Typical Ways to Reduce Your Car Insurance Premium

Posted by Reena More on July 2nd, 2019

The Car insurance premiums are becoming increasingly expensive, more so after Indian government has made the third -party insurance cover a mandatory factor for cars to run on the Indian roads. This feature has created ‘the best insurance cover at the least premium’ a feature of the yesteryears. It is for this reason that this article has some of the ‘Typical Ways to Reduce the Car Insurance Premium

Compare the different Car Insurance policies

Before making a purchase of car insurance, it is always advisable to compare the benefits and the quotes that are offered by the various insurance companies/agents. Almost all insurance companies possess a website, in addition to a large number of online insurance comparison sites where a person can easily compare the car insurance premium rates that are charged by the different insurance companies. Such online insurance distribution channels are considered to be cheaper as compared to the conventional method, and they even help to get the best car insurance premium rates easily. Also, if the person has been taking the same policy for the very same car for a number of years, it makes complete sense to try out other insurance companies, as one may receive attractive discounts and also lower car insurance premium amounts.

Beware of the car insurance firms that claim to offer the 'free' insurance. It is generally free only for the very first year and this cannot be customized. Also, it is important to keep in mind the fact that the ‘no frills’ policy is generally the cheapest option as the premium goes up significantly when the insurers include the add-on features. Most importantly, one must ensure that they have read the policy fine print extremely carefully before they decide to purchase it.

Be Smart with the insurance policy

The car insurance policy has typically a pre-defined number of benefits. But, if the policy permits, then it is advisable to opt out of the features that one may not really need. It helps to lower the car insurance premium amount to a certain extent.

Look out for the Deductibles

Increasing the deductibles or the voluntary deduction may reduce the car insurance premium amount. A deductible is said to be the out-of-pocket amount that is paid by a policyholder at the time of making a claim. When opting for the deductibles, it is advisable to pay as much comfortably, rather than going overboard.

If the deductible is zero, then the person will receive the total claim amount, in case of an accident. Here the premium amount that is regularly paid would be very high. A greater voluntary deduction makes much more sense in mainly two cases – first, if the individual is an extremely safe driver. This significantly reduces the chances of an accident taking place. Secondly, if the individual has not claimed the insurance for a number of consecutive years.

Think Big

While it is truly said that the core purpose of the car insurance is to save the expenses that are incurred while repairing a damaged vehicle, making a very small claim here may work against the objective. Even for the smallest amount of claim that is made, the individual loses the valuable advantage of a No Claim Bonus (NCB). It is the bonus that is accrued for every consecutive ‘claim-free’ year across the policy term. An NCB may lower the car insurance premium up to a maximum limit of 50%; so, the next year premium has a 50% dip.

A claimed amount maybe sometimes be lesser as compared to the total processing charge as well as the loss of the NCB. The smartest way to use the insurance is to get the small repairs at the local workshops. The dual advantage is that such expenses are powers and the NCB is definitely saved too. It is important to keep in mind that if a repair amount is lower than the NCB, then one can definitely accumulate this amount, and refrain from raising a claim.

From vintage to modern

The advantage of not making an insurance claim is that the no claim bonus that is accumulated is then transferable to a new car that is purchased. It is, thus, wise to retain an insurance in the name even after selling the vehicle and then ask the insurer to provide with a no-claim certificate.

One can easily reserve a bonus, even if they are not immediately going to buy a new vehicle. Whenever an individual buys a new car, at that time, they can transfer the existing policy to the new car and can carry forward with the no-claim bonus that is accrued over the years. This would help to reduce the overall car insurance premium rate as against a new insurance policy.

Stay Safe

Equipping safety features and anti-theft devices such as the locks for a steering wheel and gear, driver seat airbags, anti-theft alarms etc. may fetch the individual a 5% discount on the insurance premium. Further, the people linked with the associations such as the Automobile Association of India (AAI) or even the Western India Automobile Association (WIAA), may get special added benefits or discounts on the premiums. Such associations are empowered by the Motor Vehicles Act and Rules along with the members therein and are deemed to be ‘safe drivers’.

Let go of the Frills

The Car modifications such as adding alloy wheels, spoilers, etc., as well as expensive gadgets like automotive night vision, ultrasonic sensors, etc. might lead to a bigger amount of premium. Thus, such modifications, as well as gadgets, must be ideally avoided if one wishes to keep the premium amount to below. But, if an individual still wants to introduce the modifications at the cost of the higher premiums, then it is necessary to notify the insurer because if one doesn’t, then the insurer may invalidate the insurance policy itself.

Look out for the Bigger Discounts

Depending on the policyholder’s age, the driving record, the profession, and the various other criteria that are specified by the insurance provider company, the policyholder may avail of the car insurance premium discounts.

It is even advisable to check with the insurance provider whether one qualifies for a discount, if they have covered the parking for a car. In addition, the individual can also get discounts on car insurance premiums if he/she is a member of the organizations such as the AAI or the WIAA.