How to Reduce Car Insurance Premium

Car insurance premiums are getting increasingly expensive, especially after the Indian government has made thirty-party insurance cover mandatory for cars to run on the road. This has made ‘the best insurance at the lowest premium’ a thing of the past.

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*TP price for less than 1000 CC cars. All savings are provided by insurers as per IRDAI approved insurance plan. Standard T&C apply.

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Above-mentioned prices are for a 7-year-old Maruti WAGON R AVANCE LXI (998 CC) registered in Gurgaon and 15 days before expiry of previous policy

Ever wondered how to reduce car insurance premium? Here are some ‘How to keep car insurance low’ tips:

Compare Car Insurance

Before purchasing car insurance, always compare the benefits and quotes offered by various insurance companies/agents. Most insurance companies have a website in addition to numerous online insurance comparison sites where you can compare car insurance premium rates charged by different companies. These online insurance distribution channels are cheaper than the conventional method, and they also help you get the best car insurance premium rates conveniently.

Also, if you have been taking the same policy for the same car for several years, it makes sense to try other insurance companies, as you may get attractive discounts and still lower car insurance premium rates.

Beware of car insurance firms who claim to offer 'free' insurance - this is usually free only for the first year and it cannot be customized. Also, keep in mind that a ‘no frills’ policy is usually the cheapest because the premium goes up proportionally when insurers include add-on features. Most importantly, make sure you’ve read the policy fine print carefully before purchasing it.

Be Wise with the Coverage

A car insurance policy is typically a pre-defined set of benefits. Nevertheless, if your policy permits, then opt out of features you do not really need. This helps lower the car insurance premium to some extent.

You May Also Like: Typical Ways To Reduce Car Insurance Premium

Watch Those Deductibles

Increasing deductibles or voluntary deduction can reduce your car insurance premium. A deductible is the out-of-pocket amount paid by the policyholder when making a claim. While opting for deductibles, it is better to pay much comfortably rather than going overboard.

If your deductible is zero, then you will receive the entire claim amount in the case of an accident, but the premium you regularly pay will be very high. A higher voluntary deduction makes sense in two cases – one, if you are an extremely safe driver, which significantly lowers the chances of an accident; two, if you have not claimed insurance for a few consecutive years.

Don’t Think Small

While it is true that the core purpose of car insurance is to save expenses incurred for repairing a damaged vehicle, making very small claims could work against this objective. Even for the smallest claim you make, you lose the distinct advantage of the No Claim Bonus (NCB) – the bonus accrued for every consecutive ‘claim-free’ year over the policy term. The NCB can lower your car insurance premium up to a maximum of 50%; so, your next year premium sees a 50% dip.

The claimed amount is sometimes lesser than the total processing charge and the loss of NCB. The wisest way to use your insurance is get small repairs at local workshops. The dual advantage is that the expenses are lesser and the NCB is saved too. Keep in mind that if the repair amount is lesser than the NCB, then you can potentially accumulate, refrain from making a claim.

From Old to New

An advantage of not making a claim is that the bonus accumulated is transferable to the new car you purchase. It is, therefore, wise to retain the insurance in your name even after selling your vehicle and ask the insurer to give you the no-claim certificate.

You can reserve this bonus even if you are not immediately buying a new vehicle. Whenever you buy a new car, transfer the existing policy to it and carry forward the no-claim bonus accrued over the years. This will help you reduce the car insurance premium rate for the new insurance policy.

Stay Safe

Installing safety features/anti-theft devices like locks for the steering wheel and gear, air bags, anti-theft alarms etc. could fetch you a 5% discount on your premium. Further, people linked with associations like Automobile Association of India (AAI) or the Western India Automobile Association (WIAA), can get special benefits and discounts on premiums. These associations are empowered under the Motor Vehicles Act and Rules and the members therein are deemed as ‘safe drivers’.

Avoid the Frills

Car modifications like adding alloy wheels, spoilers, etc., and expensive gadgets like automotive night vision, ultrasonic sensors, etc. may lead to a higher premium. Hence, such modifications and gadgets should ideally be avoided if you wish to keep your premium low. However, if you still want to introduce modifications at the cost of higher premiums, notify your insurer because if you don’t, your insurer may invalidate your insurance.

Dig Bigger Discounts

Based on the policyholder’s age, driving record, profession, and various other criteria specified by the insurance company, the policyholder could avail car insurance premium discounts.

Also, check with your insurance provider whether you qualify for a discount if you have covered parking for your car. In addition, discounts on car insurance premiums can be availed if you are a member of organizations like the AAI or the WIAA.

It Pays to be Loyal

When people have multiple insurance policies (in any category) with the same insurance company, and they approach the same provider for a car insurance policy, the provider offers a lower car insurance premium as a loyalty reward.

Remember the Lapse

Once your car insurance policy lapses, you may not qualify for NCB that you would otherwise have been eligible for. While buying your policy, make a note in your organizer or ask your provider to send a reminder before the policy expires, so you renew your car insurance policy without fail.

Written By: PolicyBazaar - Updated: 26 June 2021
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