A minor dent or scratch used to mean a quick visit to the local mechanic and a small repair bill. But with modern cars, the same damage can sometimes leave owners surprised by higher costs at the garage.
This is making people rethink car insurance. Cover that once felt like an extra now seems more important, especially when repair costs are so high. Understanding why repair costs have increased can help you choose the right insurance cover for your car today.
Why car repair bills keep climbing despite the GST cut
From 22nd September 2025, the GST on most car spare parts has been reduced from 28% to 18%. This means a lower tax for many common parts, which could help reduce your repair bills. That said, the tax is just one part of the total cost. Modern cars come with advanced systems, which can make repairs more complex and expensive.
For example:
– A bumper now might have parking sensors or radar for driver assistance.
– Windscreens may have cameras that need recalibration after being replaced.
– Headlamps are often sealed LED units that require complete assembly replacement.
– Body panels in many cars are designed around electronic components.
What once involved simply straightening a panel might now mean replacing electronics or recalibrating systems. While the lower GST helps, it doesn’t fully cover the additional costs of these modern repairs.
How depreciation deductions grow with the repair bill
When a part is replaced under a standard policy, the insurer deducts depreciation before paying the claim. How much is deducted depends on what the part is made of and how old the car is.
| Part Being Replaced | Depreciation Usually Deducted |
|---|---|
| Plastic, Rubber and Nylon Parts, Tyres, Batteries and Airbags | 50% |
| Fibreglass Parts | 30% |
| Glass | Nil |
| Metal Parts, Car Under Six Months Old | Nil |
| Metal Parts, Car Three to Four Years Old | 25% |
| Metal Parts, Car Five to Ten Years Old | 40% |
The higher the price of the part, the more the deduction. For example, if the bumper or lamp assembly is expensive, a bigger amount will be deducted from your claim, even if it’s covered under the policy terms.
Older cars are also affected differently by rising repair costs. If fixing your car costs more than 75% of its insured declared value (IDV), it’s treated as a total loss. Since repair costs keep increasing, older cars reach this limit faster. In that case, the payout will be based on the IDV.
Why comprehensive car insurance matters more now
Third-party car insurance is mandatory. It covers damages or losses you may cause to others, but it doesn’t cover repairs for your own car. Earlier, when repair costs were low, some car owners were okay taking that risk themselves. But now, with rising repair charges, that choice doesn’t seem practical.
Comprehensive car insurance is a better option. It includes third-party cover and also protects your car from things like accidents, theft, fire, floods, and storms. Many owners of new cars prefer to buy a three-year third-party policy and then purchase own damage cover separately each year. This way, their car stays protected.
Add-ons that respond to higher repair costs
Several add-ons deal directly with the way repair bills have grown.
Zero depreciation cover removes the depreciation deduction on a covered claim, which matters more as parts get costlier. It applies to a set number of claims each year and is generally offered on cars up to about five years old.
Consumables cover pays for items such as engine oil, oil filter, brake oil, nuts and bolts, which a standard policy may not include.
Engine protection covers engine, gearbox and differential parts damaged by water getting in, which a standard policy treats as a knock-on loss and leaves out.
Which mix fits depends on how new the car is and where it is driven. A newer car used in heavy city traffic may make zero depreciation cover relevant, while a car parked in a flood-prone area may make engine protection worth considering.
What to look at when buying car insurance online
Buying car insurance online makes it easy to compare options and a few points are worth comparing alongside the premium.
The IDV: A lower IDV can reduce the premium, but it can also reduce the amount payable if the car is written off or stolen, subject to the policy terms.
The cashless garage network near you: A cashless repair can reduce the need to pay the full repair bill upfront, subject to the insurer’s cashless facility and applicable terms.
The add-on price beside the cover it provides: A slightly higher premium with relevant add-ons may help cover repair costs that are otherwise excluded or subject to deductions.
The voluntary deductible: A higher deductible can lower the premium, but you agree to bear a larger portion of the claim amount when you make a claim.
Leading insurers in India like Zurich Kotak General Insurance Company (India) Limited, show these details alongside the quote before you pay. Comparing car insurance online on these points gives a fuller picture than the headline premium alone.
Also Read: How do you actually know if an instant loan app in India is safe to use?
Conclusion
Repair costs might still be high even though GST on parts is lower. Newer cars come with advanced electronic components and systems, which can make repairs costlier. This is why renewal is the perfect time to check if your policy suits your car.
Take a fresh look at:
– the IDV (Insured Declared Value)
– the add-ons
– the deductible
This will help you understand your coverage and know how much of the repair costs you may need to pay.