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Business News/ Insurance / News/  Should you buy or renew motor insurance from car dealers?

Here are the freebies that you usually get when you buy a car: Free vehicle service for a certain period. Hassle-free repairs in case of any accident resulting in damage to the vehicle. You can also get value-added services: many dealers provide financing facilities and motor insurance coverage through tie-ups with banks, non-banking financial companies and insurers. While all these can give you a seamless car-buying experience, you should be careful while opting for a motor insurance policy. Here are the advantages and demerits of buying a policy from a car dealer.

Convenience: You can get your car and vehicle insurance in one place. You don’t have to go through the hassle of finding an insurance provider.

Customisation: A car dealer will likely know your vehicle and its specifications. They can help you get insurance policies best suited to your car. Further, you can get personalised service from car dealers, including assistance on insurance claims and other related services. Gopakumar Pillai, head of automotive partnerships at Digit Insurance, said, “Car dealers may offer customized insurance policies that are tailored to your specific needs, such as zero depreciation cover, engine protection, and roadside assistance."

Limited options: Car dealers typically offer limited insurance policies. Some may not even allow you to compare policies from different providers. Pillai said, “When you buy insurance from a car dealer, you might not get the option to compare and choose from various products."

Raghavendra Rao, chief distribution officer of Future Generali India Insurance, said, “The price and cover comparisons providing multiple insurer options may not be available at all car dealers. This limits the flexibility that the customers must have while buying/renewing their motor insurance."

Higher premiums: Car dealers usually charge high commissions on insurance policies. Rakesh Goyal, director, Probus Insurance Broker, said, “Car dealers have a financial incentive to sell you motor insurance, which can create a conflict of interest. They may prioritize their profits over your best interests."

Lack of transparency: Car dealers may not provide complete information about their insurance policies. Rao said, “You may miss out on the advice agents and other intermediaries give while buying insurance."

What to do? Check out the offerings from various insurers. Abhishek Bondia, principal officer and managing director of SecureNow, said, “A car dealer is just like any other insurance intermediary. Buying insurance from the dealer is not mandatory, nor is there any economic advantage. In fact, it is advisable to compare rates from a trusted insurance advisor. Often, it is possible to get better insurance coverage and price from insurance advisors compared to a car dealer."

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Navneet Dubey
Navneet Dubey is a personal finance writer and artist. Over the past decade, he has written feature stories on insurance, financial planning, lending and borrowing.
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Updated: 22 Feb 2023, 11:45 PM IST
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