When you buy a car, convenience comes at a price. In addition to maintenance, you also pay for car insurance, which consists of two components: "third party" and "own damages" or what is also known as "comprehensive" insurance. While the first covers any damage or injury suffered by a third party in the event of an accident, the second guarantees damage to your vehicle. Is there a way to reduce this financial liability or are both premiums fixed?
“In terms of third-party liability, the premium is fixed and the cover is mandatory as per the Motor Vehicle damage risk, the premium is dependent on the kind of coverage required,” says Rakesh Jain, CEO, Reliance General Insurance. What this means is that you can lower your universal premium, not only by customizing your insurance coverage, but by knowing many other factors as well. Here are some of the ways you can lower your car insurance premium.
1) Get ‘pay as you drive’ insurance
This is a relatively new concept in the Indian auto industry that has been available since 2020 under Irdai's sandbox regulatory guidelines, and only a few insurers are able to market it. "It's a usage-based proposition, where the insurance company charges a premium only for the fixed mileage at the beginning of the policy. However, the insured gets the same benefits as conventional comprehensive insurance," says Jain. So if you drive occasionally this would be a good way to lower your premium because fewer miles means a lower premium.
2) Don’t buy all add-on covers
Not all damage is covered by the base cap. Extras help increase the scope of your comprehensive coverage, but they also increase your premium.“You should pick the add -ons depending on your need. So, if you don’t live in an area that has water logging, you don’t need the engine protection cover,” says Ashwini Dubey, Head, Motor Insurance Renewals, Policybazaar.com. “There are several add-ons that are less important but cost the same as others,” says Ankit Agrawal, Co-founder & CEO, InsuranceDekho. So you can easily forgo those like daily allowance cover, or the one that covers loss of personal belongings.
3) Don’t go for too many modifications or upgrades
If you change your vehicle in any way, be it by installing a CNG kit or an electronic device, you should inform your insurance company as it may affect your premium. If you do not report, your claim may be denied later. “Modifications that increase the chance of theft, such as wheels, car interiors or paintwork, should be avoided. Similarly, any change in engine or mechanics to enhance power or increase acceleration, leads to an increase in risk and a rise in premium,” says Aatur Thakkar, Co- founder & Director, Elephant.in, Alliance Insurance Brokers. “Other modifications you can avoid are bull bars, pressure horns, tinted head or tail lights, fake carbon fibre, flashing brake lights and over or undersized wheels and tyres,” says Agrawal.
4) Avoid small claims
If your vehicle suffers minor damage, such as scratches or small dents, you should avoid filing a claim as it will not be eligible for a No Claim Bonus (NCB) at the next renewal. The National Commercial Bank is a discount on the insurance premium that you get from your insurance company for not filing claims during the life of the policy and can range between 20-50%. You can take advantage of this by renewing the policy within 90 days of expiration.“So, if your car damage is worth Rs 2,000 or so, and you are scheduled to get a Rs 6,000 NCB next year, it is better to pay the amount from your pocket,” says Dubey.
5) Install anti-theft devices in your car
Another easy way to lower your car premiums is to reduce the risk of it being stolen. The higher the security, the lower your insurance premium. “You can do this by installing anti-theft devices like gear locks, anti theft alarms, steering locks from registered manufacturers to get a discount on the premium,” says Thakkar.
6) Raise your deductible
The deductible is the amount you pay out of pocket before the insurance company covers the claim. The higher the discount, the lower the premium you pay on your insurance. So if you're confident in your driving skills or don't drive a lot, it may be a good idea to go for a bigger discount to lower your premium.
7) Transfer NCB for new car
If you have collected a large unclaimed bonus over a 6-7 year period and you plan to buy a new car, you can significantly lower your premium by converting NCB from your old insurance policy to your new car insurance.
8) Join an auto association
Another simple trick that you can get a fixed discount on car premiums is to become a member of registered bodies like the Automobile Association of India (AAI) or the Automobile Association of the West Indies (WIAA).
9) For older cars, take only third-party cover
While a third-party cover protects you financially against death, injury or property damage of a third party in an accident involving your vehicle, it is imperative to have an own-damage cover to protect against expenses incurred in damage to your own car. So not buying a comprehensive cover to cut premium will be unwise,” says Jain. However, it may only make sense to buy third-party coverage if your vehicle's value is very low or it's an older vehicle. “If your car is very old or you plan to sell it soon, it's a good idea to go for third-party insurance just because it's cheaper than comprehensive plans,” Thakkar says. Plus, you may spend less on repairs than the premium you pay. for coverage against all risks.
10) Pay premium on time, buy online cover
Two easy ways to lower your premium are to shop and buy your insurance online and pay your premium on time. “If you don’t pay your premium on time, the insurer may see it as a risk and could raise your premium amount,” says Dubey.