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10 Simple Steps to Reduce Car Insurance Premium

Sharanya Kannan Sharanya Kannan 11 December 2015

You may have the best motor insurance policy but have you ever considered if the premium you are paying can be effectively reduced WITHOUT losing any current benefits? We tell you it's a can-can, here!

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Is there even a household without a vehicle these days? Hardly. For a country that has bad roads and arguably tough traffic conditions, it’s a good thing we are all compelled to insure our vehicles. The government making car insurance mandatory is what prompts us to renew our policy each year. But, let’s be realistic here.

Truthfully speaking, if we had the option, wouldn’t many of us opt out of this spend every year, even if it doesn’t make a significant difference to our yearly expenses?

You may not be able to do that but Coverfox takes you an inch closer in helping you find easier ways to minimize your premium so that it doesn’t make a dent in your wallet.

Here is a list of options you can try to reduce your premium considerably without having to make any major compromises on your policy.

1. Increase the voluntary deductible

Deductible is the amount you agree to pay towards your repairs or claims before your policy covers the rest. At the start of your policy or during renewal, you can choose this voluntary deductible value and the higher you choose this value to be, your premium decreases by a specified percentage.

But, remember to increase your deductible only as much as you can afford. Having a large deductible value out of your reach just so that your yearly premium reduces, can only defeat the purpose of your claim.

Let’s say, you have a claim of 20,000 and your voluntary deductible is Rs. 15,000. Your premium, if it was Rs. 15,000 a year, would reduce to Rs. 12,000. And at the time of any claim, you would pay Rs. 15000 while your insurance company would pay Rs. 5,000.

2. Make no claim for small expenses

You know that if you don’t make any claim for consecutive years, you can accumulate the no-claims-bonus, which allows your premium to get discounted by as low as 50%. Such a discount on your premium is a huge saving.

Do you really want to lose that by making claims for expenses that your wallet can afford? Let’s work this out backwards.

If an amount spent on the repair of your car is lesser than the amount that your NCB can potentially accumulate, then you should just pay for the repair yourself and not make a claim on your policy.

If you were to make a claim after accumulating a good discount, your premium would obviously double back to the original amount paid at the start of your policy. You would think that so many years of safe driving and thriftiness is down the drain.

It is not! To protect your discount, you could always use the no-claim-benefit-protector and lock your discount percentage to the year before you made the claim.

3. Transfer your NCB

If you were to buy a new car selling your old one, the one thing that you MUST NOT forget is to transfer your NCB. Imagine that in a test match, India takes the lead in the first innings but the lead doesn’t get carried to the second innings.

(Yes, it’s more hypothetical than real) It is only fair that the lead gets carried on, which will favour the outcome of a test match. Similarly, you need to carry over your NCB-lead from your old car to the new one.

Always remember that your NCBs are linked to the policyholder and not the policy or the car. Inform your insurance company about the need for a transfer of NCB and they would give you a certificate that will help with the transfer.

Even if you don’t plan to buy a car immediately after the sale of your old one, you can always reserve this bonus for a period of 3 years. Because, that is how long within which NCBs can be transferred, on termination of a motor policy.

4. Compare premiums and purchase online

Online sales and marketing is the in-thing now. Gone are the days when we had to visit a shop or a mall to buy just a couple of things. Internet has made life easier that with the swipe of a finger, our demands are met at our own doorstep. From clothes to consumables, from jewellery to cars and houses, the most bizarre things are purchased online.

When stuff like ‘walking-on-water-shoes’, fat-freezing-machines, worm trains(yeah, actual train in the shape of a worm) and barf bibs are sold online today, according to Business Insider, it is likely that someday we would be able to order a terminator Arnold look-alike robot from the internet.

Then, what stops us from buying car insurance online?

After all, there is no fear of your promises not being met. What you see and read online is what you get. The one thing you certainly won't miss by purchasing policies car insurance policies online is filling out the long forms that you have to do otherwise. Added to this, insurance companies offer attractive rates and premium sales when it's an online purchase.

The condensed procedures for online purchases turn out user friendly and transparent and thus a popular choice for the customer. This enables the user to compare and choose between car insurance policies that works best according to his/her own needs. Do you even need more reasons to believe why online purchase is a smart purchase?

5. Declare your correct IDV

Insured Declared Value is, as the name suggests, the declared value of your car set by the insurance company. IDV is calculated by applying depreciation over the original market price. This IDV is the maximum price that your insurers will pay if in the event of theft or complete damage of your car. If you value your IDV correctly, you might just be eligible to get a reduced premium.

But if you get too selfish and register a very low IDV with your insurer, remember that at the time of a claim, that will be all the money you may get from the company against your own declared value of the car. The right way to go about would be if you declare the correct IDV that ensures you get your rightful claim, which would also help in optimizing your premium.

6. Becomes members of AAI or WIAA

If you are members of these associations, you might already know about this. Automobile Association of India and Western India Automobile Association are bodies empowered by the Motor Vehicles Act and Rules. Being members of these associations gets you a discount on your premium.

It may sound a little far-fetched but the reasoning behind this is the assumption that such members are usually judged to be safe drivers, thus fetching them the discount. So if you want to feel privileged, all you have to do is become a member of such bodies and drive safely.

7. Install anti-theft devices

When you show the insurance company that you are doing the best to protect your car by installing anti-theft devices, it makes them feel happy and proud and they offer you a discount of at least 5% on your premium. The funda behind this isn’t too hard to guess.

When you take utmost care to safeguard your car, who gets to save money? Obviously, right? So, the lesser claims insurance companies face, the more money they can save on avoidable claims.

8. Declare your details correctly

It’s no surprise that an insurance company thoroughly runs through your profile when you take a policy from them. When they process your profile, they take utmost care in defining it with respect to your age, profession, the usage of your car, the mileage you maintain etc.

When they do so, if your profile strikes them as a person with optimal usage of the car and as someone who is less prone to damaging a car, they might just decide to be very nice and offer you a discount on your premium.

But this is decision is at their disposal. Never withhold information from Insurance companies as even transparency about your age and profession could fetch you discounts obviously! If the Bat Mobile were to get insured, whom do you think the insurance company would trust– Bruce Wayne or Batman?

9. Renew policy before time lapses

If you haven’t renewed your lapsing policy yet, it means you are obviously headed to start on a policy all over. Which also means you may have to get your vehicle inspected again – something for which you have to pay. Imagine, your premium will be calculated all over again and you even stand to risk escalated prices.

You certainly don’t want to lose your accumulated bonus! It’s just one hassle over another. If you want to save yourself from paying more and getting stuck in annoying situations, renew your policy before it lapses.

10. Pay only for what you need

If there are items in your shopping cart that you didn’t pick, would you pay for them? Similarly, in an insurance policy pay only for the features that are useful to you.

Say, you have a nice, closed parking spot, both at home and at office. Obviously, your car is well protected. So the return-to-invoice add-on in your policy wouldn’t be of much use.

By removing such unused add-ons in your policy, your premium can reduce substantially. When you take your motor policy, have your eyes wide open and choose to pay only for features which you would need.

We are pretty sure that at least a few of these ideas can be applicable to each one of you policy-holders out there. Be the Harry Potter in your family. Wave your wand at the right policy with the right charm and see how your premium works like magic!

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Sharanya Kannan
Written by Sharanya Kannan
Sharanya loves food, films, finitism, flawlessness, flavours, freedom, factualism, facundity and being fluxional. Obviously you can tell that she loves the f-word: Feminism.