New Car Insurance Guide: What to Know Before Buying Your First Car Policy
More than 43 lakh new vehicles were sold in India in 2024 alone (according to a report by SIAM).
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Do I Need Car Insurance Before Taking Delivery of a New Car?
The answer is yes. In India, it's a legal requirement to have insurance in place before you can drive your new car out of the showroom. Even if it's just a short trip home, you must have at least a basic third‑party insurance policy.
Most dealers ask for the insurance documents because the car will not be registered with the Regional Transport Office (RTO) unless it has a valid policy. This applies regardless of the car's make, model, or cost.
In practice:
- Dealers often include a basic one‑year third‑party insurance with the car.
- It's wiser to upgrade this to a comprehensive car insurance policy that covers both third‑party liabilities and damage to your own car.
Should I Buy Insurance From the Dealership or Online?
Many people just agree to the car insurance the dealership offers because it feels convenient. But it's worth knowing that this isn't always the best or the cheapest option. Dealer policies often:
- Costs more because of hidden or bundled charges.
- Only give you a handful of insurers to pick from.
- Don't let you adjust the cover to suit your needs.
On the other hand, what online platforms or direct websites of insurance companies give you?
They are:
- A chance to compare quotes across insurers.
- Better transparency in terms of the premium, add‑ons, and coverage.
- The ability to choose insurers with a strong claim settlement ratio and a wide cashless garage network.
Online platforms are cost-effective and can help you pick the right coverage compared to dealership policies.
What Documents Do I Need to Insure a New Car Online?
Buying insurance online for a new car is straightforward if you have the right documents. The insurer only needs a few documents to confirm the car and its owner. When buying car insurance, keep handy:
- A copy of the invoice issued by the dealer.
- Vehicle registration certificate (RC).
- Identity proof (Aadhaar card, PAN card, or DL).
- Sales agreement or temporary registration number.
- Chassis number of the car.
- Engine number of the car.
Once you have submitted them online or shared them with the insurer, they will verify them. After that, you can pay and get your policy.
Can I Choose the Insurer or Is It Fixed by the Car Dealer?
The choice of insurer is entirely yours. Car dealers often have tie‑ups with specific insurance firms, which is why many buyers assume that the car insurance is pre‑decided. However:
- You can opt out of the dealer's insurance and decide on your own.
- You have the right to compare quotes online and pick a company that suits your requirements.
- Your decision will not affect the delivery of the car.
For example, if the dealer offers an insurance policy from Company A, but you feel car insurance online is better with Company B, you can ask the dealer to register the car with Company B's policy.
Which Add‑Ons Should You Consider for a New Car?
Add‑ons are like little extras you can attach to your basic car insurance to strengthen it. They don't cost much, but they can save you from a lot of stress and unexpected expenses later. Here are a few worth looking at if your car is new:
- Zero Depreciation Cover: Helps you get the full cost of replaced parts if your car is damaged, so you don't lose money on wear and tear.
- Return to Invoice Cover: Gives you back the car's original on‑road price if it's stolen or completely wrecked.
- Engine Protection Cover: Covers expensive repairs if your engine is damaged by water or oil leaks.
- Roadside Assistance Cover: Gets you help quickly if you are stuck with a flat tyre, dead battery, or accident.
- Tyre Protection Cover: It ensures repair or replacement costs are covered if your car's tyres or tubes get damaged.
- Total Cover: It bundles together numerous benefits. It protects your car and your loan (if any) and even covers road tax or insurance premiums if your vehicle is stolen or totally damaged.
Each of these add‑ons only adds a small cost to your premium but can save you a lot of money and worry down the line.
What is Covered in New Car Insurance?
Getting new car insurance when you buy a new car is critical. It protects you against any financial setbacks you might face as a car owner. Here's what it generally includes:
- Damage caused by natural events like cyclones, floods, and storms.
- Damage caused by human events like riots, strikes, or vandalism.
- Third‑party liabilities for injuries, death, or property damage caused by your car.
- Total or partial loss of the car due to theft.
- Damage caused by fire, explosion, or self‑ignition.
- Damage to your car caused by a collision or accident.
What is Not Covered in New Car Insurance?
Even the best policies have a few limits. Your new car insurance won't cover every situation, especially if you do not comply with the rules. Here's what you can't claim:
- Damage due to carelessness or high speed.
- Accidents caused when the driver is under the influence of alcohol or drugs.
- Damage that occurs when the vehicle owner is unable to furnish the required documents like a licence, RC, or insurance.
- Damage caused when the car is driven outside the area covered by the policy.
Disclaimer: Insurance coverage can vary from insurer to insurer. Read the policy document carefully before purchasing a new car insurance online or offline.
How to Buy/Renew Car Insurance Online?
Buying or renewing car insurance online is quick and straightforward. It can be done through trusted platforms like Policybazaar Insurance Brokers Private Limited. You just have to:
- Open Policybazaar.com.
- Click "Car Insurance" on the homepage.
- Click on "Brand New Car".
- Enter make, model, and registration year.
- Select the car insurance that meets your needs.
- Choose add-ons to increase coverage.
- Check the insurance price, pay the premium online, and get your policy documents in your inbox.
How Much Does a New Car Insurance Cost?
The cost of car insurance depends on:
- The make and model of your car.
- The age of the car (new cars have higher IDV).
- The zone of registration (metropolitan areas attract higher premiums).
- The selected add‑ons.
For example:
A comprehensive car insurance premium on Policybazaar.com starts at ₹2,263 as of June 2025. Third-party car insurance costs ₹2,094 as of June 2025.
Remember, the third‑party car insurance premium is regulated by the Insurance Regulatory and Development Authority of India (IRDAI), so it is the same across insurers. You can also check the premium for your first comprehensive car insurance policy through an online car insurance calculator.
