Buying car insurance from an auto dealer may seem convenient, given that it helps save time and ostensibly offers a one-stop solution. However, this might not be the best decision you make. Here’s why you should think twice before buying car insurance from a dealer.
Limited choices: The foremost reason is the lack of comparison. The car dealer would normally have tie-ups with only a limited number of insurance companies and, often, only with one. This could end up limiting your choices, thereby not allowing you to shop around for the best insurance policy that suits your needs and budget.
Rahul M Mishra, Co-founder and Director of Policy Ensure, says, “Motor dealers typically work with a limited number of insurance providers, which means you might not have access to a wide range of insurance options. This can lead to a lack of flexibility in choosing a policy that best suits your needs and budget.”
Biased advice: Motor dealers may be financially incentivised to sell insurance policies from a particular provider. Their recommendations may be influenced by commission or tie-in agreements, potentially compromising the impartiality of their advice.
Higher Premiums: The dealers are likely to charge higher fees. Auto dealers focus on maximising their profits, which come in the form of commissions from insurance companies. There’s a likelihood that this sum might be passed on to you, the customer, resulting in high premiums. Acquiring car insurance independently makes it easier to avoid this extra cost and ensure the funds go directly into covering your vehicle adequately.
“Insurance policies purchased through motor dealers may come with higher premiums. These policies often include additional fees or markups, making them more expensive than policies you could find independently," said Mishra.
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Limited expertise: Car dealers are not insurance experts; they are in the business of selling cars. Therefore, the specifics of your policy might get overlooked, leaving you with inadequate cover in times of need. An insurance broker, on the other hand, can offer a much more personalized service focusing on your coverage requirements, risk profile and budget.
“While motor dealers are knowledgeable about cars, they may not have the expertise to provide in-depth advice on insurance. They might not fully understand your specific insurance needs or the intricacies of different policies," said Mishra.
Complex claims process: Buying insurance from a dealer often means they manage your paperwork. While it may seem attractive in the beginning, in the long run, you may find yourself entrapped in unnecessary bureaucracy because you don't have direct control over your policy.
Mishra says, “In the event of a claim, the process may become more complex if your insurance is tied to a motor dealer. Dealing directly with an insurance company or a dedicated insurance agent often results in a smoother and more efficient claims process.”
Point to note: While purchasing insurance from a car dealer may seem easy, the cost, limited choices, and lack of personalised service and control should detour you from doing so. Being independent and seeking advice from a dedicated insurance advisor or broker might be your best bet in making an informed choice that guarantees your long-term satisfaction.