How to Reduce Car Insurance Premium?
Reducing car insurance premiums is simple and straightforward. By understanding Read more
10 Tips to Lower Your Car Insurance Premium
Here are some helpful tips you can follow to reduce your car insurance premium costs:
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Compare Car Insurance Online
One of the easiest ways to save on your insurance costs is to compare car insurance rates from multiple insurers. Different companies evaluate risk factors differently, resulting in varied premium quotes for the same individual. You can use online comparison tools on websites like Policybazaar.com, which allows you to compare car insurance online from several insurers in minutes.
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Opt for a Bundled Policy
Many insurers offer discounts on premiums if you bundle multiple policies, like home & car insurance. This not only simplifies your billing but also helps you save a significant amount of money.
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Maintain a Clean Driving Record
Your driving history is another important factor that insurers consider to determine your premium costs. If you have a driving history free of accidents, traffic violations, and claims, it will generally result in lower car insurance rates.
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Choose a Higher Deductible
The deductible is an amount you choose to pay out of your pocket before your car insurance coverage kicks in at the time of a claim. Let's take an example to understand this: You buy a car insurance policy and choose a voluntary deductible of Rs. 2,500, which you will pay out of your pocket. Now, if you make a claim of Rs. 10,000, you will bear Rs. 2,500 yourself because it is your voluntary deductible, and your insurance company will pay the remaining Rs. 7,500.
The higher the deductible you choose to pay from your pocket, the lower will be your car insurance premium amount.
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Improve Your Credit Score
Insurance companies also consider your credit score when deciding your car insurance premium. A higher credit score typically leads to lower insurance rates.
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Ask for Discounts
Insurers offer a range of discounts on premiums, like good driving discounts, military or veteran discounts, safety features discounts, etc. This can help you save money on your car insurance.
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Review Your Coverage Annually
Your insurance requirements may change over time, so it's essential to review your policy regularly. If you have an older car, consider dropping comprehensive coverage if its cost exceeds your car's value.
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Install an Anti-Theft Device
Cars equipped with safety & anti-theft features are less risky to insure, which often leads to discounts on car insurance premiums.
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Consider Pay-as-you-Drive Insurance (PAYD)
PAYD or Usage Based Insurance (UBI) charges premiums based on the total number of kilometres you drive your car. The less you drive, the lower is your car insurance premium. Hence, if you drive your car occasionally, you can reduce your car insurance premium by opting for PAYD insurance.
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Ask About Group Discounts
Some organisations, employers, or alumni associations provide group discounts on car insurance. So, you can check with your employer or take membership in certain groups to qualify for special car insurance rates.
Factors that Affect Car Insurance Premiums
Car insurance companies evaluate several factors to assess the risks associated with your vehicle. The higher the risk, the more the insurance premium. Here are the key aspects that impact car insurance premiums:
- Age of the Car: Older cars have a higher probability of giving trouble than brand-new cars. Hence, car insurance premiums shoot up with an increase in the age of the car.
- Make & Model of the Car: Expensive or high-end car models are a greater liability for an insurer. This is because the cost of repairing or replacing its parts is higher in luxury or high-end cars. Thus, car insurance premiums are higher for luxury or high-end cars.
- Type of Coverage: Comprehensive insurance provides greater coverage for a car than third party insurance. As a result, the cost of car insurance is higher in the case of comprehensive coverage.
- Engine Capacity of the Car: Cars with greater engine capacity pose a higher level of risk to the insurer. Therefore, the cost of car insurance is more for cars with a higher engine capacity.
- Registration Location: The probability of a car getting damaged is higher in certain places, such as densely populated cities, mountains, urban areas, places with a higher record of crimes, etc. Hence, if you reside in such areas, your car insurance premium will be higher.
- Claim History: People with a poor claim history are considered a greater liability by car insurers. Besides, not making any claims in the past year helps the car owner to earn No Claim Bonus (NCB), which reduces their car insurance premiums. Thus, if you have a poor claim history, you need to spend more on your car insurance premium.
- Car Modifications: If you have made any modifications to your car, you may incur a greater loss in case of vehicle damage. Hence, a car with modifications attracts a higher car insurance premium.
How Does Your Credit Score Impact Car Insurance Premium?
Your credit score has a direct impact on your car insurance premium. It is because insurers use it to know how financially reliable you are when paying premiums and during claims. A higher credit score usually means lower car insurance premiums, while a poor score can push your premium prices up.
To assess your risk, insurers often use a specialised credit-based insurance score, which focuses on your payment history and debt behaviour. Before issuing a quote, they may check your current credit score, and if there are any recent improvements, it can help reduce premium costs. Hence, to keep your car insurance premium low, you should manage your credit responsibly. Make sure you clear bills on time, maintain low balances, avoid excessive debt, and regularly review your credit report for errors.
