In India, people often choose to purchase a used car first rather than wait to buy a new one. This could be for various reasons, such as budget, preference for a model, and so on. Therefore, there is substantial demand for used cars in the country. A valid four-wheeler insurance policy is a must when buying/selling a used car. Hence if you are planning to sell your car, make sure that you complete the sale within the time for the car insurance renewal.

There are several ways to renew your car insurance policy, including the online mode which is simple, safe, and transparent. You can compare car insurance policies offered by various insurance companies and select the one you find most suitable. You can use online tools like the Tata AIG car insurance premium calculator to calculate the premium amount of the selected policy and proceed with the purchase.

What is Used Car Valuation?

Used car valuation is necessary to arrive at the fair value for disposal of the car. Many factors have a say on the valuation, these being the age, model, driving condition, accumulated depreciation and the damage sustained by it due to accidents or theft of parts. The value thus obtained is referred to as the Insured Declared Value (IDV); this value is also termed as the Resale Value of the car.

You can calculate the accurate value of your used car by using a car valuation tool that is available on the websites of most insurance companies. It is important to note that the higher the IDV of a car, the higher the amount of the premium on the car insurance. However, a higher IDV is beneficial if you ever need to file a car accident insurance claim. Therefore, you must be careful while carrying out your car’s valuation.

How does the Valuation of a Used Car Affect its Insurance Policy?

The valuation of your used car has a significant bearing on your car insurance policy. When a used car is sold, the insurance policy of the said car should be transferred from the seller to the buyer. The seller can retain the no-claim bonus after getting a no-objection certificate from the buyer. It is mandatory for the seller of a used car to inform the concerned insurance company about the sale of the car and transfer of the car insurance policy. This process should be completed within 15 days of the transfer of ownership of the car.

The Sale of a Used Car

If you are selling a used car, the valuation of your car determines the number of prospective buyers for it. Furthermore, the valuation also affects your overall profit or loss on the sale of your car.

1. The impact of overvaluing your used car: If you quote a high price based on a higher IDV than the one arrived at through a car valuation tool, you are likely to have only a few people willing to purchase your used car. Moreover, you may have to pay a higher differential premium between the fair value and the computed IDV before transferring the policy. However, you will benefit from a higher car accident insurance claim settlement amount in case your car is stolen before the expiry of your existing car insurance policy.
2. The impact of undervaluing your used car: Declaring a lower IDV for your used car as compared with the value computed by a car valuation tool is likely to attract more buyers for the car. However, you will make a lower profit on the sale of the car and also receive a lower car insurance claim settlement amount in the event of a total loss such as the theft of the car. Hence you must try to neither undervalue nor overvalue your used car.

The Purchase of a Used Car

If you are planning to purchase a used car, you must ascertain whether it has a comprehensive car insurance policy. You must carefully assess whether the owner is quoting a fair IDV for the car under the given conditions. You must refrain from purchasing a car with an undervalued IDV since it can result in a substantial loss for you in the event of theft; in such a case, you will receive a lower than appropriate car insurance accident claim settlement amount.

There are many options available if you decide to purchase a used car. Some of the cars that are popular in the used car segment in India are Tata Nexon, Hyundai Elite i20, and Honda City. The selection of a used car depends on a variety of factors, including the specific requirements you are looking for in a car, your budget, the mode of purchase—online from a car resale portal or offline from an acquaintance, and the estimated resale value of the car.

Conclusion

The accurate valuation of a used car is instrumental in quoting an adequate price as well as for determining the premium amount of its insurance policy. Therefore, you must not undervalue or overvalue your car’s IDV.