The cost of car insurance premiums is regularly increasing. But, if you choose to venture out without adequate insurance coverage, you risk violating the Motor Vehicle Act 1988. So, you must have third-party car insurance coverage, at least. If an unfortunate incident happens on the road involving your car, you will need to pay all the bills.
What is the way out? You must know about the avenues through which you can secure standard car insurance coverage without paying significantly more. This will enable you to buy comprehensive or own-damage and third-party insurance covers.
Drive stress-free on the road and let your insurer take care of the expenses that may come your way if an accident occurs. This blog will offer actionable insights on ways to bring down the car insurance premium legally. The methods discussed below protect you from overspending while purchasing an insurance cover and after an accident.
These Ways Can Help Reduce Your Car Insurance Premium
1. Opt for a ‘Pay as You Drive’ Insurance Policy
IRDAI provided the ‘Pay as You Drive’ model while setting out new regulatory norms in 2020 for the automobile segment. The permission to market this car insurance model has been initially granted to select insurance companies like Digit, Edelweiss, etc.
If you don’t drive your car regularly, you can opt for this insurance type. Its structure has been outlined below:
- The model applies to comprehensive or ‘own damage’ cover.
- At the start of the policy period, a fixed number of kilometres (usually 15,000 kilometres) is finalised by the insurer for coverage.
- Before the expiry of the previous policy, you need to upload a video of your car’s odometer reading.
- A telematics device will be installed for monitoring kilometres run.
- 10% discount is offered on comprehensive insurance premiums.
If you drive your car sparingly, this car insurance model suits you.
2. Avoid Modifying Your Car Significantly
Your car insurance premium goes up if you upgrade your car by altering its basic structure, as provided by the manufacturer, or by installing newer devices.
For example, the insurer has to declare the installation of a CNG Kit or fancy electronic items. This is because such items make your car more attractive to thieves. Consequently, coverage risk increases, and the insurer charges a higher premium. If you hide the details, your claim will be rejected outright if an incident happens.
You can reduce your car insurance premium amount by
- Avoiding the installation of extra electronic devices and CNG kits unless it is essential.
- Preventing modification of interior, wheel, and paint of the car.
- Not changing the car’s mechanics or engine configuration for increasing power and accelerative dynamics.
- Not fitting the vehicle with fancy taillamps, brake lights that flash, faux carbon fibre parts, headlights with tint, bull bar, pressurized horn, tires of different sizes, etc.
3. Avail Optimum No-claim Bonus (NCB) by Not Making Minor Claims
It is possible that your car grazes other vehicles during driving or while making your way through congested roads. The resultant dents or scratches will require minor expenses to get repaired. Try to get them repaired out of your pocket. If you request a claim from the insurer, your NCB will become nil during car insurance policy renewal.
Avoid making small or negligible claims on the insurer to
- Enjoy a discount of 20-50% on the premium value through NCB
If you are eligible for an NCB of INR 5,000 and the scratch remediation cost amounts to INR 1,000, it is better not to make a claim.
4. Protect Your Car by Installing Anti-theft Lock
The insurer will reward you with a discount on the car insurance renewal premium if you bring down the risk of car theft through your initiative. The premium value is directly proportional to the safety quotient of the car.
You may consider installing:
- Locks for securing gear and steering
- Alarm for alerting against theft attempts
- Other anti-theft systems
It would be best if you always made purchases from renowned manufacturers only.
Read more - Theft Cover in Your Car Insurance
5. Reduce The Number of Add-Ons You Purchase
You purchase car insurance add-ons to widen the coverage scope of the standard car insurance policy. Each add-on makes the premium value go up. Choose the add-ons wisely.
You may avoid buying an ‘engine protection cover’ if you don’t live in an area experiencing heavy rainfalls or seasonal floods. Similarly, consider dropping minor add-ons like ‘personal belongings loss’ cover.
6. Increase the Quantum of Deductible
The car insurance premium will come down if you agree to bear a higher deductible. The insurer will have to pay a lesser car insurance claim value after an incident, as the quantum of your voluntary deductible will be increased.
Go for this option
- If you have a proven track record of driving safely and skilfully negotiating traffic
- If you drive infrequently or hire the services of an experienced driver for long tours
7. Take Membership in An Authorized Automobile Association
You can reduce car insurance premiums by taking membership in recognized automotive bodies such as
- WIAA (Western India Automobile Association)
- AAI (Automobile Association of India)
You shall become eligible for a fixed discount on premiums every year.
8. Get Accumulated NCB of Old Car Transferred to a New One
Your safe driving skills will prevent you from making any insurance claims. This will cause the NCB in car insurance to grow significantly.
If you are purchasing a new car, you can request the insurer to transfer the NCB incentive of the old policy to the new one. This will adequately reduce the premium.
9. Go for Third-party Insurance Coverage Only If Your Car Has Become Old
If you are planning to sell your car soon or your vehicle has become very old, consider opting for a third party car insurance policy only during renewal. Comprehensive or own-damage covers can be avoided as the old car will be used rarely.
You can pay less for car insurance premiums by following the tips above. However, it would be best not to take the rash decision of voluntarily reducing the insured declared value (IDV) to save a few on insurance premiums.
The financial burden you may have to bear later in an unfortunate car accident may prove your decision wrong. Be judicious and make informed decisions after factoring in available premium lowering options.
Read more -