How Does Car Insurance Vary for Used Cars?

Almost everyone dreams of owning a car someday and go on long drives with their family and friends. However, not all have that kind of money to purchase a brand new car. There is one market that you cannot ignore, that is the used car market, which is also like a blessing for many. Second-hand cars are largely bought by people as it is a market you can trust in today’s time.

More than the new cars, the market for used cars is flourishing and buyers have started to prefer it more. The main reason being that, people who own the car feel that they can get a pre-owned car at a great deal. As soon as the car leaves the showroom, its value starts depreciating. There are a few models that lose their value by 40-50 % in not more than a year. Therefore, if you wish to buy a car, there is no harm in buying a used one.

Value of a Used Car

Valuation of a used car is simply the usage of accurate methods to calculate the premiums for car insurance. This includes factors like depreciation of the car, any accident that your car is involved in, etc. Once all of these factors have been considered, they will arrive at the Insured Declared Value of the car (IDV). No matter if the cars are directly sold to the customers or through a broker or used car merchants, always remember that the value of a car is inversely proportional to its age.

Why is Insurance necessary for Used Cars?

You either drive a used car or an unused one, if you are not careful with your driving, it can lead to road accidents. In case you have any plans to purchase a used car, here are a few reasons why you must also buy car insurance for it as soon as possible.

  1.     Liabilities arising due to accidents

Accidents are unpredictable and can cause some serious legal as well as medical liabilities. An insurance policy looks after such liabilities.

  1.     Payment for Damages Caused

If you get involved in an accident, your insurance policy will take care of the damages along with the cost of repairs. These damages can result in long repair bills, and you wouldn’t want to pay it from your pocket.

  1.     Obeying the law

As per the law, a car owner must have an insurance policy to drive on the public roads. In case you get caught driving without having a valid insurance policy, you may be asked to pay a hefty fine.

Now, let us look into some factors that affect or have a major impact on the car insurance premium of your used car:

  • Additional Covers

On choosing a comprehensive car insurance policy for your used car, you also get to opt for additional covers (add-ons) and enhance your existing policy. However, you are supposed to pay a little extra premium amount. Therefore, before you choose, always compare car insurance online along with the add-on covers online to check which insurer is offering you a better deal.

  • Area of Registration       

The premium amount will vary depending on the city that you register your car in. As compared to the Tier-2 cities, Tier-1 cities will have a higher premium. Likewise, the areas prone to natural calamities such as floods, earthquake, may have to pay more premium amount.

  • No Claim Bonus (NCB)

If you had a car before this one, the NCB that had accumulated in your previous insurance policy can be carried forward and you can still receive the concessions.

You must purchase a car insurance policy whether your car is new or a used one. This has to be done at the earliest to meet the legal requirements as well as safeguard yourself in case of any unforeseen event takes place. Also, when you’re buying the policy online, you can get the estimate of the premium amount to be paid instantly, by using the car insurance calculator.