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How to Reduce Your Car Insurance Premium

There was a time when owning a car was seen as a luxury. People with high income and rich people used to own cars in the beginning, but with the advent of technology, cars are now available to even the middle class and above middle class. With the rise in the number of cars sold, the accident rate is also increasing thereby pushing the insurers to increase the insurance premium rates.

As known to every car owner third party car insurance is mandatory as per the Motor vehicles act and this premium is decided by the Insurance Regulatory and Development Authority of India after due diligence by striking a balance between the losses of the insurance company and affordability of the customers.

This third party premium is fixed for every insurer and cannot be reduced at any cost, but the own damage premium can be reduced by offering extra discounts. This section of car insurance can be used for reducing the premium paid to the insurance company.

Top Ways to Reduce your Car Insurance Premium:

Car insurance premium has been on the rise in recent days due to many factors such as increased loss ratio, rising maintenance costs, and several other factors. Many of us are dissatisfied with the higher car insurance premiums and are looking out to reduce the car insurance premium every year.

Most of you might have been maintaining your car in good condition and the premium paid every year is not justified as no claim is made during the policy period. Let us look at the below ways to reduce the car insurance premium:-

1. Voluntary Excess/ Deductible:

A deductible is an amount that is to be borne by the insured at the time of claim settlement. There are two types of deductibles namely: Voluntary deductible and Compulsory deductible.

  • The compulsory deductible is applicable for every claim which is prefixed by the insurer.
  • A voluntary deductible is an amount that the insured wishes to contribute to the overall claim amount at the time of claim settlement apart from the compulsory deductible.

Explained:

Excess or deductible is the amount that the insured promises to pay in the event of a claim. Under this, a part of the risk is passed on to the insured and the insured is made liable for a percentage of claim amounts. Each insurance policy has a compulsory deductible or excess up to Rs.2000 depending on the cubic capacity of the car.

The voluntary excess is the amount that the insured promises to pay in the event of the claim over and above the voluntary deductible or excess mentioned under the car insurance policy.

By opting for a higher deductible the premium can be reduced to a maximum of 35% on the own damage premium or Rs.2500 whichever is less. The maximum voluntary deductible to be borne by the customer is limited to Rs.15k under the Indian Motor Tariff.

2. Insured Declared Value:

The other option to reduce the premium in car insurance is to opt for the lower Insured declared value in the policy copy. Lower the IDV, lower would be the premium in the car insurance policy. Car insurance renewal tips in Insured Declared value offered by the insurance company should be higher in the market at an affordable premium.

Explained:

A small percentage of the own damage premium can be reduced by reducing the insured declared value in the insurance policy copy. It is important to maintain a balance between the IDV and the premium to be paid so that at the time of claim settlement the claim amount is not too less.

3. Add-ons:

The riders or add-ons are the extra coverage at an extra premium provided to your car by the insurance company. These add-ons include Bumper to bumper cover, Consumables cover, Key protection cover, Roadside assistance covers, etc.

Explained:

The premium for these add-ons is calculated as a percentage of the insured declared value. By reducing the number of add-ons covers and opting only for the necessary covers your car insurance premium can be reduced drastically.

4. No Claim Bonus (NCB):

No claim bonus is a kind of discount offered on your damage premium for not making any claims in the previous years. This is a type of reward for good driving and not claiming from the insurance company.

Explained:

The no claim bonus plays an important part in reducing the overall premium. Higher the no claim bonus, lower the premium, so it is advisable to exercise caution at the time of claim. No claim bonus ranges from 20 % to 50 % for each claim free year and is calculated on the own damage premium.

5. Compare & Purchase Online:

It is important to compare online for more discounts from insurers. We at PolicyBachat are tied up with almost all the insurance companies and offer online car insurance at affordable rates. Discounts of up to 80% can be obtained from different insurers.

Even car insurance renewal quotes can be obtained online using the car insurance premium calculator. Online car insurance reduces the premium by providing many options to be chosen from.

Explained:

These days insurance is available online easily due to the advancement in technology. These online portals offer huge discounts to customers compared to offline agents. These discounts are possible due to the fierce competition in the market and the involvement of less paperwork with the online portals.

We at PolicyBachat offer up to 80% on your car insurance premium from the top general insurance companies. How to renew insurance online? This can be done by paying the insurance online with the help of car insurance where the payment is directly made to the insurance company and the policy copy is shared immediately.

6. Anti-theft Device:

Installing an anti-theft device in the car will help you reduce the risk of the car being stolen and also it would be easy to track if the car is stolen. Having an anti-theft device approved by the government fitted to your car will reduce the car insurance premium by a considerable amount.

Installing devices such as gear lock, steering lock, and anti-theft devices helps to protect the vehicle from theft or burglary and reduces the premium by about 4-6%.

Explained:

Cars fitted with Anti-theft devices are eligible for a discount on their damage premium. The anti-theft device in your car helps in tracing the car in case of theft compared to the car without an anti-theft device. The cars fitted with anti-theft devices are eligible for a discount of 2.5% on the own damage section of premium subject to a maximum of Rs.500/-

For midterm installation of the anti-theft device a pro rate proportion of the premium, the discount is calculated as per tariff for the unexpired period is allowed under your car insurance policy. Your car insurance cost depends on the extra fittings such as an Anti-theft device which reduces your car insurance premium payable and the electrical fittings which increase your premium payable.

7. AAI membership:

Members of the auto mobile association of India are also entitled to receive a discount on their insurance premiums. All you need to do is provide the insurance company with your AAI number to obtain the extra discount thereby reducing your overall premium. AAI membership provides you with features such as 24*7 roadside assistance, global driving permits, drivers on call, etc.

Explained:

For a valid and recognized membership with the Automobile Associations, a discount of 5% on the own damage section subject to a maximum of Rs.200 for a private car is allowed in the Indian Motor Tariff.

Members of Automobile associations such as Automobile Association of South India, and Automobile Association of Eastern India are eligible for the discount under the own damage section of the car insurance.

8. Avoid Break-in:

It is of utmost importance to keep your car insurance live all the time throughout the year. Insurance companies offer higher discounts to people renewing their car insurance policies without break-in and good NCB. Having a break-in of more than 90 days in the policy period wipes out your existing NCB.

9. Opt for Pay As You Drive:

The concept of pay as you drive originated in western countries and is now being implemented in India also. Few insurers are offering car insurance on a pay as you drive basis.

Explained:

Here you can select the number of kilometers you intend to drive in a particular year and pay a premium for the same. Once you exhaust the specified number of kilometers you can refill the number by paying an extra premium or going back to the comprehensive policy. Pay as you drive enables you to pay per kilometer driven.

How to Save Money on Car Insurance Policy?

Shop Around: Prices vary from company to company, so it pays to shop around. Get at least three price quotes. You can call companies directly or access information on the Internet. PolicyBachat may also provide comparisons of prices charged by major insurers.

Before you buy a Car, Compare Insurance Costs:Before you buy a new or used car, check into insurance costs. Car insurance premiums are based in part on the car’s price, the cost to repair it, its overall safety record, and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft.

Reduce Coverage on Older Cars:Consider dropping comprehensive coverages on older cars. If your car is worth less than 10 times the premium, purchasing the coverage may not be cost effective.

Don’t Make Small Claims:One thing about car insurance policies is that they allow policyholders to maximize benefits in the form of NCBs (No Claim Bonus) for an insurance term, wherein they haven’t made any claims. These benefits are generally offered in the form of lower premiums and can be availed at the end of the policy year, during policy renewals. However, to be eligible for a No Claim Bonus, you need to have a completely claim-free year. The best way to ascertain this is by not making claims for minor concerns or repairs.

Don’t Let Your Car Insurance Policy Lapse:Now while you are trying to lower your car insurance premium, you must also pay attention to mistakes that lead to higher premiums. A significant one among such mistakes is not renewing insurance policies on time. By forgetting to renew your car insurance plan and letting it lapse, you will not only have to purchase a new plan all over again but may also have to pay a penalty.Also, you become ineligible for a No Claim Bonus, despite having made no claims during the policy tenure. These days, insurance companies send reminders to their policyholders regarding renewals of car insurance online so that their insurance plans do not lapse.

Follow the Traffic Rules: The security and comfort of your four-wheeler are unmatched, especially in current times when you need to maintain social distance from others. So, if you are looking to buy a car or are a car owner, it is imperative to buy a four-wheeler insurance policy to ensure the complete protection of your vehicle.

Renew your Car Insurance Policy In-time:When your car insurance plan lapses, it means that your insurance plan becomes inactive. An inactive policy will not be helpful to you during an unfortunate event. This is why it is crucial to renew your car insurance plan on time.

The Car insurance premium can be reduced by using any of the above or all of the above tips. You are advised to exercise caution at the time of selecting the voluntary deductible as it implies the amount of claim you will be bearing in case of an accident to your car. For the best car insurance quotes visit www.policybachat.com and get the best car insurance renewal quotes from the top general insurance companies.

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