I'm buying a new car with a BH series number. What type of insurance should I opt for?

I'm in the process of buying a new car with a BH series number due to frequent job-related relocation. Do I have to purchase car insurance directly from the dealership? Also, what type of insurance should I opt for, and are there any essential add-ons I should consider?

By Nitin Kumar, Head, Motor Insurance, Policybazaar.com.

I think it's great that you're going with a BH series number plate. It’s a great concept introduced by the Indian government recently to ensure nationwide validity of your car’s number plate. What this means is that if you’ve opted for a BH series number plate for your car, you won't have to change your car's number plate if you relocate to another state. You won’t have to re-register your car either, and you can enjoy the convenience of a consistent tax structure across different Indian states.
 
To answer the first part of your question - while many dealerships offer insurance services, you are not obligated to purchase insurance directly from them. You can explore various plans online and choose a policy that best suits your needs and preferences.
 
Now, in terms of which plan you should consider: You have two options, either a 3-year Third-Party cover which is compulsory but won't cover your own damage expenses, or you can choose a 1+3 year Comprehensive bundle deal which will cover your third-party and own damage expenses. You should ideally choose the second option.

Here's how both the components work: Third-Party Liability Insurance is mandatory by law in India and covers damages caused to third parties such as pedestrians, other vehicles, or property. It provides financial protection against legal liabilities arising from accidents. Own Damage Insurance covers damages to your own vehicle due to accidents, theft, natural calamities, or vandalism. It provides comprehensive coverage and ensures that you are financially protected against unforeseen events that may damage your car.
 
How you can save on premium : If you don’t drive your car that frequently or use it for shorter distances, then you can even consider Pay As You Drive car insurance. These are usage-based insurance plans, where you pay only for the distance you drive.

Your premium is directly tied to your mileage, starting with a base plan of 2500 KM per year. Should you exceed this limit, you have the flexibility to purchase additional coverage in slabs such as 5,000, 7,500, or 10,000 kilometers. You can easily top-up your plan and restore the coverage anytime it exhausts.
 
In addition to a comprehensive motor insurance plan, you may also consider adding essential add-ons to enhance your insurance policy's coverage and protection. Here are some of my recommendations:
 

1. Zero Depreciation Cover: This add-on ensures that you receive the full claim amount without any deduction for depreciation of vehicle parts during repairs or replacements.  
2. Engine Protector: Provides coverage for damages to the engine and its components due to car usage when water ingression has happened or when you've tried starting your car while it was flooded. 
3. Roadside Assistance: Offers assistance services such as towing, fuel delivery, flat tire assistance, and emergency repairs in case your vehicle breaks down. 
4. Consumables Cover: Covers the cost of consumable items like engine oil, coolant, and brake fluid that may need replacement after an accident.  
5. Key and Lock Cover: Protects against the cost of replacing lost or stolen keys and repairing or replacing damaged locks.

 
Remember, it’s important to shop around before you finalise on a plan. So, take your time and find a plan that works for you.

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)