Lowering your car insurance cost is crucial as it may save you a lot of money in the long run, while still giving you the coverage you need. With an increase in car ownership, the accident rate is also rising along, which is forcing insurance companies to increase insurance premiums.
Hence, if you are planning to get a car or have a car already, getting an insurance policy is mandatory. The insurance can be mandatory third-party insurance or comprehensive insurance coverage. Whatever the type may be, there are a few measures you can take to minimize your car insurance premiums.
Tips for reducing premiums
Here are a few of the simplest and most efficient methods for reducing your auto insurance renewal cost.
Insured Declared Value (IDV)
According to the insurance provider, with each renewal, the insured declared value (IDV) of your car will continue to decline by 10%. In essence, the IDV is the amount your insurance will pay if your car is stolen or badly damaged.
Most people would want a high IDV, which has an impact on the cost of the car insurance policy. Low IDV results in a smaller insurance payout at the time of claims and a cheaper premium. A higher IDV indicates a higher premium.
You must thus exercise caution when choosing the value during renewal since the appropriate IDV for your vehicle can have an impact on the compensation you get in the case of theft or complete loss.
No Claim Bonus (NCB)
No claim bonus (NCB) is a type of discount given on your car insurance premium for not making a single claim in the previous years. This is a kind of incentive for safe driving and not making insurance claims.
One significant factor in lowering the total premium is the NCB. Being cautious while filing a claim is advised because a higher NCB will result in a reduced premium. The NCB varies from 20% to 50% for each consecutive year without a claim.
Deductibles
A deductible is the sum of money that the policyholder must pay when the claim is settled. There are two different kinds of deductions: Voluntary deductible and Compulsory deductible.
The compulsory deductible that the insurer has determined is imposed on each claim.
A voluntary deductible is the portion of the total claim amount, excluding the mandatory deductible, that the insured chooses to contribute at the time of claim settlement. By choosing a higher voluntary deductible, you can reduce the insurance company’s claim liability.
This way, the insurer offers a discount on your car insurance premium. Therefore, you can lower the cost of your renewal premium by opting for a higher voluntary deductible. However, this can result in a decrease in the amount receivable in the event of a claim.
Compare and buy online
To save on your premium, it’s essential to compare various insurances online. You can use the auto insurance premium calculator online to get quotations for any vehicle insurance renewal.
Online insurance lowers rates by offering a wide range of options. The progress of technology has made insurance easily accessible online these days. When compared to traditional brokers, these online platforms provide customers with significant discounts.
Therefore, when it comes to vehicle insurance, to reduce the cost of renewal, look for the most comprehensive insurance and affordable premiums.
Make sure to renew your policy on time: Don’t wait until the last minute to renew your automobile insurance. Always be aware of when your policy is set to expire. Some insurance providers offer a buffer period of a certain number of days after your expiration date has passed.
But if you wait until after the policy has expired to apply to renew it, you may miss out on benefits like an NCB or other advantages that would have come with renewing earlier. This can impact your premium cost.
Anti-theft device
Fitting an anti-theft device in your vehicle will help lower the likelihood that it will be stolen and make it easier to find it. Installing a government-approved anti-theft device, steering locks, and gear locks can lower insurance premium rates by around 4-6% while also protecting the car from theft or break-ins.
Membership in the Auto Mobile Association of India (AAI)
AAI membership entitles an individual to a premium reduction on insurance. To receive the additional discount and lower your total price, all you have to do is provide the insurance company with your AAI number. Benefits from your AAI membership include drivers on call, worldwide driving permits, and round-the-clock roadside support.
The Indian Motor Tariff allows a 5% reduction on the own damage portion for a genuine and recognised membership with the Automobile Associations. The discount is available to members of automobile groups such as the Automobile Association of Eastern India and the Automobile Association of South India.
Add-ons
The add-ons or riders are the extra coverage at an additional premium offered to your insurance by the insurance company. These can comprise consumables covers, bumper-to-bumper covers, roadside assistance covers, key protection covers, etc.
The premium for these add-ons is calculated as a percentage of the insured declared value. You can reduce your insurance premium by limiting the amount of add-on coverage and choosing only the coverage that you need.
Now that you are aware of the different ways to reduce your car insurance premium, be mindful at the time of your insurance renewal. Make sure you are aware of your policy expiry date and do not forget to compare policies online. You can also opt for other ways in which you can reduce the vehicle insurance premium.
(Disclaimer: The above information is for illustration only. For more details, please refer to the policy wordings and prospectus before concluding the sales.)
(The above content is non-editorial, and ETAuto hereby disclaims any and all warranties, expressed or implied, relating to it, and does not guarantee, vouch for or necessarily endorse any of the content.)
