Few Steps To Cut Down On Your Car Inurance Premium
Car insurance provides financial security to the car owners against financial loss due to accidental damage or other unfortunate events like theft, fire, natural calamities, etc.
It is also a mandatory requirement to have at least 3 years of third-party car insurance for all new cars as per the IRDAI regulations in 2018.
In India, people usually buy or renew their car insurance from the car dealer who sold them the car, without doing much research. However, there are several drawbacks to it, some of which are listed below –
- You might be paying a higher premium on the car insurance.
- You may have a lower Insured Declared Value (IDV) on the car insurance.
- The car insurance company may not have many cashless garage networks.
- The dealer might not provide information regarding add-on covers.
- The claim process is also not explained while purchasing a policy from the dealer.
- The dealer might sell only third-party car insurance to all, while comprehensive car insurance might be a better option for few.
To get the best car insurance in India, we recommend you first research car insurance online. Following the below checklist should guide you in selecting the best car insurance in India:
| Checklist to Compare Car Insurance Online: | ||
|---|---|---|
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Parameter for Comparing |
Explanation |
Decision Making |
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Insured Declared value (IDV) and premiums online
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IDV is the maximum sum assured that the insurance provider shall pay on the car insurance policy. Premiums are paid by the policyholder to the insurance provider for getting their car insured. |
Select the insurance companies which offers certain sum assured at lowest premium to buy car insurance online |
|
Claim Settlement ratio (CSR)
|
CSR is one of the most important points of comparison. It denotes the percentage of claims settled by an insurance company against all claims received in a year. |
Select insurance companies having higher CSR to buy car insurance online |
|
Incurred Claim ratio (ICR)
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ICR indicates the financial ability of the car insurance companies to pay claims. ICR value is calculated using the value of claims paid against the total premiums received in a year, |
Select insurance companies having higher ICR to buy car insurance online |
|
Solvency ratio
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Solvency ratio indicates the financial stability of an insurance company as it compares all assets and inflows against the liabilities and outflows. |
Select insurance companies having higher Solvency ratio to buy car insurance online
|
|
Claim settlement speed
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Claim settlement speed shows how quickly the insurance provider approves and disburses the claim amount.
|
Select insurance companies having quick claim settlement speed to buy car insurance online
|
|
Cashless Garage Networks
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Cashless garage networks are garages approved by the insurance provider for cashless car repair.
|
Select insurance companies having a long list of cashless network garages to buy car insurance online
|
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Online customer reviews
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You may view the ratings and read reviews of the customer service experience on internet for any Insurance company
|
Select insurance companies having highest online ratings to buy car insurance online
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Additional benefits or riders
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Additional riders help in enhancing the scope of coverage of a car insurance policy such as Engine protection, Zero depreciation, Roadside assistance, etc.
|
Select insurance companies having various add-on benefits and riders to buy car insurance online
|
Tips To Cut Down On Your Car Inurance Premium:
After understanding how to evaluate and select the best car insurance in India, you would now wonder if there is a way to cut down on these car insurance premiums any further? Listed below are few tips to reduce your car insurance premiums:
Compare Car Insurance online:
By comparing different car insurance policies online as per the checklist mentioned above, you should be able to evaluate not only the best car insurance in India but also the cheapest car insurance which would match all your insurance needs.
At EquitySeeds Consultants, you have the option to get quotes for all the eligible car insurance policies at the convenience of your home to compare and buy a policy of your choice.
Avoid Unnecessary Add-Ons:
Car insurance companies offer several additional riders such as Engine protection, Zero depreciation, Roadside assistance, etc. along with the main policy. These additional riders increase the scope of your insurance coverage but also increases the premiums of your car insurance.
Hence, you should select these add-ons wisely and avoid purchasing unnecessary add-ons which would help in reducing the cost of premiums.
Increase Deductibles:
Deductibles are a portion of total claim that the policyholder may choose to pay it themselves. Most car policy buyers opt for deductible as 0, in this case, the car insurance company would pay 100% of the claim amount, however, keeping the deductible as 0 increases the cost of your premiums.
You can increase the deductibles to reduce the cost of premiums. However, do not increase deductibles randomly, make sure to check that increasing deductibles does not put you in liquidity crises and you are comfortable paying the said portion of the total claim.
Bear expenses on small damages by yourself:
Car insurance companies provide discounts on premiums in the form of No Claim Bonus (NCB) for every policy year you do not make a claim, this helps in reducing the premiums of your car insurance policies greatly.
| Discounts on premiums under Non-Claim Bonus benefits: | |
|---|---|
|
Years |
Discount % |
|
If claim is taken in last 1 year
|
0%
|
|
If claim is not taken for 1 year
|
20%
|
|
If claim is not taken for 2 years
|
25% |
|
If claim is not taken for 3 years
|
35% |
|
If claim is not taken for 4 years
|
45% |
|
If claim is not taken for 5 years or more
|
50% |
Now, assume if your car insurance policy premium is Rs 6000 and you do not make a claim in 1 year then the discount on premiums during renewal will be of Rs. 1200, and hence your car insurance policy would cost you only Rs. 4800.
By taking claims for small damages, these NCB benefits are lost. Hence, to keep your car insurance premiums low it is recommended to pay for small damages on your own.
Transfer of NCB certificate from old car to a new car:
Car insurance companies in India allow policyholders to transfer their existing car insurance policy from old car to a new car along with accrued NCB benefits.
Hence, if you are planning to sell your old car, make sure to get the no-claim certificate from the car insurance company first. You can keep the no claim certificate stored safely in case you do not wish to buy a new car immediately. Whenever a new car is purchased, you can request the car insurance company to transfer the existing car insurance and NCB benefits accrued over the years to your new car’s insurance policy. Thus, helping you in reducing the car premiums of new car insurance.
Benefits of installing anti-theft devices on your cars:
An anti-theft device installed on your car reduces the risk of your car getting stolen, this helps in reducing the premiums of your car insurance policy.
There are several anti-theft devices available in the market such as gear locks, steering locks, anti theft alarms, etc which can be installed on your car to reduce the risk of your car getting stolen.
Concessional premium rates for few Associations:
Car insurance companies in India provide insurance policies at concessional premiums to Associations like Automobile Association of India (AAI) or Western India Automobile Association (WIAA) which are empowered by Motor Vehicles Act. You can join these Associations to get car insurance at concessional rates.
Reducing the IDV on your cars:
Adding new parts such as alloy wheelers, spoilers, etc to upgrade your car performance or looks would increase the IDV of your car and thus increase the premiums as well. You may avoid adding additional parts to reduce the IDV and premiums.
Make sure to inform the car insurer of any modification done to the car that increases the IDV as your insurance policy may get invalidated in case the IDV is increased without proper intimation to the Insurer.
Reduce Insurance coverage on old vehicles:
You can opt to have only the Third-party insurance or a comprehensive insurance with very low IDV for your old cars to reduce the premiums.
Avoid old car insurance policy to lapse:
A lapsed car insurance policy does not get the NCB benefits. Hence, make sure to renew the car insurance policy on time to continue getting the NCB benefits on your premiums.
Conclusions:
After knowing how to evaluate the best car insurance policies in India as per your insurance needs and ways to cut down on your car insurance premiums, you should be able to select a car insurance that matches your needs. However, if you would need more assistance you can count on our expert advisory.
