Car insurance policies mainly come in two forms, comprehensive car insurance and third-party liability insurance. A comprehensive car insurance policy offers wide coverage to protect the policyholder against expenses pertaining to personal accident, vehicle damage, and also third party claims. While most policy buyers prefer this plan, it has comparatively higher premiums which may discourage many buyers. For those who have newly bought a car, comprehensive car insurance is ideal, especially since there could be potential expenses in case of an accident.
Third-party liability insurances safeguard the policyholder against expenses related to third party claims. As per the Motors Vehicle Act, for car owners to legally ply their vehicles on public roads in India, a third party motor insurance cover is the minimum requirement.
Irrespective of the auto insurance cover chosen, policy buyers can save money on the premium by using the following 5 tips.
Tips to reduce your auto insurance premium
Opt for higher deductible amount
By choosing a higher deductible amount, a policyholder can significantly reduce the auto insurance premium. The deductible amount is the sum that the policyholder pays while making a claim. A policyholder can choose the deductible amount as per the personal financial condition. It is advisable, to begin with a low deductible amount and raise it with time. An ideal deductible amount must be less than the No-Claim Bonus (NCB) amount that the policyholder is eligible for in the next year.
Avoid small claims
Under most auto insurance covers, policyholders can get NCB for each claim-free year. While the main objective of an auto insurance cover is to provide for any damages caused to the policyholder’s vehicle, the policyholder should try to skip claims for minor issues such as a broken headlamp, scratches, etc. The main reason to do so is that the repair cost of minor damages is often lower when compared to the amount one can get in the form of NCB. At the time of renewal of the auto insurance cover, the NCB amount gets deducted from the cost of the premium and thus reduces the premium cost.
Transfer accumulated NCB
Transferring accumulated NCB to a newly purchased vehicle can be beneficial since auto insurance is linked to the policyholder and not the vehicle. Thus, it makes sense to retain the insurance even if one has sold the previously insured vehicle and request for an NCB certificate from the insurer. This can reduce the car insurance premium of the new insurance policy that may be purchased for a new vehicle.
Carefully consider claims
If one does not make a claim during a policy year, he/she gets rewarded with a No Claim Bonus (NCB). This attracts discounts on the premium amount. NCB can also be carried forward to the next policy year in case it is not claimed during the current policy year. On the other hand, if a claim is made during a policy year, the insured loses NCB.
Thus, making careful policy claims is suggested instead of reaching out to claim minor losses. If one claims insurance for insignificant losses, chances are that he/she will miss out on NCB and end up paying a comparatively higher premium amount later.
Choose car insurance cover wisely
In vehicle insurance, one can opt for add-ons to get additional protection and widen the vehicle insurance coverage. However, this could also result in an increase in total insurance premium. While choosing a Comprehensive Car Insurance policy with Add-ons, one must ensure to opt for only select Add-ons that are needed. For instance, availing a Personal Accident (PA) Cover for passengers could be helpful if the vehicle owner drives alone most of the time.
It is important to ensure that the car insurance policy is renewed in a timely manner else one can lose the NCB benefit. Renewal of a car insurance policy post its expiry date could result in a car inspection. These can increase the car insurance premium since the insurance company may consider it as a new policy.
The intent of purchasing a Comprehensive Car Insurance cover is to broaden existing insurance coverage. While one must lookout for ways to reduce insurance policy premium but, at the same time, it shouldn’t result in a compromise on the insurance coverage.
- How much is car insurance per year in India?
Various factors are taken into consideration while determining car insurance per year in India. Some of these factors include engine size, purpose of vehicle, geographical location, add-on covers sought, etc.
- Does car insurance premium increase after claim in India?
Claims such as accident claims do not affect third party car insurance premiums in India. Since insurers are not permitted to increase or decrease the third party insurance premium, these remain uniform across all motor insurance providers in India.
- What is the new rule of vehicle insurance?
In 2018, the Supreme Court of India made it mandatory for new two-wheelers and car owners to have a five-year and three-year third-party insurance, respectively. This is mandatory at the time of purchasing a vehicle.
- What are the benefits of car insurance?
The main benefits of car insurance in case of an accident resulting in death include legal fees for lawsuits brought against the insured following an accident, bills of vehicle repairs resulting from damage caused due to an accident, damage cost due to theft, fire, etc.
- Is it good to claim car insurance?
A car insurance claim must ideally be made only in the event of a significant loss or damage. The quantum of loss should be measured against the benefit of No Claim Bonus that one can get every year.