New car insurance? Take dealer quotes with a bag of salt!

pjbiju · 10th July 2009, 14:34

Vehicle dealers not last stop for auto insurance

A Mumbai resident who recently bought a mid-sized car was stumped when the dealer demanded Rs 48,000 premium for the annual comprehensive car insurance. “I did some online research independently and got several quotes from insurance companies, one of which was as low as Rs 25,000. I went back to my dealer who then matched it.’’

In other words, if you plan to buy a car, you don’t have to necessarily pick up motor insurance from the dealer. You could approach insurance companies directly and negotiate a lower premium and secure up to 50% discount on what your dealer offers. According to Delhi-based consumer expert Bejon Misra and former General Insurance Council secretary general K N Bhandari, dealers are known to mark up premium.

While insurance companies TOI spoke to deny knowledge of such a practice, Bhandari says, “Higher the premium, higher the commission. There is a need for consumers to assert themselves even to the regulator to enforce greater surveillance and more stringent implementation of insurance guidelines.’’

Another Mumbai resident who just bought an SUV says, “When people take an LPG connection, they think it is compulsory to pick up a gas stove from the dealer. The same mindset works here.’’ He too managed to bring down the dealer’s quote from Rs 38,000 to Rs 14,000. “The range of quotes is shocking,’’ he says.

Importantly,the dealer did not mention that he was entitled to a no-claims bonus as well, considering he had not made a single insurance claim on his old car. The bonus is transferable across insurers and vehicles—provided you sell your old vehicle.

Says Rahul Aggarwal, CEO at Optima Insurance Brokers,“The bonus is on percentage basis and not in rupee terms. It changes every year. The minimum is 20% on own-damage premium and maximum, 50%.’’ The percentage remains unchanged even when one upgrades from a smaller vehicle to a large one, assures Aggarwal.

An official at the Insurance Regulatory and Development Authority (IRDA), while asking consumers to be more aware, says, “Dealers are neither agents, brokers nor insurers. What they quote is what they get from insurers. They can’t quote more or less than that.’’ Consumers should cross-check the price offered by various insurers, says the official. “Nobody should get carried away. No dealer can force you to get insurance.’’

DRIVING POINT

While picking up insurance for your vehicle, ensure that you don’t club the premium with the automobile loan. You will end up repaying the amount for the oneyear cover over two years or beyond.

Source of Article : Times of India, Pune edition dated 10-Jul-2009. Page 14 under Times Business.

GTO · 10th July 2009, 18:54

Commissions on insurance policies are huge, no wonder then that car dealers will never tell you about NCB (No claim bonus benefits), and get away with uncompetitive rates. Fact is, not too many buyers even think of cross-shopping on insurance. A MUST-DO in my opinion. It's even a part of our new car buying article. 9 times out of 10, buying insurance cover directly will work out way cheaper than the dealer route.

Thanks for the thread, Pjbiju.

s3va · 16th July 2009, 23:32

Very true, there is a huge difference in the insurance amount quoted by the dealer as compared to the ones that are offered by the insurance company directly...I am going to buy a new car and I have requested quotes from 4 Insurance companies. Eventually i will go for the lowest quote and will never buy the insurance package from the dealer. Most of us resort to the dealer package as it’s a hassle to initiate a separate process for buying the insurance...
On a separate note the same logic holds for the Registration charges as well. The dealers charge a whooping amount that ranges from Rs4000-6000 for a midsize sedan while you can end up paying a maximum of Rs1500-2000 if you get the vehicle registered on your own (including the RTO bribe)

ITs all attributed to our quintessential way of thinking that when a new car is bought it is mandatory to buy the car as a package that would cover the Ex-showroom price, Regn charges, RT, Insurance and blah blah...but things are changing these days and thanks to such forums like T-BHP for creating a sense of awareness!!

Siva

NetfreakBombay · 17th July 2009, 09:40

Quote:

Originally Posted by s3va

On a separate note the same logic holds for the Registration charges as well. The dealers charge a whooping amount that ranges from Rs4000-6000 for a midsize sedan while you can end up paying a maximum of Rs1500-2000 if you get the vehicle registered on your own (including the RTO bribe)

How to go about doing that in Mumbai?

Heard that usually its not possible to drive car on temp registration here. And does this cost of 1.5 - 2k include usual charges for RTO agent?

rjvora_2000 · 18th July 2009, 09:36

I have normally seen that dealer's don't have knowledge of premium breakup at all. I will also advice the same that going through any knowledgeable person would be much better than a Dealer for insurance.

Good information - pjbiju

Sahil · 29th July 2009, 01:45

As most know RTO regn charges by dealers always contains a healthy margin over and above the tax amount. These hidden charges are justified as RTO agent charges,which in reality is less than half of claimed amount. In addition insurance rates given by dealerships are almost 20% higher than the market.

For the above reasons I have always got regn and insurance done via other agents. But now several dealerships such as Maruti and Skoda compell customers to get the above done by them "as a dealership Rule"

These issues arise close to delivery, after payment is already made. Hence this puts dealerships in the advantage as cancelation is not really an option.

How can one fight such illegal compulsions?

Red Liner · 29th July 2009, 02:58

By telling them upfront that your uncle is an ex rto commisioner. Thats what i did. Minimum fuss.

dash · 29th July 2009, 11:06

Atleast the insurance is not compulsory from the dealer, and the quote I got for i20 CRDi was 23K from the dealer. I bought from Bajaj for 13K ! Yeah 10K difference.

For RTO, I think it is ok to give 1-2 K and avoid delivery delay hassles

Just my thought.

lancer80 · 29th July 2009, 11:46

Well its Skoda again! Skoda why are you so shady? whyy!?
I remember them doing the same thing with one of my friend when he had booked the octy.

finneyp · 29th July 2009, 12:12

This is a big rip-off by all the dealers!

They charge around Rs.3000 - Rs.5000 as Service charges, this is mainly for RTO registration charges & number plates.
If you do this on your own, it will cost you a max of Rs.500/-.

Most of the 1st time car buyers are not aware of this, and even if they are aware they don't want to take the hassle of registering the car themselves.

Sahil · 29th July 2009, 13:25

Quote:

Originally Posted by lancer80

Well its Skoda again! Skoda why are you so shady? whyy!?
I remember them doing the same thing with one of my friend when he had booked the octy.

Well I am not sure if it's Skoda to blame for this as it seems to be more of a dealership policy than the parent company's policy.

I managed to make the dealership match the insurance rates, slashed price to the tune of 16k less !

However they are not budging on the RTO service charges, there claim is "If we don't earn on the Superb then where will we earn"

@dash: I wouldn't mind paying the 1-2k but the difference is even more on a premium car, they charge almost double of what I have been paying earlier.

wildon · 29th July 2009, 14:20

I have just booked my i20 Asta , the dealer was quoting >19k and i got the lowest quote from outside starting from >12 K.

sonirohit · 29th July 2009, 14:33

Well if you are smart and informed enough - you can get a good deal from your dealer. I renewed my Insurance via my M.A.S.S the lowest prices I was getting from outside (online quotes from PolicyBazaar.com) were lower Prices quoted by dealer by 1200. So bargained hard - although the dealer didn't give any upfront discounts and got 2 free paid service coupons & 1 free alignment & balancing (total cost abt 1800 Rs) and left with a smile...

Sahil · 29th July 2009, 14:59

Quote:

Originally Posted by sonirohit

Well if you are smart and informed enough - you can get a good deal from your dealer. I renewed my Insurance via my M.A.S.S the lowest prices I was getting from outside (online quotes from PolicyBazaar.com) were lower Prices quoted by dealer by 1200. So bargained hard - although the dealer didn't give any upfront discounts and got 2 free paid service coupons & 1 free alignment & balancing (total cost abt 1800 Rs) and left with a smile...

If you are smart and informed enough - you wouldn't fall prey to such freebies coupons which costs the dealer a fraction.

anujmishra · 29th July 2009, 15:06

Excellent information "pjbiju". It would help all prospective car buyers of Team-BHP. Just do no fall prey of dealer's side.

But to get maximum benefit

1. Negotiate first with dealer on freebies/any other items/discounts etc.
2. Make him say that he will give you all promised freebies (If they give in writing it is well and good)
3. After confirmation from dealer tell them you are going for insurance outside.

If you tell them before about insurance, chances are they will deny freebies. Till now dealer is acting smart providing freebies with customer's their own money and making their names.

10th July 2009, 14:34	#1
pjbiju Senior - BHPian Join Date: Apr 2006 Location: Pune Posts: 1,357 Thanked: 1,089 Times	New car insurance? Take dealer quotes with a bag of salt! Vehicle dealers not last stop for auto insurance A Mumbai resident who recently bought a mid-sized car was stumped when the dealer demanded Rs 48,000 premium for the annual comprehensive car insurance. “I did some online research independently and got several quotes from insurance companies, one of which was as low as Rs 25,000. I went back to my dealer who then matched it.’’ In other words, if you plan to buy a car, you don’t have to necessarily pick up motor insurance from the dealer. You could approach insurance companies directly and negotiate a lower premium and secure up to 50% discount on what your dealer offers. According to Delhi-based consumer expert Bejon Misra and former General Insurance Council secretary general K N Bhandari, dealers are known to mark up premium. While insurance companies TOI spoke to deny knowledge of such a practice, Bhandari says, “Higher the premium, higher the commission. There is a need for consumers to assert themselves even to the regulator to enforce greater surveillance and more stringent implementation of insurance guidelines.’’ Another Mumbai resident who just bought an SUV says, “When people take an LPG connection, they think it is compulsory to pick up a gas stove from the dealer. The same mindset works here.’’ He too managed to bring down the dealer’s quote from Rs 38,000 to Rs 14,000. “The range of quotes is shocking,’’ he says. Importantly,the dealer did not mention that he was entitled to a no-claims bonus as well, considering he had not made a single insurance claim on his old car. The bonus is transferable across insurers and vehicles—provided you sell your old vehicle. Says Rahul Aggarwal, CEO at Optima Insurance Brokers,“The bonus is on percentage basis and not in rupee terms. It changes every year. The minimum is 20% on own-damage premium and maximum, 50%.’’ The percentage remains unchanged even when one upgrades from a smaller vehicle to a large one, assures Aggarwal. An official at the Insurance Regulatory and Development Authority (IRDA), while asking consumers to be more aware, says, “Dealers are neither agents, brokers nor insurers. What they quote is what they get from insurers. They can’t quote more or less than that.’’ Consumers should cross-check the price offered by various insurers, says the official. “Nobody should get carried away. No dealer can force you to get insurance.’’ DRIVING POINT While picking up insurance for your vehicle, ensure that you don’t club the premium with the automobile loan. You will end up repaying the amount for the oneyear cover over two years or beyond. Source of Article : Times of India, Pune edition dated 10-Jul-2009. Page 14 under Times Business.
	(3) Thanks

10th July 2009, 18:54	#2
GTO Team-BHP Support Join Date: Feb 2004 Location: Bombay Posts: 70,483 Thanked: 300,256 Times View My Garage	Commissions on insurance policies are huge, no wonder then that car dealers will never tell you about NCB (No claim bonus benefits), and get away with uncompetitive rates. Fact is, not too many buyers even think of cross-shopping on insurance. A MUST-DO in my opinion. It's even a part of our new car buying article. 9 times out of 10, buying insurance cover directly will work out way cheaper than the dealer route. Thanks for the thread, Pjbiju.
	() Thanks

16th July 2009, 23:32	#3
s3va BHPian Join Date: Jun 2009 Location: Dubai Posts: 646 Thanked: 5 Times View My Garage	Very true, there is a huge difference in the insurance amount quoted by the dealer as compared to the ones that are offered by the insurance company directly...I am going to buy a new car and I have requested quotes from 4 Insurance companies. Eventually i will go for the lowest quote and will never buy the insurance package from the dealer. Most of us resort to the dealer package as it’s a hassle to initiate a separate process for buying the insurance... On a separate note the same logic holds for the Registration charges as well. The dealers charge a whooping amount that ranges from Rs4000-6000 for a midsize sedan while you can end up paying a maximum of Rs1500-2000 if you get the vehicle registered on your own (including the RTO bribe) ITs all attributed to our quintessential way of thinking that when a new car is bought it is mandatory to buy the car as a package that would cover the Ex-showroom price, Regn charges, RT, Insurance and blah blah...but things are changing these days and thanks to such forums like T-BHP for creating a sense of awareness!! Siva Last edited by Rehaan : 17th July 2009 at 16:34. Reason: [FONT] and other tags removed. Please see the thread regarding this in the Announcements section. Thanks.
	(1) Thanks

18th July 2009, 09:36	#5
rjvora_2000 Senior - BHPian Join Date: Mar 2008 Location: Mumbai/Mulund Posts: 1,658 Thanked: 56 Times	I have normally seen that dealer's don't have knowledge of premium breakup at all. I will also advice the same that going through any knowledgeable person would be much better than a Dealer for insurance. Good information - pjbiju
	() Thanks

29th July 2009, 01:45	#6
Sahil Distinguished - BHPian Join Date: May 2004 Location: Bombay Posts: 6,292 Thanked: 7,605 Times	Dealership compulsions on Insurance & RTO regn charges As most know RTO regn charges by dealers always contains a healthy margin over and above the tax amount. These hidden charges are justified as RTO agent charges,which in reality is less than half of claimed amount. In addition insurance rates given by dealerships are almost 20% higher than the market. For the above reasons I have always got regn and insurance done via other agents. But now several dealerships such as Maruti and Skoda compell customers to get the above done by them "as a dealership Rule" These issues arise close to delivery, after payment is already made. Hence this puts dealerships in the advantage as cancelation is not really an option. How can one fight such illegal compulsions? Last edited by Sahil : 29th July 2009 at 01:48.
	() Thanks

29th July 2009, 02:58	#7
Red Liner Distinguished - BHPian Join Date: Aug 2006 Location: Bangalore Posts: 5,209 Thanked: 18,042 Times	By telling them upfront that your uncle is an ex rto commisioner. Thats what i did. Minimum fuss.
	() Thanks

29th July 2009, 11:06	#8
dash BHPian Join Date: Feb 2008 Location: Bangalore Posts: 74 Thanked: 9 Times	It is not compulsory! Atleast the insurance is not compulsory from the dealer, and the quote I got for i20 CRDi was 23K from the dealer. I bought from Bajaj for 13K ! Yeah 10K difference. For RTO, I think it is ok to give 1-2 K and avoid delivery delay hassles Just my thought.
	() Thanks

29th July 2009, 11:46	#9
lancer80 BHPian Join Date: Dec 2005 Location: Mumbai Posts: 102 Thanked: Once	Well its Skoda again! Skoda why are you so shady? whyy!? I remember them doing the same thing with one of my friend when he had booked the octy.
	() Thanks

29th July 2009, 12:12	#10
finneyp Senior - BHPian Join Date: Dec 2005 Location: Bangalore Posts: 2,716 Thanked: 319 Times View My Garage	This is a big rip-off by all the dealers! They charge around Rs.3000 - Rs.5000 as Service charges, this is mainly for RTO registration charges & number plates. If you do this on your own, it will cost you a max of Rs.500/-. Most of the 1st time car buyers are not aware of this, and even if they are aware they don't want to take the hassle of registering the car themselves.
	() Thanks

29th July 2009, 14:20	#12
wildon BANNED Join Date: Jul 2007 Location: Bangalore Posts: 2,440 Thanked: 1,235 Times View My Garage	I have just booked my i20 Asta , the dealer was quoting >19k and i got the lowest quote from outside starting from >12 K.
	() Thanks

29th July 2009, 14:33	#13
sonirohit BHPian Join Date: Nov 2008 Location: Chandigarh Posts: 321 Thanked: 15 Times View My Garage	Well if you are smart and informed enough - you can get a good deal from your dealer. I renewed my Insurance via my M.A.S.S the lowest prices I was getting from outside (online quotes from PolicyBazaar.com) were lower Prices quoted by dealer by 1200. So bargained hard - although the dealer didn't give any upfront discounts and got 2 free paid service coupons & 1 free alignment & balancing (total cost abt 1800 Rs) and left with a smile...
	(1) Thanks

29th July 2009, 15:06	#15
anujmishra Senior - BHPian Join Date: Jun 2008 Location: Bangalore Posts: 1,290 Thanked: 492 Times View My Garage	Excellent information "pjbiju". It would help all prospective car buyers of Team-BHP. Just do no fall prey of dealer's side. But to get maximum benefit 1. Negotiate first with dealer on freebies/any other items/discounts etc. 2. Make him say that he will give you all promised freebies (If they give in writing it is well and good) 3. After confirmation from dealer tell them you are going for insurance outside. If you tell them before about insurance, chances are they will deny freebies. Till now dealer is acting smart providing freebies with customer's their own money and making their names. Last edited by anujmishra : 29th July 2009 at 15:08.
	() Thanks

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