Those shopping for car insurance often face what's termed the paradox of too many choices leading to poorer decisions.As everyone from brokers and online channels to neighbourhood banks selling car insurance, customers are finding it difficult to pick the best offer in terms of service and costs. Price-conscious customers are likely to base their purchases on the annual premiums.
While insurance companies want to highlight the differentiation in service instead of price, they do accept that, depending on the size of business, some channels have more leeway in handing out discounts.
"Online channels could be cheaper, depending on the product construct. Also in the absence of distribution costs, companies may pass on higher discounts to customers," says Amitabh Jain, vice-president, customer service, motor, ICICI Lombard GIC.
No doubt rates offered by ICICI Lombard's online channel are cheaper than those offered by the dealer. For Hyundai Motors' latest sedan, the Verna Fluidic (1.4 CRDI), costing over Rs 9 lakh, you would end up paying a premium of Rs 23,036 for a comprehensive package.
The same from a dealer costs Rs 24,585.
But as K N Murli, head, motor insurance, Bharti Axa, says: "One should prefer the dealer option to buy insurance for the convenience, rather than the price discounts he offers. When an accident takes place, dealers can offer services ranging from pick-up to repairs without any hassles."
Though dealers offer discounts on insurance, these will be limited to the amount set aside by the company for promotional activities.
Yet, depending on the customer's ability to negotiate with the dealer, he might be able to get a bigger share of that kitty.
However, subject to special schemes, new car buyers might end up getting free insurance buying through a dealer.
Car manufacturers regularly launch 'first year free insurance' schemes to boost sales during festivals or slack periods.
For instance, Hyundai Motors is offering its i10 customers free insurance on the base model, costing Rs 4.61 lakh (on-road price). This will save about Rs 12,000
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