When you purchase a new car, a crucial step is to make sure it is adequately protected by vehicle insurance. However, does car insurance increase for a new vehicle? The answer is affirmative; in most instances, the premiums are generally higher for new automobiles. The justification for this price hike is associated with various factors that we will examine in this blog. Recognizing these factors can aid you in managing your insurance expenses more effectively.

Why is New Car Insurance so Costly in India?

The elevated cost of comprehensive car insurance for a new vehicle in India is frequently ascribed to the value of the automobile. Newer vehicles are usually more costly than older ones, and insurance providers determine the premiums based on the market value of the car. Consequently, a brand-new vehicle with a greater value results in a higher premium.
Other Factors Behind Elevated Car Insurance Rates for a New Vehicle

Multiple factors lead to the increased price of four-wheeler insurance when you buy a new car:

1. Higher IDV Value of the Car
   The market value of a new automobile is significantly more than that of an older model, making insurance more expensive. The IDV, or insured declared value, corresponds to the current market price of the vehicle. The greater the car’s value, the larger the payout an insurance provider has to make in case of an accident. This is reflected in the premium.
2. Increased Repair and Replacement Costs
   New vehicles frequently come equipped with advanced technology and complicated parts. These components can be pricier to repair or replace when compared to older car parts. This results in insurers charging a higher premium.
3. Risk of Theft
   New vehicles may be more appealing targets for thieves because of their higher value. As a result, insurers might elevate premiums for newer four-wheelers to reflect the increased theft risk and compensation. This is particularly true for premium or luxury cars.
4. High-Performance Cars
   Sports cars or high-performance vehicles typically come with greater premiums. This is due to the fact that these automobiles are built for speed and power, raising the probability of accidents, and repairs or replacements are more expensive than those for standard vehicles.
   How to Determine New Car Insurance Premium?
   The car insurance premium for a new automobile is established based on numerous factors. Here’s how insurers assess it:
5. Insured Declared Value (IDV)
   The IDV represents the maximum sum assured by the insurance provider in the event of a total loss, and it is based on the current market value of your new vehicle. The higher the IDV, the pricier the insurance premium.
6. Car Make and Model
   The make, model, and variant of the vehicle significantly influence the premium amount. Luxury or high-end models will incur a higher premium compared to standard vehicles because they are more costly to repair or replace.
7. Location of Registration
   If your vehicle is registered in an area with higher rates of accidents, thefts, or natural disasters, the premiums will be higher.
8. Add-ons or Extra Coverage
   If you decide to add any extra coverage options to your comprehensive car insurance, such as roadside assistance or engine protection cover, the premium will rise accordingly. These additional features provide increased protection but come with a higher expense.
9. No Claim Bonus (NCB)
   If you have possessed a car and have not filed any claims in the past years, you might be eligible for a No Claim Bonus. You can transfer this NCB to your new policy, which may lower your premium.
   How to Lower New Car Insurance Premiums?
   Although the premium for new car insurance may appear high, there are several tactics you can employ to bring it down:
10. Choose a Higher Deductible
    A higher deductible implies that you will incur more expenses out of pocket when making a claim, but your monthly or yearly premium will decrease. If you are confident in your ability to manage a larger outlay in the event of an accident, this can be an effective method to lower your insurance expense.
11. Opt for Third-Party Insurance
    If you wish to avoid the additional costs of comprehensive insurance, you can select third-party car insurance, which is a more basic coverage option. It only covers third-party liabilities.
12. Install Anti-Theft Devices
    Numerous insurance companies provide discounts for the installation of anti-theft devices like GPS tracking systems, car alarms, or immobilizers in your new vehicle. These measures decrease the likelihood of theft and therefore can minimize your insurance premium.
13. Maintain a Good Driving Record
    A spotless driving history without accidents or traffic offenses will assist you in obtaining a lower premium. Many insurance providers give discounts on premiums to safe drivers.
14. Compare Insurance Plans
    Before you buy insurance, it is crucial to compare various insurance policies from different providers. This enables you to find the best deal that meets your coverage requirements at a reasonable cost.
15. Use Voluntary Excess
    You may opt to raise the voluntary excess, which is the amount you contribute toward a claim. In exchange, your insurer might provide you with a discount on the premium.
    
    Conclusion
    In conclusion, car insurance premiums usually rise with a new vehicle due to its increased value, potential repair expenses, and the related risk of theft or damage. However, understanding how premiums are determined and taking measures to reduce them can assist you in obtaining insurance at a more budget-friendly rate.

Disclaimer: The information provided above is for illustrative purposes only. For more details, please consult the policy wordings and prospectus prior to finalizing the purchase.