covers your car against risks like theft, accident, explosion etc.
The value of the car depreciates by more than 30% the moment you walk out of the showroom. For insurance purposes, the car loses close to 50% of its value within 2-3 years. This is why the car is classified as an expense offering depreciating returns and not as an investment providing appreciating returns.
The traditional view is that the purchase of a car is not an investment as it does not serve any financial returns. Yet, there are many reasons to consider the car as an investment. It will help you avoid public transportation. You will travel in comfort and security. You need not worry about the safety of your family if you have your own car. You can make your travel plans with confidence and need not depend on auto, taxi or bus drivers. The comfort and luxury you enjoy after purchasing a car will no longer make you feel that spending on car is not an investment.
Would you prefer a petrol car with 6 valve engine or a diesel car with an 8 valve engine? The bigger engine will cost more but that would be a one-time expense. However, a diesel car will help you save a lot of money every time you fill fuel. Fuel is a recurring expense. The car engine purchase is a one-time expense. Similarly, car insurance is a recurring expense. Given a choice, it makes sense to reduce recurring expenses even if you have to spend more when buying the car.
This is why it is important to buy a car insurance friendly car. The less money you have to spend maintaining your investments, higher will be your chances of extracting good returns from them. Spend less on car insurance and you will automatically extract more out of your car investments.
Keep the following insurance Policy factors in mind when buying a car:
The Maruti 800 happens to be the most popular vehicle amongst car thieves. This does not mean you should not buy this car. Just invest in an anti theft device or go in for private parking to minimize Risk of theft. This will help you reduce your car insurance premium. Do research on the net and check out statistics released by the National Crime Research Bureau. Determine car theft stats for the specific car model and make that you wish to buy. This will help you minimize the amount spent on insuring the automobile.
Have you installed a CNG kit in your car? Insuring this kit will make a lot of sense. However, it is not so essential to insure the expensive multimedia player installed in your car, right? Do not blindly install all the accessories. Focus on protecting your most valuable investments.
Buying an expensive car with lots of new age technologies makes sense if you will save money on fuel and insurance in the future. From computer controlled electronic fuel injections into the engine to ABS for skid free braking- spending money for value additions may prove very beneficial in the long run.
By now, you would have realized that buying a car and buying car insurance cannot be treated as two separate transactions. Buying an insurance friendly car will help you extract good value on your investments. Saving money on insurance can help you enhance your driving experience over the long term. A person who understands this will enjoy good returns on the money invested in the vehicle. A person who ignores this will end up saving less and spending more on the car and car insurance.