Is dealer-provided new car insurance actually convenient during claims for repairs or damages? Here’s what…

According to fresh market updates, Car insurance is both a legal requirement and a financial shield for car owners, covering expenses for repairs, damages, and unforeseen events. For most new car owners, the first point of contact for insurance is usually the car dealer. Leading insurers already have tie-ups with authorised dealer workshops, so a customer who buys directly can usually get cashless repairs at the same dealership.

That stated, experts believe the convenience dealers offer is real, though often overstated. So, does buying new car insurance through the dealer actually offer an advantage when making a claim? Should buyers compare alternatives before choosing a policy, and which add-ons are worth paying for? To answer these questions, here is an edited excerpt from the written response by Abhishek Bansal, CEO of InsuranceDekho.

Is dealer-provided insurance actually more convenient during claims?

The convenience dealers offer is real, but it's often overstated. Their main advantage is paperwork backing when the car comes in for repair. But cashless repair depends on whether the workshop is in the insurer's network, not on where you bought the policy. Most leading insurers already have tie-ups with authorised dealer workshops, so a customer who buys directly can usually get cashless repairs at the same dealership.

The claim itself, including survey, approval and settlement, follows the insurer's process either way. So in most cases, buyers can get the same quality of claim experience at a softer premium by choosing their own insurer. Before buying, just confirm your preferred workshop is on the insurer's cashless list and check what claim assistance you'll have access to. Today, digital platforms and insurers offer end-to-end claim backing that matches or exceeds what dealers provide.

What should car buyers compare between dealer-offered and independently purchased insurance?

Most buyers compare only the final premium, and that's where they go wrong. The first thing to check is the Insured Announced Value (IDV). A cheaper quote often just means a softer IDV, and that directly reduces what you receive if the car is stolen or written off. For a new car, the IDV should be close to the ex-showroom price.

Third-party premiums are set by the regulator, so the real differences between quotes lie in the own-damage premium, the discount applied, and the add-ons included. Dealers typically work with a limited set of insurers, so buyers may miss out on better OD pricing available in the wider market. We always advise customers to ask the dealer for an itemised quote and compare it line by line with at least two or three alternatives.

Beyond price, look at the insurer's claim settlement track record, its cashless garage network in your city, and the fine print of each add-on. It's additionally important to know that buying insurance from the dealer is not mandatory, even if the car is financed. The lender only needs its hypothecation recorded on the policy.

Which add-ons are worth paying for, and what mistakes should buyers avoid?

For a new car, zero depreciation is the most valuable add-on. Without it, a significant portion of the repair bill for parts such as plastic, rubber, and fibre is deducted. Engine protection is essential in cities prone to waterlogging, since standard policies exclude engine damage caused by water ingress. Return to invoice is worth considering for new and premium cars, as it covers the gap between the IDV and the on-road price in the event of theft or total loss. Consumables cover and roadside assistance are low-cost and practical. Beyond these, choose add-ons based on how and where you drive, rather than accepting every option offered.

The most common mistakes we see are accepting the bundled dealer policy without comparison, lowering the IDV to reduce the premium, not declaring accessories or a CNG kit, and errors in details such as the nominee, hypothecation, or chassis number, which can complicate claims later. Timing matters too. The policy must be active before delivery, so buyers who want to compare should do so as soon as they have the vehicle details, not on the day of delivery.