What is the difference between insurance for imported and local cars?
Prakriti loves cars. For as long as she can remember, she has always wanted to buy a luxurious imported car. And now, she is finally within the reach of fulfilling her dream. Prakriti is actively looking at imported cars that she can get delivered to India for a very luxurious riding experience for the rest of her life.
However, there have been some problems that she has faced during her search. There are so many rules and regulations that Prakriti has become quite befuddled. Now, she is unclear about the difference between imported and local cars. The biggest source of worry for her right now is what sort of car insurance policy would suit an imported or a local car.
We hate to see Prakriti in this situation. This is why we have decided that we are going to cover everything that you and Prakriti need to know to import car insurance. Once you are done going through what we have to say, we are sure that you will tackle all car insurance policy questions on your own. We will also look at the imported vehicles policy.
What is Import Car Insurance?
Let’s start by looking at what import car insurance means. Usually, import car insurance is quite similar to standard car insurance. The only difference here is that the import car insurance takes into account that the value of imported cars will increase with time. This is different from the losing value of domestic cars.
This means that on top of a standard car insurance cover, an import car insurance policy should also include benefits for replacement or original equipment manufacturer (OEM) parts. This means that import car insurance will be more holistic than regular or domestic car insurance.
There are many other reasons beyond this for why an imported car can end up being very expensive for you. Some of those reasons are:
Importing a car from one country to another is done through ships or airplanes. And as you might have guessed, this is not going to be cheap. It can be excruciatingly expensive and you also have to make sure that the delivery is smooth and safe.
There are a lot of clearance stages involved in importing a car. This means that a lot of different paperwork and payments will be made. Further, one has to submit certain documents to the regional transport office like a roadworthiness certificate.
The current customs duty on a new imported car is 102%. The same value for an old imported car is 160%. This raises the cost of the imported car to more than 200% of its original value.
- The Rules
There are also several rules and regulations for the registration of imported vehicles in India. Some of these rules include that the car should be right-hand-driven. The engine’s cubic captivity should be more than 2500 cc. Any value less than that will not be allowed in the country. An imported car can also be brought to the ports of Mumbai, Calcutta, or Chennai.
Comparing Imported Cars Vs. Domestic Cars
In this article, we are considering that an import car is any car that is not manufactured in India. This car has specifically been imported from some foreign nation to India as the brand hasn’t started producing or selling in India officially.
Imported cars can also include gray market cars like some model of BMW that has specifically been designed for the European market. It should be noted that a gray market car is not illegal to import. However, it might still not meet some federal regulations without modifications. This is done by the imported vehicles policy.
Do You Pay More for Import Car Insurance? If Yes, Why?
Indeed, one would have to pay more for an imported car in comparison to a domestic car. Further, getting the right cover for an imported car can also be tricky as not all insurance providers give cover for all types of imported vehicles.
To understand this completely, let’s go over the reasons why import car insurance policies are higher than domestic car insurance policies. These reasons are given in a list below.
- Legal Requirements
Imported cars are designed to meet the specific standards of the country for which they were made. This means that the car would need some modifications for meeting the legal requirements of other countries like India.
Further, any time a vehicle has to undergo a modification, its insurance cost will also increase. This can make it harder for the insurance provider to determine the exact value of the vehicle.
- Greater Risk
It is true that many imported cars are of very high quality. Further, those cars have been modified for performance only, which here refers to speed. This is why many insurance providers believe that imported cars come with higher speed accident issues than domestic cars.
- Cost of Spare Parts and Repairs
Acquiring the spare parts or repairs of an imported car is more expensive than doing the same repairs for a domestic car. These additional costs are considered before calculating the premium amount.
- Lack of Competition
If you search for import car insurance policies online, then you will find a couple of good policies at best. This lack of competition allows the insurance provider to give those same insurance policies at a higher price to their customers.
What Else Should You Know?
It is true that there are not many import car insurance policies available in the market. However, there are still ways in which you can save on the premium amount of your imported vehicle insurance.
One way you can do this is by always being on the lookout for discounts and deals that are commonly available on purchasing a policy online. Some insurance providers charge a lower premium for cars that are kept in a garage and are equipped with a car alarm and immobilizer.
Insurance providers also decrease the cost of premium if the driver-owner is willing to take an approved defensive driving course. Apart from all this, you should also remember to go through the terms and conditions of the import car insurance policy before making the purchase. Make sure that you are familiar with the restrictions related to the age of the driver and the number of modifications that one can make.
Prepared for Purchasing an Imported Car Insurance Policy!
Prakriti has gone through everything that has been mentioned in this article. She has even made notes and pointers related to what all she needs to do. Have you followed the same approach as Prakriti? Have you learned everything that you needed to about import car insurance policies?