How to Reduce Car Insurance Premiums?
Driving in India is stressful. With rough traffic conditions and demanding roads, it is no surprise that the IRDAI has made motor insurance mandatory for all vehicles. While car insurance offers protection against financial losses due to an accident or a mishap, most people buy the mandatory third-party cover only to save on the premium costs. A comprehensive policy offers several benefits and is highly cost-efficient too, but many car owners tend to stay away from it to save paying extra premium. What if there were ways to reduce your car insurance premium without compromising on your policy? Here are some quick tips to help you minimize the premium of your car insurance policy.
Most insurance companies like Tata AIG provide an online car insurance calculator that offers an estimate of the premium that you will have to pay for the selected policy based on the specific details of your car. Before you start looking for ways to reduce the premium, use one such calculator and see the premium that a policy of your choice demands. Once you have that figure on hand, use the tips mentioned below to bring it down.
Tip 1. Increase the Voluntary Deductible amount
Car insurancehas deductibles or amounts that the policyholder agrees to pay towards the claim while the insurer covers the rest. There are two types of deductibles – mandatory and voluntary. The deductible has a direct impact on the premium. A high deductible means a lower premium and vice versa.
While the mandatory deductible amount is fixed, to reduce the car insurance premium, you can increase the voluntary deductible and decrease the premium by a specified percentage. But remember to use this feature cautiously as increasing the voluntary deductible means receiving a lower reimbursement when you file a claim.
Tip 2. Avoid raising a claim for small repairs
All insurers offer a No Claim Bonus (NCB) to policyholders. It is a way of rewarding them for not raising a claim during the policy period. Since the insurer is not making any payments, you receive a discount on your next year’s premium amount. This is an incremental bonus that increases with every additional year that you do not raise a claim.
Let’s say that your car is parked outside your home and a branch of a tree falls on it, causing a dent and some scratches. While repairing this is a cost, you need to calculate the impact it can have on your premium amount since raising one claim resets all NCB discounts bringing it back to the original premium.
Tip 3. NCB Transfer
Not many policyholders are aware that they can transfer their NoClaim Bonus when they sell their old car and buy a new one. Remember, NCB is not linked to your car – it is linked to you! Hence, the insurance companies allow you to transfer the NCB discount from your old car to the new one. In fact, many insurers allow you to reserve this bonus for three years, meaning you can transfer the NCB even if you buy a new car within three years of selling the old one.
Tip 4. Enrol with WIAA or AAI
All insurance companies recognize the Western India Automobile Association (WIAA) and the Automobile Association of India (AAI) and offer discounts on premium to their members. Hence, you can join one of these associations and claim the discount.
Tip 5. Install security devices
If the insurance company sees that you are taking precautions to ensure the safety of your car, it is likely to offer you a discount on the premium. There are certain anti-theft devices approved by the ARAI (Automotive Research Association of India). Most insurers offer a discount if you have an approved device installed in your car.
Tip 6. Choose add-ons carefully
Insurance companies offer a range of add-ons keeping the needs of different kinds of car owners in mind. While each add-on might seem useful, you need to carefully assess your car usage and driving conditions before selecting them. Every add-on comes at an additional cost. Hence, avoid add-ons that you do not need.
Tip 7. Profession-based discounts
Some insurance companies offer discounts to people from certain professions like doctors, people working in the armed forces, etc. Check with the insurer about profession-based discounts and avail one if you qualify.
Tip 8. Discount for safe drivers
Insurance companies process your personal details and try to assess your profile. If you have a track record of being a safe driver, then the insurer can offer a discount on the premium since you are less prone to damaging the car or causing an accident.
As you can see, there are many ways of reducing the car insurance premium without compromising on the features of the policy. Remember, while the premium might seem excessive today, accidents come unannounced and being financially protected takes away half the stress during those trying times. Strike a balance between the premium you pay today, the benefit you can receive tomorrow, and choose the perfect insurance policy for your car. Good Luck!