Most households in India, these days, have atleast one car for commuting to and from work and for other leisurely pursuits. And with buying a car, come the maintenance and insurance expenses.
Under Chapter 11 (Section 145 to 164) of The Motor Vehicles Act, 1988, it is compulsory to buy at least a Third-party Car Insurance Policy in India. However, to protect from serious accidents and other faults with vehicles, owners typically purchase comprehensive coverage to protect them from liabilities. In this article, we break down how you can reduce that hefty car insurance premium considerably.
Renew the insurance well before the expiry date
It is allowed to renew the car insurance 60 days prior to the expiry date. In order to prevent unnecessary increases in premium amount and to ensure that you do not have to undergo a car inspection again, remember to renew the car insurance prior to the expiry date.
Ensure you mention the correct No Claim Bonus
A no claim bonus is the insurer’s way to reward you for not claiming the insurance policy over the past year. It is by way of a discount on the insurance premium for the current year, depending on how many years in the past you haven’t claimed insurance or invoked the insurance policy.
No Claim Bonus Rate Grid
| After one claim free year | 20% |
| After two consecutive claim free years | 25% |
| After three consecutive claim free years | 35% |
| After four consecutive claim free years | 45% |
| After five consecutive claim free years | 50% |
The table above shows how the No Claim Bonus keeps increasing as you continue using the car and if you do not claim your policy for succeeding years. Correctly declaring the no claim bonus is instrumental in reducing your car insurance premium amount.
Choose a voluntary deductible
Choosing a voluntary deductible means that while making a claim on the insurance policy, the voluntary deductible amount will have to be paid prior to receiving the claimed amount. Choosing a voluntary deductible can help you reduce the premium amount paid upfront. As an example, if your car’s annual insurance premium is Rs. 10,000, choosing a voluntary deductible of Rs. 2,000 may reduce the premium amount to, let’s say, Rs. 9,000; however, at the time of making a claim, Rs. 2,000 shall have to be paid by you additionally.
Fit your car with an anti-theft device
Fitting your car with an anti-theft device can help reduce your car insurance premium amount. Make sure you make a declaration stating that you have an anti-theft device fitted on your vehicle prior to purchasing car insurance.
Declare the correct IDV
The IDV is the Insured Declared Value of the vehicle. As the name suggests, this is the amount payable in case of total damage/ loss to the vehicle. Declaring an unnecessarily high IDV may result in an unnaturally high premium amount.
Make sure that your vehicle’s IDV mentioned on the policy is the correct IDV after providing for depreciation.
Declare your personal details correctly
If you’re a professional like a doctor or a Chartered Accountant, you may receive certain discount from certain insurance companies on the premium amount. This is because, in the view of insurance companies, professionals are better drivers and the number of claims made by them are lower. Therefore you may get a discount on the premium amount.
Based on certain other personal parameters as well, you may be eligible for a discount on the premium amount. This can only be allowed if you declare your personal details while buying the insurance policy properly.
Compare the insurance policy prices online
Online portals such as http://www.coverfox.com do a good job of comparing various insurance policy providers’ prices. You may also visit an insurance company’s direct website to purchase a motor vehicle policy.
Note: we are not affiliated with the above mentioned website/ online policy aggregators in any way.
Avoid unnecessary add-ons
While it may sound cautious to take the passenger cover addon or the an addon that protects your tires at the time of making the insurance purchase, you need to note that such small sums add up to your insurance premium amount. If it sounds avoidable to you then you need not buy such addon. Make sure you do a cost benefit analysis before you opt in to any addons.
Thanks for reading. Please feel free to comment below in case you have any questions or in case you need any more information!
