission that the insurance company pays to the dealer.
The dealer provides certain add-ons to your policy, which might not be relevant to you. These add-ons take the premium even higher. The dealer does not usually give you the option of choosing the add-ons for your policy. Any insurance bought from an insurer directly will be flexible with the add-ons, which means you can also opt-out of the add-ons if you want.
Buying an Auto Insurance Directly from an Insurer
People have access to the Internet at their fingertips. You can take a bit of time out to check various policies available, and then choose the right one according to your needs.
Comparative studies have shown that you can save nearly 40% of your spending if you compare the best deals available, rather than buying the insurance that the auto dealer sells you. This is primarily because of the money saved from commissions, paperwork, and other fees, whose benefits can be passed on to the customers.
Pros of Buying Insurance from Outside
There is a scope for policy comparison: There are a plethora of websites that can give you a detailed comparison between the options available. You can find a policy with your needs in mind. This option isn’t available when you buy insurance that the car dealer offers.
Added flexibility: The auto dealers have tie-ups with one or two insurance companies, which means you get little flexibility in choosing your insurer. Most people have their preferred insurance companies, and buying the insurance from the dealer would mean they would have to settle with a choice which they wouldn’t have preferred. But, it can be eliminated when you opt for an outside insurer after researching.
Change in cover as per the customer’s choice: The insurance available with the car dealers often has fixed covers. The plan might as well come with a lot of add-on features that you might not need. This means you will have to shell out a higher premium. All of these can be saved when you buy car insurance directly from the insurer.
Specific add-ons: You can change the add-ons as per your need. This allows you greater customization of your policy.
Cons of Buying Insurance from Outside
You will have to check various policies before deciding on one which offers the best deal. This will take considerable time, which might not be convenient for all.
You might miss out on the bundled discounts which the dealers usually provide when you buy the car and the insurance together.
The claims process would be more complicated, as you would have to initiate a process yourself.
Understanding each and every detail of the insurance alone can be a task. This will be avoided if you buy the insurance directly from the dealer, as he would help in understanding the intricate details of the insurance policy.
There are a plethora of companies offering policies at different price points. Comparing the options before choosing the best would help you land the best deal. After choosing the best policy, it would be essential for you to decide your preferred add-ons.
There are some essential add-ons that you can consider adding to your policy:
Zero or Nil Depreciation: It gives complete coverage without factoring in the depreciation of parts including fiber, glass, and rubber.
Engine Protection Cover: This provides coverage to the engine against water ingression damages.
Roadside Assistance Cover: This provides roadside assistance in cases of emergencies, such as roadside repairs, emergency refueling, towing services, etc.
There would be a lot of threats to your car, such as theft, accidents, and others. Insurance helps you face the financial consequences of these incidents. Make an informed decision before buying the insurance, and you are good to go in whichever option you opt for.