Driving Behaviour and Its Impact on Car Insurance Premium
An individual's driving record is one of the most important factors affectingRead more
How Driving Behaviour Affects Car Insurance Premium?
Have a look at how your driving behaviour influences the premium cost of your car insurance policy and the key factors insurers consider when deciding your premium:
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Traffic Violations, Speeding, and Challan History
Repeated violations of traffic rules, like over-speeding, jumping a red light, or rash or drunk driving, increase your risk profile. The installation of advanced surveillance systems in all major metropolitan cities has enabled insurers to check for traffic violations. Even the Insurance Regulatory and Development Authority (IRDAI) now allows insurance companies to check the violation history of drivers through the Parivahan e-Challan system. This helps insurers determine the insurance premium based on the frequency of violations by you.
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Claim History and No Claim Bonus (NCB)
For every claim-free year, insurers reward policyholders with an NCB in car insurance. Raising frequent and minor claims indicates that you are a reckless driver, which significantly impacts your driving & claim record. With a safe driving history and fewer claims, you can enjoy NCB benefits with up to a 50% discount on car insurance premiums.
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Drunk Driving and Severe Offences
Driving under the influence of alcohol or drugs indicates carelessness. Any offence while drunk driving can result in hefty fines, suspension of a driving licence, or even potential imprisonment. Moreover, if the insurer finds records of drunk driving or similar serious offences, your policy premium will likely increase significantly.
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Car Usage and Mileage
The car usage purpose is another aspect that influences its insurance premium. If you use your private car for commercial purposes or frequently travel long routes, you fall in the high-risk category, leading to a higher car insurance premium due to more exposure to risks.
How Responsible Driving Helps Lower Car Insurance Premiums
A good driving behaviour can significantly reduce your car insurance costs in the following manner:
- Reduced Risk Assessment: Your clean driving record signals to insurers that you're less likely to file claims, and in return, they can offer you insurance coverage at a lower premium.
- No Claim Bonus (NCB) Discount: You can maximise your No Claim Bonus benefits for not making any claim in your policy tenure.
- Telematics-based Rewards: Some insurers use telematics devices to monitor speed, braking, and kilometres driven. So, if you follow safe driving practices, insurers will reward you with lower premiums.
Usage-Based Car Insurance: PAYD and PHYD Policies
The IRDAI (Insurance Regulatory and Development Authority of India) has permitted all general insurance companies to offer Pay As You Drive insurance (PAYD) and Pay How You Drive (PHYD) insurance plans.
- PAYD Insurance: Car insurance premium depends on the number of kilometres you drive.
- PHYD Insurance: Premium is determined on the basis of driving behaviour, speed & braking patterns, use of phone while driving, and the total kilometres driven.
Insurers collect this vehicle data through a mobile app, an in-built telematics device, or an OBD device.
Here's a scenario for better understanding of Usage-based Insurance:
You work from home and only drive on weekends, staying within the speed limit and following traffic rules. On the other hand, your friend commutes to work and covers long distances with heavy traffic, frequent brakes, and occasional speeding.
Since you drive less and follow safe driving behaviour, your car insurance premium will be lower. On the contrary, your friend, who drives more frequently and is exposed to heavy traffic conditions, is at greater risk of accidents and claims, resulting in a higher premium.
Usage-based car insurance models are slowly gaining traction, and insurance companies are increasingly focusing on effectively implementing them. But, the collection of vehicle data by insurers has raised privacy concerns among individuals. Insurers are working on addressing these concerns, aiming for a win-win situation for both car owners and insurance companies.
Essential Tips Every Driver Should Follow to Improve Driving Record
Follow these responsible driving habits to reduce your car insurance premium:
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Stay Focused
The major cause of accidents in India is distractions. Drivers who use their mobile phones are more likely to be involved in road crashes. There are also other sources of distractions that might indulge others in danger. To avoid this, here is what you should consider:
- Make it a habit of enabling your GPS to plan your trip ahead of time
- Avoid answering calls or replying to emails or text
- Avoid eating or drinking while you are driving or waiting at the traffic light
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Stay Calm in Traffic
Traffic jams are another cause of accidents. After seeing the congestion, the drivers aggressively accelerate and try to cut off the other. You can try to be polite to make your drive more pleasant and help prevent accidents. Moreover, keep a safe distance between you and the vehicle in front of you. Do not honk unnecessarily, it only creates fuss in the middle. Use your turn signals to be safe on the road.
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Do Not Rush/Overspeed
Over speeding is another cause of road accidents. Always respect the speed limits. Take your time & adapt defensive driving techniques. This will help you avoid situations where you have to suddenly apply your brakes and stop the vehicle.
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Never Drive If You Are Feeling Sleepy
Dizziness and restlessness might deviate you from the lane, or it might trouble you in keeping your eyes open. Hence, take a good rest and decrease the risk of accidents.
Conclusion
Driving habits do not change overnight, but with time you can inherit good ones. If you are planning to buy the recently introduced PAYD car insurance, make sure you have a good driving history. Moreover, you can follow the above-mentioned tips and save significantly on your car insurance premium costs.
