Motor Insurance from Dealerships.

It is a usual practice at motor dealership to offer motor insurance when we buy new vehicle. As our focus is on purchase of the vehicle, majority of us don’t pay attention to whether they are priced in-line with the market or the insurance carrier providing the cover.

Following question arises in our minds

Whether it is mandatory to buy insurance from the dealership?

Can we get better deals outside in the open insurance market?

Is there any difference at the time of an adverse event or claim?  

Let’s take a look at one by one.

No, it is not mandatory to take your insurance from the motor dealership while purchasing your vehicle. You’re free to take it from open market. There is a factor of convenience both for the dealership as well as for you while registering the vehicle at the RTO which is usually done in bulk and the dealership would find it difficult to coordinate with each buyer to bring their respective insurance from an intermediary of their choice; It is convenient for you that you can write a single cheque to the dealer for all services including insurance along with the vehicle.

Yes, you’ll invariable get better motor insurance deals outside the dealerships. Sometimes the same insurer may quote differently at the dealership and at an insurance broker. Insurance in dealership is slightly expensive when compared to taking from an insurance broker as dealers have commercial interest in your claims. The motor dealer is in a vantage position and is in control of the repair cost which you claim to the insurer. The insurers are aware of the same and accordingly/appropriately adjust the premium to cover such possibilities. More over Insurer would like to price the premium slightly higher knowing very well that almost 75% of the buyers would prefer convenience at the dealership over lesser premium from insurers.

Yes, there is huge difference at the time of settlement of claims. Cashless service at the dealership in India is at the sole discretion of the dealer. Hence you would only get cashless service for repairs only if you’ve placed your motor insurance through your dealers. The service manager at the dealership may have delegated authority from the motor insurance surveyor to survey and approve repairs up to certain amount. This ensures that work on your vehicle would commence almost immediately. Where as if you’ve placed your insurance outside you would be waiting for your insurer to appoint a surveyor and survey the damages, agree on repair cost and then commence repair. More over the dealership can ensure that you would have difficult time just to convey the message that next year your motor insurance should be placed through your dealership. The arm twisting of dealerships to ensure that you end up placing your motor insurance through them is rampant and being an industry wide debate whether it is an anti-competitive practice.

Only few insurers have cashless tie-up at the manufacturer level, where the cashless is provided by the manufacturer hence the dealerships have to honour cashless service. So if you want convenience at the time of inception of motor insurance and at the time of claim we recommend that you place your motor insurance premium at the dealership.

But you’re very particular that you want to save premium cost then it makes sense to approach an insurance broker to get you competitive motor insurance quotes and the insurance broker would assist you in your claim paper work reducing your stress.