Insure your brand-new car from day one

Why Third-Party cover alone is rarely enough

Third-Party cover is legal, and it is the only cover the law asks for. In an accident it pays for the other person's car, property, and injuries. It pays nothing towards your own car, which rarely makes sense on a car you have only just paid for.

Own Damage cover is the half that repairs your car after an accident, theft, fire, or flood. Taken together with Third-Party cover, that is a comprehensive plan, and it closes the gap from your first day of ownership.

Why the IDV falls: depreciation

Depreciation is the value a car loses simply by ageing. The IDV is worked out from the manufacturer's listed price minus depreciation at standard rates, so the same car has a lower IDV, and a lower total-loss payout, each year it gets older. A new car sits at the very start of this scale, and falls fastest in the first year.

Past 5 years, the IDV is agreed between you and the insurer. On a brand-new car, Return to Invoice closes the gap between the IDV and the on-road price you actually paid.

What happens after the 3-year period ends

From year 4 onwards you renew the Third-Party plan every year, alongside your Own Damage plan, or move to a fresh 1-year comprehensive policy that bundles both. The 3-year block only applies once, at first registration, and does not repeat at renewal.

Long-term comprehensive is not available on a new car

Only the Third-Party part comes as a 3-year block. The own-damage side is always a 1-year plan, whether you take it as Own Damage alongside the 3-year Third-Party or as a full comprehensive plan. That yearly cadence is also what lets you reset the IDV, review your optional covers, and use your No Claim Bonus each year.

Driving without Own Damage cover can mean paying the full repair bill yourself

Without Own Damage cover, the entire repair or replacement bill is yours to pay, and on a brand-new car that bill is the largest it will ever be. One accident, one flooded street, or one theft is enough for it to arrive. The own-damage premium is a small fraction of what a single bill like that would cost you.

In an accident, Third-Party cover pays for the other person's car, property, and injuries. It pays nothing towards your own car. Own Damage cover is the part that pays your bill, not only the other person's.

There is a second reason to start now. Your No Claim Bonus only begins once you hold Own Damage cover, so every year you delay is a claim-free year of discount you do not earn. Taking comprehensive cover from day one starts your bonus immediately.

Third-Party prices, set by IRDAI

Third-Party rates are notified by IRDAI and priced on engine size, so no insurer can charge more or less. These are the annual base rates for private cars, before 18% GST.

Rates are the base amounts notified by IRDAI and exclude 18% GST. See the MoRTH notification of the Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022 for the rates in force. An electric car is priced on motor power in kilowatts rather than engine size, and carries a 15% discount on the Third-Party premium, with 7.5% for a hybrid.

Own Damage prices, set by the insurer

As a rough guide, the own-damage base premium works out to about 3% to 3.7% of your car's IDV before any discount, with the 8 largest metros at the higher end. On a brand-new car the IDV is at its peak, so this part of the price is too. It eases each year as the IDV falls and your No Claim Bonus builds.

On every own-damage claim you also pay a compulsory deductible, ₹1,000 for cars up to 1500cc (for example a Maruti Suzuki Swift or a Hyundai i20) and ₹2,000 above (for example a Mahindra XUV700 or a Toyota Innova). This deductible exists because insurers pass on some of the cost of every claim to keep premiums affordable for everyone. You can also choose a voluntary deductible on top of this to lower your premium further, though it means paying more out of pocket if you do claim.

Then 18% GST on the whole premium

GST of 18% is added on top of everything above, on the Third-Party part, the own-damage part, and every optional cover you take. It is not an insurer's charge and no insurer can waive it, so a quote of ₹20,000 in premium is ₹23,600 to pay.

On a new car the 3-year Third-Party premium is charged once at purchase with GST on it, which is the main reason the amount on delivery day looks larger than a yearly renewal quote.

Why comprehensive works out better on a new car

Buying comprehensive cover means one policy, one renewal date, and one insurer to deal with at claim time, instead of a Third-Party plan sitting with one company and an Own Damage plan with another. It is also the only route to a No Claim Bonus, to optional covers such as Zero Depreciation, and to a payout when your own car is damaged.

The difference in price is smaller than most new owners expect. The Third-Party part is fixed either way, so what you are really adding is the own-damage premium, in exchange for the whole value of the car being covered.

• IDV: the biggest lever on a new car. It is at its peak in year one, which sets the payout ceiling high and the premium with it

• No Claim Bonus: a new car starts at zero, so there is no discount in year one. Each claim-free year then cuts the own-damage premium, by up to 50%, and up to 90% on Kiwi Insurance Super NCB

• Optional covers: Zero Depreciation and Return to Invoice are worth the most while the car is new, and each cover you take raises the premium a little

• Make, model, and variant: parts prices and repair costs differ by car, and the premium follows them

• City and zone: Zone A, the 8 largest metros, carries slightly higher own-damage rates than Zone B, the rest of India

• Engine size and fuel type: larger engines cost more to insure, and an electric car is rated on motor power in kilowatts instead

• Deductible: a higher voluntary deductible lowers the premium now, and raises what you pay at claim time

• The car's invoice, showing the ex-showroom price, which sets your IDV

• The registration number, or the temporary registration if the permanent number has not been issued yet

• Make, model, variant, and fuel type, which decide the rating of your car

• Engine and chassis numbers, taken from the invoice or the delivery paperwork

• Your KYC, completed online with PAN or Aadhaar, for the policy to be issued

• Loan details, if the car is financed, so the lender can be recorded on the policy

If your policy has lapsed when something happens, there is no claim to raise. The repair, the replacement, or the liability to another person is yours to pay in full, and a serious accident can run well past what a year of premiums would ever have cost. That is the plain reason renewal dates matter more than they look.

With a live policy, the same event becomes a process rather than a bill. You report it, the damage is assessed, and the payout is worked out from the cover you hold. What you pay is your deductible, plus anything no cover on your policy takes care of.

What a claim does to your No Claim Bonus

Every claim-free year earns you a discount on the own-damage part of your premium. It begins at 20% after your first clean year and builds to 50%, where a standard No Claim Bonus stops.

On a standard plan, one claim takes that discount back to zero at your next renewal, whatever it had reached. That is why so many owners quietly pay for small damage themselves rather than raise a claim they are entitled to, and it is the problem Kiwi Insurance Super NCB was built to solve.

What happens to it when you claim

With a standard No Claim Bonus, one claim resets the discount to zero at your next renewal, whatever it had reached. On a new car that hurts twice over, because you are giving up a discount you have only just begun to build.

• For a small scratch it can be cheaper to pay yourself and keep the discount, unless Kiwi Insurance Super NCB is protecting it for you

• The bonus belongs to you, not the car, so it carries across when you switch insurers, and on to your next car, on a certificate from your previous insurer

• A gap in cover can cost you the bonus, so renew your Own Damage plan before it expires

Buying at the dealership counts as buying through an agent. It is convenient on delivery day, but you can compare and buy your own cover in a few minutes, and the car is insured just the same.