Why New Car Insurance Is So Expensive In India?

Introduction

Buying car insurance in India is not an easy task. It is expensive and time consuming. The reasons why car insurance is so expensive in India are varied. The cost of car insurance in India is determined by a number of factors such as the type of car, its age, the type of coverage, the premium, the deductible and the location of the car. In this article we will discuss why car insurance is so expensive in India.

High Cost of Car Parts

One of the major reasons why car insurance is so expensive in India is the high cost of car parts. Car parts in India are expensive due to the high import duties and taxes levied on them. This makes the cost of repairing a damaged car expensive and hence affects the cost of car insurance. In addition, the cost of spare parts for imported cars is also high due to the high taxes and duties levied on them.

Lack of Competition

Another reason why car insurance is so expensive in India is the lack of competition in the insurance market. In India, the insurance market is dominated by just a handful of companies. This lack of competition results in higher premiums and deductibles. The lack of competition also makes it difficult for consumers to compare prices and find the best deal.

Rising Claims

The number of claims made by car owners is also on the rise in India. This is due to the increasing number of road accidents and the rising cost of repairs. The rising cost of repairs increases the cost of car insurance as the insurance companies have to cover the cost of repairs. The rising number of claims also affects the premiums as the insurance companies have to spread the risk of paying out more claims.

High Cost of Administration

The cost of administering car insurance in India is also high. This is due to the high cost of marketing, customer service and back-end operations. The insurance companies have to pay for these services in order to remain competitive in the market. This adds to the cost of car insurance in India.

Conclusion

The cost of car insurance in India is determined by a number of factors such as the type of car, its age, the type of coverage, the premium, the deductible and the location of the car. The high cost of car parts, lack of competition in the insurance market, rising claims and high cost of administration are the main factors why car insurance is so expensive in India.