Valuation of Used Cars and Its Impact on Premiums
As the car sales in India are increasing every day, the used car market has become extremely competitive. If you want to purchase a used car or sell one, you will want to know the exact value of the car so that you get the best price.
What is used car valuation?
Used car valuation or second-hand car valuation is the process of determining the accurate value of the pre-used vehicle. There are many companies that help you determine the value of the used car. Generally, these companies consider factors like accident history, service history, make/model of the car, depreciation, etc., to determine the value of the car.
The older the car, the more the depreciation, which reduces the overall value of the car. When it comes to car insurance, the value determined after evaluating the car is called Insured Declared Value or IDV.
Car Insurance for Used Cars and Factors Affecting Its Premium
Getting car insurance coverage for your used car is necessary as per the Motor Vehicles Act. You must have at least a third-party liability cover for your second-hand car. Driving without a valid insurance is a punishable offence. If you are caught you may have to pay a hefty penalty or face imprisonment or both.
So, it is important to purchase a car insurance policy for your second-hand vehicle. It is better to purchase a comprehensive policy to get maximum protection arising due to damage to your vehicle, property, and life.
Factors That Affect Premium Cost For Used Cars
Location
When you compare old car insurance prices, the premium may vary based on the location where you drive and park your vehicle. For example, if the area where you drive through or park your vehicle is prone to natural disaster or the incidence of theft is high, insurance companies may have to take high risk in covering your vehicle. Consequently, the premium will be on the higher side.
Fuel Type
When you request car insurance quotes, most insurers would require you to provide details about the type of fuel your car uses. If your car runs on CNG (Compressed Natural Gas), the premium would be higher compared to cars that run on petrol or diesel. This is because of the high risk associated with CNG.
Safety features
This is another critical factor that affects the premium for used car insurance. If your car is equipped with advanced safety features like anti-theft devices, you can expect the insurer to offer you a discount on the premium as the risk of theft is minimal.
No Claim Bonus
Many insurance companies offer NCB or No Claim Bonus to car owners who do not file for any claim during the previous policy year upon car insurance renewal. So, if you have made a claim in the previous year, the premium will be high.
Vehicle usage
Generally, the vehicles used for commercial purposes suffer from high levels of wear and tear, and the premium for such cars would be high. However, if you use the car only for personal purposes, the premium would be comparatively lesser.
Final Word
Whether you are buying or selling a used car, you must know the accurate value of the vehicle. Ensure that you get your used car evaluated as it would have a direct impact on the insurance cost.
Disclaimer: The content provided is for education and informational purpose only, none of the information contained in our blog amounts to any form of opinion or advice. Please go through policy related documents carefully or consult an expert before making any insurance-related decisions.