Car insurance premiums are rising rapidly, and so are the maintenance charges, especially after the Government of India has made third-party liability insurance mandatory for all vehicles.
Car insurance premiums are rising rapidly, and so are the maintenance charges, especially after the Government of India has made third-party liability insurance mandatory for all vehicles. Under such circumstances, you should know various factors which affect your car insurance premium so you can avail the maximum benefit and also reduce your premiums.
Here we look at some tips which will help you reduce the car insurance premium
1. Use a Car Insurance Calculator
A car insurance calculator will help you to calculate the premium of your car insurance as well as compare premium quotes from different insurance providers. Different sets of customers have their specific insurance requirements, and an online car insurance calculator helps you to evaluate and buy the best policy as per their requirements.
A car insurance calculator is a valuable tool that helps you buy the best car insurance policy based on specifications provided by you. It will allow you to compare different car insurance plans on a click of the mouse. You can also see how changing certain specifications of coverage will change your premium amount.
2. Opt Appropriate Coverage
A car insurance policy comes with a pre-defined set of benefits. If your policy allows, you can opt-out of some coverages, especially the add-ons that you don't need. This helps you to lower the car insurance premium and you pay only for the coverage that you need.
3. Raise Deductibles
A car insurance premium consists of two types of deductibles: Compulsory deductibles and voluntary deductibles. Increasing voluntary deductibles can reduce your car insurance premium. Voluntary deductible is the out-of-pocket amount paid by the insured when making a claim.
In case your deductible is zero, then the insurance company will pay the entire claim amount in case of an accident; however, the premium amount will go up and vice versa. A higher voluntary deductible offers two-fold benefits:
- If you are a safe driver which significantly reduces the chances of an accident
- If you have not raised a claim for a few consecutive years there is no question of paying for any damages.
4. Don’t Claim Small Sums
While it is true that the primary purpose of car insurance is to save expenses incurred due to vehicle damages, making claims for minor damages would work against this objective. Even for the smallest damage if you make a claim, you lose the advantage of accumulating NCB (No Claim Bonus)- which is provided for every consecutive claim-free year over the policy duration. The NCB can lower your premium amount up to a maximum of 50%; hence your next year premium reduces by the accrued NCB amount.
When the repair amount is lower than the NCB the smart decision is to get small repairs done at local workshops and accumulate NCB. The dual advantage is that the cost of repairs are lower and you get the benefit of NCB in the next year.
5. Avoid Policy Lapse
Once your car insurance policy lapse, you may not be able to avail NCB that you could otherwise be eligible for. It is always important to renew your car insurance policy before it expires. It does not only help you with saving the accumulated NCB but also saves you from paying the penalty to the traffic authorities.
6. Avail Discounts
Based on various criteria specified by the insurer, you could avail discounts on your car insurance premium. Also, you can check with your insurance company whether you qualify for any discount if you have covered parking for your car. Moreover, you can avail discounted premium if you are a member of organisations such as AAI (Automobile Association of India) or WIAA (Western India Automobile Association).
7. Avoid the Modifications
Car personalisation like adding alloy wheels, spoilers, etc. and adding expensive gadgets like automotive night vision, ultrasonic sensors, etc. may lead to a higher premium. Therefore, such modifications should ideally be avoided if you want to keep your car insurance premium low. However, if you want to modify your vehicle at the cost of the higher premium, inform your insurance company because if you don't, the insurance provider may reject your claim.
8. Install Safety Features
Installing approved safety features like an anti-theft device could fetch you a discounted premium.
9. Make & Model of the Car
Insurance companies, these days, are keeping a close watch on the make and model of vehicles as each model has its own claim record. Therefore, insurance premiums are also calculated based on the model's claim experience. If your car model is more claim-prone because of its make and structure, the insurance company will be less willing to offer discounts. Thus, you can expect higher discounts on premium if your car’s model and make has favourable claim ratio.
10. Seek Quotes from Different Insurance Providers
Before purchasing a car insurance policy, always compare the coverage and quotes offered by multiple car insurance companies. Most insurance companies have a website along with online insurance comparison websites where you can compare the policy benefits and premium rates.
Also, if you are buying car insurance policy from the same insurance company from several years, it makes sense to try other insurance providers, as you may get attractive discounts and reduce your car insurance premium.
The price of car insurance premium is likely to rise in the future. However, there are certain things on your part you can do to reduce the premium amount. The ten tips, as mentioned above, should get you going in the right direction.
Also Read: The Ultimate Cheat Sheet to Calculate Your Car Insurance Premium
