How to Reduce Your Car Insurance Premium – 15 Secret Tips

car insurance premium
Tips for car insurance premium

Multiple Motor Insurance companies are working in India and providing car insurance. These companies provide different offers and plans. This means you have several options and opportunities to find out the best policy at the minimum car insurance premium.

And if you know some tips and factors then you can reduce your car insurance premium for a package car insurance policy. Either you or me, in fact, everyone wants a minimum premium for his or her car insurance policy. But due to a lack of knowledge, sometimes people purchase policies at high car insurance premiums.

In this article, I am writing about some powerful tips that can be very helpful to reduce your car insurance premium. So, let’s begin.

What is Zero Depreciation in Car Insurance Policy?

What is Consumable Cover in Car Insurance?

1- Compare with Multiple Insurance Companies

Whenever you are purchasing an insurance policy for your car then the first thing that should come to your mind is – “Let’s Compare it”. Select 4 to 5 companies at least and gets some quotations from each one.

Check and compare its features and benefits including car insurance premium. Surprisingly, You will see a lot of difference in premium. Now you Select the company which is providing you maximum benefits with less premium.

Apart from premium and benefits consider some other points also. You also check the company’s reputation and claim settlement ratio. You should not have any stress at the time of any claim. It should be easy and hassle-free. Let’s go through this example:

Example 1

Company ACompany B
Car Insurance Premium = Rs. 20000/-Car Insurance Premium = Rs. 23000/-
Comprehensive Policy with Zero Depreciation Add OnComprehensive Policy with Zero Depreciation Add On
High Claim Settlement RatioHigh Claim Settlement Ratio
Good Company ReputationGood Company Reputation
Assumed example, only for understanding purpose

In this case, you should select Company A because the premium is lesser than Company B and the other factors are the same.

Example 2

Company ACompany B
Car Insurance Premium = Rs. 20000/-Car Insurance Premium = Rs. 23000/-
Comprehensive Policy with Zero Depreciation Add OnComprehensive Policy with Zero Depreciation Add On
Low Claim Settlement RatioHigh Claim Settlement Ratio
Poor Company ReputationGood Company Reputation

In the above example, the premium of company A is lesser than Company B. However, the reputation and claim settlement ratio of company B is good. In this case, you should not go with company A because you may face some problems at the time of the claim.

2- Tariff Discount

Most insurance companies provide discounts on tariff premiums (Basic Own Damage). This discount depends on the Car manufacturer, Model, No Claim Bonus, etc. When you take a car insurance premium quotation from an agent or company, try to negotiate the discount. There may be possibilities to get more discount than the quotation you have.

Companies have some internal approval systems which can be given to good customers. But for this sometimes you may need to have some extra negotiation to reduce your car insurance premium.

Tariff discount depends on make and model because the loss ratio of the different cars is different for insurance companies. The insurer provides more discounts on favorable models and avoids or provides fewer discounts for those models which are not favorable for them. Here favorable means low risk for companies.

3- Automobile Association Membership

If you are a member of the Automobile Association of India then you can get some extra discount on your car insurance premium. For such member insurance companies give a discount of 2.5% or a maximum of Rs. 200 on basic own damage premium. Companies provide this discount on the basis of some assumptions.

Whenever companies find that you have a membership of AAI then they assume that you may be a good use for a car. Being a member, you may be a responsible and safe driver. It means you may be less prone to damage the car. That’s why you get a discount on a car insurance premium for being a member of the Automobile Association of India.

4- Renew Your Policy On Time

Lapsation of your car insurance policy may give you a big dent in the premium while buying a new policy. On lapsation of the policy, you may get a few setbacks:

  • You may need an inspection for your vehicle. Some companies take charges for vehicle inspection.
  • You may lose your No Claim Bonus if the policy expiry date crosses 90 days.
  • You may get fewer tariff discounts if you don’t have a No Claim Bonus. Because sometimes companies offer more discounts for NCB cases.

I will advise you to set a reminder and renew the policy on time because it will affect the premium. Renewing the policy on time help to reduce your car insurance premium.

5- No Claim Bonus (NCB)

It is a discount that you get on the renewal of your car insurance policy when you don’t have any claims in a policy year. It helps you to reduce your car insurance premium because you get the No Claim Bonus discount on your basic own damage premium.

A high No Claim Bonus represents that you are a good customer of the company. In the case of good NCB companies also provide good tariff discounts on their own damage premium. And as I above said it is good to reduce your car insurance premium.

You should avoid a claim for small damages. It will help you to accumulate a bonus in your insurance policy. Don’t waste your no-claim bonus for small damage when you see that NCB is more beneficial than the claim amount.

6- Transfer of No Claim Bonus

Accumulation of No Claim Bonus (NCB) is always beneficial for you. You get the discount year by year till when you have NCB in your Car insurance. But in case you sell your car and purchase a new one then even you can avail the benefits.

You may get surprised that you can transfer the existing NCB of your old car to a New car also and get the No Claim Bonus discount. No Claim Bonus is always connected to the individual, not to the car. So, that you can transfer it.

It will be very helpful to reduce the premium of your new car insurance policy. You need to do is that you take the No Claim Bonus Reserving letter from the insurer by doing the required documentation. Submit the reserving letter to a new insurer from where you are purchasing the Insurance policy for your new car.

7- Voluntary Deductible

You can also add a voluntary deductible to your policy to reduce the car insurance premiums. Almost all motor insurance companies provide this option and premiums can be reduced by adding this option. VD (Voluntary Deductible) is the excess amount paid by the policyholder at the time of claim settlement. You should choose this very wisely.

I think you should not select a very high amount of VD. Because you have to pay the VD amount in each claim whether the claim amount is small or big.

Example

Option AOption B
Deductible Amount = Rs. 2500/-Deductible Amount = Rs. 8000/-
Claim Amount Filled = Rs. 10000/-Claim Amount Filled = Rs. 10000/-
Claim Amount Received Rs. 7500/-Claim Amount Received Rs. 2000/-

In both, the case-filled claim amount is the same. But in the case of Option, A you are getting the claim amount of Rs. 7500 after the deduction of VD. However, in the case of Option B, you are getting the claim amount of Rs. Only Rs. 2000 because you selected a high VD on time of buying your car insurance policy.

High VD is only beneficial if the filed claim amount is high. Choose this option very wisely so that you do not pay a high amount of voluntary deductible at the time of claim settlement. If you are doing safe driving and very rare you file any claim then this option is very good for you to reduce your car insurance premium.

8- Multiple Cars

If you have multiple cars then you can manage it well to reduce your car insurance premium. You can negotiate your premium – discount with the insurance company. You can do this by offering to take all cars policy from one company only.

Some companies may give you an extra discount on car insurance premiums if they get multiple cars from a single owner. You can take it another way also. The discount offered by insurance companies depends on the manufacturer and model of the car. Some models can be favorable model for companies.

It is because they have less claim on these models. So, you can check each car insurance premium from different companies. By doing this exercise you can also select one by one company that is offering a lesser premium for the particular car.

9- Bundle Plan

You can work out this option also to reduce the premium. You can have some reduction in premium if you are buying a bundle plan for your car insurance. It depends from company to company. Ask your agent to provide the best possible combinations for you. If you find that option is suitable and the best possible car insurance premium then you can opt for it.

10- Online Discount

We all are living in the internet world and insurance companies are available online also. You can check your car insurance premium online also. Sometimes companies offer extra discounts on online purchases. It is because their marketing cost gets reduced in this case.

Nowadays the company gives instant chat and other help options to get any assistance while buying a policy. You have both the option online and offline. Check your car insurance premium on both platforms and select the suitable option for you.

11- Selection of IDV

The selection of IDV (Insured Declared Value) is a crucial part of taking the policy for the vehicle. It directly affects your car insurance premium. If you take too high IDV then the premium will be high and if it takes too low IDV then the premium will be less.

Now, what to do? You should always go for the correct IDV for your vehicle because ultimately it is your car’s value. You will get the theft claim or total loss claim amount according to this IDV.

You should not go for too high or too low IDV. Select it according to your car’s vintage and market value. You can optimize your car insurance premium with the ideal value of your car.

12- Selection of Add On Covers

The premium of a policy depends on how many add-on cover you select. Zero depreciation, Engine cover, Consumable cover, Tyre cover, Return to Invoice, and many other options are available. If you want to reduce the premium then you may also avoid unnecessary add-on cover. Check which cover is beneficial for your car and which is not.

Take the coverage according to your needs only. Taking the coverage which is not required for your car then you should avoid it. If you are using your car very rarely then adding so many covers may not require. Take the necessary cover and add on which are not avoidable. In this way, you can reduce your car insurance premium.

13- Old Vs New Customer

Being an old customer is also an important factor to reduce the car insurance premium. Companies never would like to let go of their customers to another company if you are profitable for them. They will always try to retain you as much as possible.

That’s why most companies offer more discounts to their old customers than new customers. So, if you are renewing your policy from the same insurer then you may have a lesser premium than a new company.

14- Anti Theft Discount

You have the chance to reduce your car insurance premium if you have installed an anti-theft device in your car. Insurance companies provide you an extra discount if you have installed an Anti -Theft device approved by the Automobile Research Association of India (ARAI).

This discount is 5% or a maximum of Rs. 500. You get this discount because the installation of this device reduces the chance of theft of a vehicle. Companies get fewer theft claims from this type of customer. If have installed ARAI approved device in your car then you are also eligible for this discount.

15- Profession Discount

Some companies also offer extra discounts for some professions like Teachers, Doctors, Military persons, Chartered Accountants, etc. People of these professions use their vehicles very less and have well maintenance of them also. So, the chance of damage or theft of a vehicle is reduced. That’s why some companies offer extra discounts to them.

Whenever you are buying an insurance policy for your car then you may keep all the above points in your checkpoints and get the best possible quotation from your agent. A small extra discount can give you good support to reduce the premium.

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