Buying car insurance from a car dealer: pros and cons

mm Paul Verbiton February 28, 2019
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Buying a car is a huge investment that consists of many steps. After putting in hours of research hunting for the perfect car and scouting for the best deal, the satisfaction of driving home your brand-new car is immeasurable. However, the process might not end there. According to the Motor Vehicles Act of 1988, you can’t legally drive your vehicle until it is insured.

Almost all car dealers today have tie-ups with insurers to provide vehicle insurance to their buyers. Though it might seem tempting because of its convenience, buying car insurance from the car dealership comes with its own advantages and disadvantages. Comparing the pros and cons will help you make an informed decision about the deal.

Advantages of buying insurance from a car dealership

Following are some notable advantages of buying insurance from a car dealership:

  • Dealers have a better idea of the intricacies involved in the policy and hence are well-equipped at advising you and helping you find the best deal.
  • Buying an insurance policy saves a lot of time as you don’t have to contact other insurers and compare the policies and premiums.
  • Opting to buy a policy from a dealership also makes the process more convenient and streamlined in nature.
    The dealer is also authorized to provide add-on covers if you want to opt for any. The dealer may also provide other offers from their end.
  • Buying insurance from a dealer doesn’t mean you have to compromise on the customer service front. Most dealerships have a separate helpdesk for claim assistance and insurance queries. It is especially helpful during times of need.
  • Dealers often bundle purchase offers and insurance deals together. This might mean additional discounts on deals. Sometimes, dealers waive off the first year’s premium when they provide promotional offers.

Disadvantages of buying insurance from a car dealership

Mentioned below are the disadvantages of buying an insurance policy from a car dealership:

  • Buying a policy from your dealer might be convenient, but it doesn’t give you the option of searching for other deals and comparing the premiums.
  • Dealers can provide insurance to buyers as they have tie-ups with insurance providers. This same feature can make the deal inflexible in nature as you don’t have the freedom to choose another insurer.
  • Often dealers sell pre-packaged policies that contain various add-ons. The premiums for policies are substantially higher and you might not need all the add-ons on offer. Buying such policies would mean paying for something you don’t need.
  • Car dealers work on a commission basis with insurers. This means that the policy prices provided by the dealers are higher in nature as giving a cheaper rate would mean cutting down on their commissions.

Important points to remember while buying car insurance

Though it is made mandatory by the government, buying motor insurance has numerous other benefits too. From bearing the cost of repair to taking care of expenses pertaining to theft, car insurance makes sure you can enjoy your long drives worry-free. However, there are certain things to be kept in mind while buying insurance from car dealerships. Following are the key points you should remember:

  • Comparing deals: Buying insurance from your car dealer is a relatively fast and fuss-free process. However, you might have to compensate by paying a higher price. Since car dealers are subscribed to only one insurance provider you don’t get any options when it comes to the policy. Thorough research online can yield much better results while looking for good insurance offers. It is always advisable to compare policies before settling for one.
  • Be aware of the add-ons: Car dealers are primarily focused on selling their cars and not insurance policies since they generate maximum revenue from car sales. Therefore, it is better to do your homework on the add-ons you want. Don’t settle for additional covers that you don’t require as it will increase your premium without being beneficial.
  • No Claim Bonus (NCB): The No claim Bonus refers to the discount you receive on the premium if you don’t make any claims in a policy year. The bonus is usually around 20% and can go up to 50% sometimes. When buying a new vehicle, you can transfer the insurance of your old vehicle to the new one and claim NCB, if applicable. Car dealers might miss out on such information, but as a buyer, such pieces of information can be very crucial.

Conclusion

Buying car insurance from a car dealer has its pros and cons. As a buyer, it is important for you to weigh out your priorities. If convenience and quicker process top the list for you, you can opt to buy the policy from the dealer. However, if you want to save money, it is better to look for other options and compare policies from different insurers.

Category: Blog, Business
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Paul Verbiton

I enjoy spotting opportunities and doing my best to grab them if I can. I am eager to see the world, I love taking photos and writing, coming up with topics that are pleasant to read, funny, and interesting at the same time.

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