Know About Used Car Valuation and Its Impact on Motor Insurance

The automobile industry is growing at a rapid rate in India. This is mainly because more and more people now prefer buying cars. In fact, today, used cars are more preferable as doing so offers them a budget-friendly option. However, when purchasing a used car, there are certain things that you need to consider and one such factor is its car valuation. Knowing about car valuation will help in understanding the real value of the car based on its age, current condition, and other factors. So, read on to understand about used car valuation and its impact on motor insurance. 

What is Used Car Valuation?

It is a known fact that the value of things gets depreciated with every passing year and the same is the case with a car as well. Yes, you have got us right, the value of the car depreciates every year. Thus, to understand this, it becomes necessary to check the value of a car after years. This is helpful for those planning to buy a second-hand car as the used car valuation will help them understand the current value of the vehicle and whether it makes sense to invest in it. 

Factors affecting used car valuation:

• Depreciation
• Model of the car
• Accident history of the car
• Mileage of the car

Based on these factors, the value of the used car is evaluated and which is called the Insured Declared Value or IDV.

Benefits of Used Car Valuation

Listed below are the benefits of Used Car Valuation:

• With the knowledge of used car valuation, it becomes easier for you to make a wise decision regarding the purchase of the used car. This is because used car valuation provides real value for the car.
• As used car valuation provides the exact value of the car, this also helps potential buyers from not spending more.
•  As used car valuation affects the premium as well, so a knowledge of used car valuation will help in picking the right motor insurance plan. 

How Does Used Car Valuation Affect Motor Insurance

The value of a car is largely determined on the basis of the value of the car. Read on to know how used car valuation exactly affects motor insurance premiums:

• As the used car valuation has a direct impact on car insurance, so in case you fail to tell the used car valuation to your car insurance company, then there are chances that your claim may not be settled rightly. 
• If there is an active car insurance policy when you are buying a used car, then the current car insurance company needs to be informed about the same; the existing car insurance policy needs to be transferred to the new owner of the car.

So, make sure to have an active car insurance plan while buying a used car. This will help you in staying stress-free if your car is damaged by financially protecting you against such situations. 

Other Factors Affecting Used Car Insurance Premium

There are several other factors that affect car insurance premiums such as the following:

• If the accident claim history of the used car is higher, then the car insurance premium will also be higher.
• The premium of a used car also gets affected by geographical location. For instance, if you live in an area where there are high chances of accidents such as in hilly terrains, then the car insurance premium will be higher.
• Based on the type of car insurance plan and its coverage, the premium for a used car will accordingly vary. For instance, the premium of third-party car insurance will be lower.
• Another factor that affects the car insurance premium for a used car is its model and fuel type. Generally, the premium for CNG cars is higher as compared to a diesel or petrol car.
• If you add a number of add-on covers to your car insurance plan, then the premium will increase for the used car. 

Take Away

So, always make sure to first check the used car valuation and only then decide to sell or purchase a used car. Moreover, make sure to have an active car insurance plan whenever you buy a used car.

Also read: Common Questions Regarding Motor Insurance